The Commission on Audit (CoA) has ordered the Government Service Insurance Corporation (GSIS) to recoup P2.3 billion in members' contributions that it had invested in three firms in 2023 despite no proof of profitability.

The CoA made no mention of the said companies but cited income information from the Philippine Stock Exchange (PSE) that showed that they have no proven track record of profitability from 2019 to 2022 and have not paid dividends at least once over the same period, in violation of Republic Act 8291 or the GSIS Act of 1997.

Audit revealed that the total investment in stocks amounted to P2,307,919,680 and state auditors lamented that the GSIS, under the leadership of seasoned banker Jose Arnulfo "Wick" Veloso, had already included a P251.371 million loss in 2023 alone.

"The investment in stocks with the foregoing companies, regardless of how promising the returns are in the future, is contrary to Section 36 (h) of RA No. 8291," the auditing body stated.

The law allows the GSIS to invest in its collections. However, it must meet the criteria — such as its policy that the company shall have a market capitalization of P15 billion or more — as well as rules and regulations as may be prescribed by the board.

"As a result of non-compliance with the twin requirements set forth under Section 36 of RA No. 8291 in providing liquidity, safety/security, and yield of stock investment, the GSIS took the high risk of investing a significant amount of its members' contributions wherein the actuarial solvency of the fund may not be ensured," the CoA pointed out. 

A resolution was already filed in May last year at the House of Representatives to launch a congressional investigation into the "risky" investment plans of the GSIS.

Aside from this, the audit team also flagged the GSIS's investment of P1.450 billion in 2023 in a separate firm (Company A) sans approval of the board of trustees (BoT) and without complying with the follow-on order requirements, mandated by RA 8291 and its Revised Investment Policy Guidelines, respectively.

The sum was part of the P4.396 billion worth of stocks that the GSIS invested in three different companies in 2023.

Of the P4.396 billion, CoA also found that the GSIS invested P1.549 billion worth of 246,450,090 common stocks to Company D, which was made on two consecutive days.

The said transactions were also subjected to the CoA's scrutiny since the GSIS split it or purchased it separately, circumventing BoT's approval.

The policy requires that if the transaction did not exceed the P1.5 billion threshold, it can do away with the BoT approval requirement.

"While it cannot be conclusively presumed that the aforesaid purchase transactions have been intentionally divided into two to avoid the required BOT approval, which would have been necessary if executed as a single transaction exceeding the P1.5 billion limit, the similarity of the two transactions casts doubt as to its regularity," the CoA said.