Senator Risa Hontiveros on Tuesday revealed that the state-run Government Service Insurance System (GSIS) has invested P1 billion in a private online gambling firm, DigiPlus, owned by casino operator and Negros Occidental Representative Albee Benitez.

“In recent weeks, news articles have started to shine light on the P1 billion investment of the GSIS in online gambling platform DigiPlus. You heard that right, Mr. President and dear colleagues. Most shocking of all, the GSIS invested over P1 billion in online gambling. The GSIS got into it when Digiplus shares were being offered at a peak of P65.30. Those shares have since dropped to as low as P13.68. That’s a loss,” said Hontiveros in a privilege speech on Tuesday.

She said the investment was made during the tenure of suspended GSIS President and General Manager Jose Arnulfo “Wick” Veloso, calling it a clear disservice to the 2,736,710 GSIS members—teachers, police officers, traffic enforcers, government doctors and nurses, and other public servants.

“In the first place, what was GSIS thinking, investing funds in online gambling? We government workers aren’t even allowed to set foot inside a casino, much less gamble there. So why is GSIS going all in—using public employees’ money to bet on gambling?” she asked.

Hontiveros noted that the investment was made despite calls by lawmakers and even Malacañang to curb online gambling in the country due to its harmful social impact.

“So why is GSIS doing the opposite? Why is GSIS investing the retirement money of public servants in seemingly expanding the e-gaming industry? We need explanations. And unfortunately, Mr. President, this is just the tip of the iceberg,” according to the lawmaker.

By law, GSIS has the fiduciary duty to invest the contributions of its members wisely, ensuring they meet the requirements of “liquidity, safety or security, and yield to guarantee the actuarial solvency of the funds,” Hontiveros said.

The actions of the GSIS officials showed a blatant disregard for the very people whose contributions sustain the fund.

“For those working in government, how long have you been serving? 10, 20, 30 years? And yet, it turns out our funds aren’t being taken care of, not secured, not guaranteed. When the time comes, will you end up with no pension at all?” she said.

Hontiveros said it appeared there was a pattern of reckless and questionable investment decisions made by the current GSIS leadership, adding, “The guardrails we have put in place to guide and protect GSIS investments are seemingly being breached.”

Earlier, Veloso and other GSIS officials were sanctioned with preventive suspension by the Office of the Ombudsman in connection with the P1.45-billion subscription of the GSIS in Alternergy Holdings Corporation for the purchase of 100 million of the latter’s Perpetual Preferred Shares.

“According to the Ombudsman, Veloso and his fellow GSIS officials may have committed serious misconduct when they agreed to purchase Alternergy’s Perpetual Preferred Shares without the approval of the GSIS Board of Trustees, and in clear violation of the GSIS’s investment policies and guidelines,” Hontiveros said.

The GSIS entered into the multi-billion-peso deal without the necessary endorsements from the GSIS’s Assets and Liabilities and Risk Oversight Committees.

“Glaringly, Alternergy’s market capitalization was far below the P15 billion minimum reportedly required under the GSIS policy for investible companies. The shares were not even listed with the Philippine Stock Exchange on the dates of the execution of the agreement and the payment of the subscription,” the lawmaker said.

Moreover, Hontiveros said Alternergy appeared to be “highly over-leveraged.”

“Simply put, they have too much debt, with a debt-to-equity ratio of 194 percent and a dangerously low interest coverage rate. How was that company able to declare a P40 million cash dividend when it’s buried in debt and already in financial distress?” she asked.

Along with GSIS’s questionable investment in online gambling, Hontiveros said there is also the continuing 0.82-percent stake of GSIS in Del Monte Pacific, a company “teetering under 2.3 billion US dollars in debt” and facing massive write-offs.

“This investment has already incurred an estimated paper loss of P19.1 million for GSIS, representing a 32.5 percent decline in its stake. This is why the Senate should act swiftly to review the policies, procedures, and guidelines covering the GSIS’s investment decisions. We should strengthen GSIS’s investment policy compliance and oversight. We should increase transparency and accountability in their investments. And we should plug policy gaps and clarify ambiguities,” Hontiveros said.