The revisions are not improvements as touted by the government. They are relaxation of governance standards and certain provisions of the law. They do not inspire confidence in the fund. They evoke questions and distrust. What is the administration trying to do with the Fund?
1. Removal of immediate transfer of GFI contributions to BTR after approval of IRR. This can imply two things: (a) early transfer was a mistake, or (b) early transfer was deliberate for undisclosed reasons. In principle, the GFIs still own those monies prior to operationalization of MIC, and should still turn profit or earn interest on those funds prior to actual investment in MIC.
2. Removal of
Section 21 on the appointment, qualification and functions of the Corporate
Secretary. While the Corp Sec
role was not explicit in the MIF law, one can’t help but ask why this whole
section was removed when it actually helps define the governance structure. The
Corp Sec plays a critical role being the official recorder and safekeeper of MIC
Board decisions.
3. Removal of Section 29 on Additional Qualifications on Regular and Independent Directors (education, professional experience, track record and ethical standards). Removal of Section is inconsistent with the legal requirement to have Regular Directors “of good moral standing and reputation, of recognized probity and independence, and have substantial experience and expertise.” The Law also states that “the Advisory Body shall ensure that selected members of the Board of Directors are with proven probity, competence, expertise and experience in finance, economics, investments, business management, or law.” The Law specifically states that specific guidelines on Board of Directors (Section 21 of RA 11954) should be in the IRR “to ensure that only those eligible and qualified shall be appointed to the Board.”
4. Section 32 on
Period for Filing Director Seats was modified to add this provision: “Provided,
That, the President may either accept or reject the recommendation of the
Advisory Body: and, Provided, finally, That, the President may require the
Advisory Body to submit additional names of nominees.” The President as approving body naturally has
the option to accept or reject director recommendations. As members of the
Cabinet, the Advisory Board members are alter-egos of the President so they
naturally should consider the Presidential perspective in their recommendation.
They may even pre-clear nominees with the President. Not sure what the big deal
is here, unless there are other concerns not being disclosed.
5. Removal of a
portion of Section 33 on Solicitation of Nominees and Applications. A
5-point list of documentary requirements “necessary in evaluating their
qualifications and disqualifications) was removed contrary to the spirit of the
law. These documents include clearances from Civil Service Commission, NBI,
Ombudsman, Sandiganbayan; criminal or administrative cases; and endorsements
from civil service organizations. Criminal or administrative cases are
explicitly stated in the law as qualifications.
6. Section 40 was
amended removing 9 skills that the Chief Investment & Operating Officer
must have. While that list is not in the law, one wonders why the
more specific list/guidelines have to be taken out.
7. Section 41 on
Risk Management was amended removing the list of functions. While
that list is not in the law, one wonders why the more specific list/guidelines
have to be taken out.
8. Amendment of
Section 42 on Audit Committee to remove guidelines on the composition of the
committee and its functions. Ironically, why the legislators prided
themselves on supposed safeguards, the law only mentioned that the Board must
constitute an Audit Committee and nothing else. The composition of the
Committee was not even established. By corporate governance standards, this
committee has to be chaired by an Independent Director. Removal of guidelines
that are supposed to fill-in gaps in the law is therefore questioned.
9. Deletion of Section
47 (Initial Appointment of CEO and Directors) which sets time table and
nomination process
10. Deletion of
Section 48 (Organizational Meeting). This
is actually important in operationalizing the corporation so one wonders why
this is removed.
