The Ombudsman has ordered the immediate suspension without pay of Government Service Insurance System (GSIS) president and general manager Jose Arnulfo “Wick” Veloso and other agency officials amid the anti-graft agency’s investigation into the controversial P1.45-billion preferred shares investment by the state pension fund in Alternergy Holdings Corp.
The suspension follows a formal investigation triggered by an anonymous complaint filed against Veloso and seven other GSIS executives over the transaction, which allegedly breached multiple provisions of the GSIS’ investment policies and was carried out without proper board-level authorization.
Placed in the freezer along with Veloso were executive vice presidents Michael M. Praxedes and Jason C. Teng, vice presidents Aaron Samuel C. Chan and Mary Abigail V. Cruz-Francisco, officer II Jaime Leon K. Warren, and acting officer IV Alfredo S.S. Pablo.
The Ombudsman’s order said that on 7 November 2023, the GSIS signed an agreement to buy 100 million preferred shares from Alternergy at P14.50 each, totaling P1.45 billion. However, the investment violated several rules in the GSIS’ own 2022 Investment Policy Guidelines.
The investment followed an earlier P85 million infusion into the same company on 13 March 2023.
Investigators found that Alternergy was not listed on the Philippine Stock Exchange and did not meet the required market capitalization under rules on allowed GSIS investments.
The investment also did not undergo proper internal approvals, including endorsement by the Assets and Liabilities Committee and the Risk Oversight Committee, or final approval by the GSIS Board of Trustees.
On 15 December 2023, a disbursement voucher was approved certifying the P1.45 billion subscription as lawful and complete. That same day, GSIS officials executed the payment through the Land Bank of the Philippines. Respondents Cruz-Francisco and Praxedes signed a Letter of Authorization instructing the bank to debit the funds from the GSIS account and transfer the amount to Alternergy.
The Commission on Audit (CoA) flagged the transactions as the purchase of Alternergy Perpetual Preferred Shares 2–Series A, which was made months after the acquisition of common stocks on its IPO, as not complying with the follow-on offer requirements.
CoA said that the P1.5 billion threshold over which a transaction would need board approval can be negated by splitting a single transaction, which resulted in the P1.45 billion Alternergy deal.
Likely culpable
The Ombudsman said the respondents’ actions demonstrated a strong indication of administrative liability.
The Office said their continued stay in their positions may prejudice the investigation, influence the outcome, or result in the tampering of key documents and evidence.
In line with Section 24 of Republic Act 6770, the Ombudsman Act of 1989, and applicable rules of administrative procedure, the suspension will remain in effect until the conclusion of administrative adjudication, but not longer than six months, unless the respondents themselves cause the delay in disposition.
Veloso, a former banker and prominent figure in the financial industry, was among the officials who recently submitted courtesy resignations to President Ferdinand Marcos Jr. as part of the government’s call for accountability in key state-run institutions. However, Malacañang did not accept his resignation.
The Ombudsman emphasized that the suspension was immediately executory and shall not be interrupted by any appeal, motion, or petition unless otherwise ordered by a competent court or the Ombudsman itself.
As of press time, the GSIS had yet to issue an official statement addressing the Ombudsman’s decision and its implications on the agency’s operations and investments.