The Office of the Ombudsman placed Government Service Insurance System (GSIS) President Jose Arnulfo “Wick” Veloso and six other officials under a six-month preventive suspension without pay for the purchase of P1.45 billion in preferred shares from Alternergy Holdings Corp. in November 2023.
In a seven-page order dated July 11, the anti-graft body cited that it found sufficient grounds to suspend Veloso, executive vice president Michael Praxedes, executive vice president Jason Teng, vice president Aaron Samuel Chan, vice president Abigail Cruz-Francisco, officer II Jaime Leon Warren, and acting officer IV Alfredo Pablo.
This is “considering that there is strong evidence showing their guilt” of possible grave misconduct, gross neglect of duty, and violation of reasonable office rules and regulations over the P1.- billion stock purchase from Alterenergy.
Despite the order being executory, the Ombudsman ruled that Veloso and the six other officials can still file an appeal on their suspension.
As this developed, the Government Service Insurance System (GSIS) Board of Trustees on Tuesday said that all services and programs remain uninterrupted, despite the preventive suspension of several officials by the Office of the Ombudsman.
In a statement, GSIS said its board has acted promptly to ensure business-as-usual across all services and core operations.
“All programs, member transactions, and benefits delivery remain fully operational and uninterrupted,” GSIS said.
In line with established governance protocols, the Board designated Juliet M. Bautista, executive vice president for Support Services, as Officer-in-Charge (OIC) of the GSIS during a special board meeting on Monday.
Bautista will temporarily assume the responsibilities of president and general manager to provide steady leadership and assure continued service to all members and pensioners.
In its resolution, the Ombudsman said: “The [Ombudsman’s Results of Investigation] expounded that the provisions [of the GSIS Investment Policy Guidelines] were contravened by the respondents because: the Perpetual Preferred Shares were not listed with the PSE (Philippine Stock Exchange) on the dates of the execution of the agreement and the payment of the subscription, the investment was non-compliant with the Minimum Market Capitalization and exceeded the Free Float Market Capitalization Cap.”
The GSIS executives allegedly purchased the preferred shares without the necessary endorsement from the Assets and Liabilities Committee and Risk Oversight Committee for the approval of the Board of Trustees.
“Their continued stay in office may prejudice the investigation of the case filed against them. [The suspension order is being issued] in order to preserve documents and evidence pertaining to this case which they have control and custody; and in order to avoid respondents’ commission of further malfeasance and/or misfeasance in office,” the Ombudsman said.
Meanwhile, renewable energy developer Alternergy Holdings Corporation said its P1.45 billion transaction with Government Service Insurance System (GSIS) was fully documented, transparent and above board.
Iin a statement, Alternergy said GSIS will yield 56 percent rate of return, or P826 million profit, on its P1.45 billion investment in the company.
It said GSIS’ investment supports acceleration of Alternergy’s Green Energy Auction Program 2 awarded projects and government’s goal of energy transition.
It reiterated its unwavering commitment to ethical practices, transparency, and accountability in all its transactions, including the investment by the GSIS.
“We are confident that all our actions adhere to the highest standards of governance,” said Gerry Magbanua, Alternergy president. “Maintaining stakeholder trust is at the core of everything we do.” He added that Alternergy stands ready to cooperate with any official review.
GSIS subscribed to the company’s perpetual preferred shares (PPS) of Alternergy in December 2023. The PPS enjoy a preference in distribution and liquidation over common shares, are non-voting and non-convertible, have a coupon of 8 percent per annum with a step up on its 7th anniversary, and are redeemable at a premium to GSIS beginning on the 5th year. The PPS were listed on the stock exchange in March 2024 and are tradeable securities.
Alternergy said it has already remitted the first PPS coupon totaling P118 Million to GSIS in December 2024. This coupon is payable every year and effectively gives GSIS a 56 percent return on its investment in the PPS, totaling P826 Million, over 7 years.
It said the funds used to subscribe to the PPS amounting to P1.45 billion will be returned to GSIS in full at the end of the investment period.
Proceeds of the investment were utilized for accelerating the development of GEA 2 program of the Department of Energy (DOE) as part of four projects under construction totaling 225 MW capacity.
“This affirms the soundness of GSIS’ investment decision in Alternergy, and reflects its and its members’ commitment to renewable energy and sustainability,” Magbanua said.
Alternergy also assures stakeholders of its financial strength and disciplined management.
