The Long View: Blink thrice if you don’t mean it


Blink thrice if you don’t mean it

 / 04:03 AM December 07, 2022

It would seem global events are conspiring against the Marcoses in their effort to rally public support for their proposed Maharlika Wealth Fund. Never mind how, in Malaysia, the fact that the new prime minister, Anwar Ibrahim, concurrently finance minister, has led to a coalition partner reassuring the public it won’t result in a 1MDB situation because scrutiny is higher and, in a multiparty coalition, executive autonomy is limited. Look instead at Norway, which has the world’s biggest sovereign wealth fund (built on windfall proceeds from oil and gas reserves), and lost a mind-boggling $174 billion in the first quarter of this year, a return on investment of negative 14.4 percent. This was the largest six-month loss in the 26 years that the fund has existed. Reuters reported the losses were led by a 28 percent “plunge in the value of its technology stocks.” Temasek, in our region considered the gold standard in sovereign wealth funds, is itself licking its wounds after it had to write off its entire $275 million investment in FTX, the world’s third-largest cryptocurrency exchange, which recently collapsed.

Temasek declared it would conduct an internal review of the loss, which, after all, has potential political repercussions. This was clearly demonstrated by two officials who have had to issue statements on the loss. Temasek reports to the minister of finance, Lawrence Wong, who is also deputy prime minister—and widely considered to be next in line to be PM. He told parliament, “What happened with FTX, therefore, has not only caused financial loss to Temasek, but also reputational damage.” Not only was taking a hit “disappointing,” he said, but furthermore, “the loss arose from what turned out to be a very badly managed company, and from possible fraud and mishandling of customer funds. The fact that other leading global institutional investors like BlackRock and Sequoia Capital also invested in FTX does not mitigate this.”

This also meant that the former chief of Temasek, Ho Ching, who happens to be the wife of Singapore’s current PM, feels compelled to weigh in. The Asia Sentinel quotes her saying on Facebook: “A loss in what may turn out to be a badly managed company without adult supervision is egg on our face.” She stated that the loss can’t be written off as minor in the overall scheme of things since “This amount can pay for a lot of electricity and water bills, and be invested in other companies or assets.” And yet, as the Asia Sentinel reported, Singapore’s due diligence on the investment took all of eight months.

Even domestic opinion may be less supportive than the machinery expected. The most junior senior deputy majority leader in our history, Ferdinand Alexander Marcos III, went before the already-generally-docile media to reassure pensioners that the Social Security System (SSS) and the Government Service Insurance System (GSIS) payouts wouldn’t be endangered by the family scheme. But his eyes, swore some in the peanut gallery, seemed to be blinking a Morse code reassurance to those in the know (“what is truly safe is that we will actually use the pensions funds”). Of course, that wasn’t the case—sometimes a blinking freshman congressman is just that.

The good folks at Bilyonaryo [BizBuzz] suggest Central Bank governor Philip Medalla is mentally (and morally) prepared to merely serve out ex-governor and current finance chief Gollum’s term, preferring to speak truth to power even if it imperils his chances of being appointed to a full term. This may explain Medalla’s statement, described as “lukewarm” by Bloomberg, that the Maharlika scheme is a “governance” issue. Even former president and current Deputy Speaker Gloria Macapagal Arroyo said Maharlika is a scheme whose time has come, pointing to Temasek while making this masterfully ambiguous defense: “The success of any fund, sovereign or private, lies in the quality of its management. In the current version of the Maharlika Wealth Fund, the President of the Philippines chairs its governing Board.” Adding that: “This is a powerful statement that the highest official of the land will hold himself as ultimately accountable to the Filipino people for the performance of the Fund,” which is code for saying how brave of the president for volunteering himself to go directly to jail if the scheme goes south. Her statement reminds me of this bit of dialogue from the brilliant British satire on politics, “Yes, Minister”:

Sir Frederick “Jumbo” Stewart: “There are four words to be included in a proposal if you want it thrown out.”

Sir Humphrey Appleby: “Complicated. Lengthy. Expensive. Controversial. And if you want to be really sure that the Minister doesn’t accept it, you must say the decision is ‘courageous.’”

Bernard Woolley: “And that’s worse than ‘controversial?’”

Sir Humphrey Appleby: “Oh, yes! ‘Controversial’ only means ‘this will lose you votes.’ ‘Courageous’ means ‘this will lose you the election!’”

It doesn’t help that an opinion is circulating attributed to former Supreme Court senior associate justice Antonio Carpio which is that SSS and GSIS funds come from contributions by members, so what the agencies earn must be for the benefit of members exclusively; but the Maharlika scheme is supposed to benefit the entire country, which is tantamount to taking private property for a public purpose without just compensation, which is unconstitutional. Sen. JV Ejercito for his part issued a clarification: neither his nor Bam Aquino’s bills on a sovereign wealth fund proposed using government pension funds. The core of the opposition then are the future pensioners whom Senior Deputy Majority Leader Marcos III felt compelled to try to reassure.

Manuel L. Quezon III.

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