[Vantage Point] Is public money unsafe in GSIS hands?

In the 12 months since, the GSIS has incurred an estimated paper loss of SGD430,865 (approximately ₱19.1 million). Its stake has declined from SGD1,324,509 (₱58.7 million) to SGD893,644 (₱39.6 million) — a 32.5% loss, with more potential losses to come.

Del Monte Pacific — now teetering under US$2.3 billion in debt, facing massive write-offs, and delivering negative shareholder returns across all time horizons — fails every test of prudence.

What is deeply alarming is that GSIS has not trimmed or exited its position despite: persistent losses over the last five years; warnings of balance sheet distress; public news of US bankruptcy and deconsolidation, and a sharply deteriorating debt profile.

The government-owned and -controlled social insurance institution’s latest and damning gambit into Alternergy Holdings is not just a case of questionable investment judgment. What has emerged is a layered tale of oversight failures, regulatory red flags, and a struggling renewable energy company with deteriorating financials. At its heart lies a crucial question that demands an answer: Was this investment a well-intentioned bet on green energy, or a calculated maneuver in breach of fiduciary duty?

Alternergy Holdings is a Philippine renewable energy developer engaged in wind, solar, hydro, and battery storage projects chaired by former energy secretary Vince Perez. On paper, it’s the kind of investment that a pension funds company might be tempted to back in the age of ESG (Environmental, Social, Governance). But the execution of GSIS’s investment reads less like a carefully considered strategy and more like a backdoor deal executed in haste.

On November 7, 2023, the GSIS agreed to purchase 100 million perpetual preferred shares from Alternergy at P14.50 apiece, totaling P1.45 billion. Perpetual preferred shares are hybrid instruments — part equity, part fixed-income. Unlike bonds, however,  they do not have a maturity date. That alone makes them illiquid and risky for a pension fund that needs steady, secure returns to meet long-term obligations.

What’s more troubling: the deal allegedly did not undergo the required internal clearance. Under GSIS’s 2022 Investment Policy Guidelines, any equity investment of this magnitude should have passed through the Assets and Liabilities Committee (ALCO), the Risk Oversight Committee (ROC), and ultimately the GSIS Board of Trustees. None of these internal clearance levels appears to have been secured.

The P1.45 billion was not GSIS’s first foray into Alternergy. On March 13, 2023, the pension fund had already invested P85 million prior to the company’s Initial Public Offering (IPO). This initial tranche was small enough to escape high-level scrutiny. When taken together, these transactions exceed the P1.5 billion threshold that would require full board approval. According to the Commission on Audit (COA), this is tantamount to transaction splitting — a maneuver often used to evade oversight.

Alternergy eventually listed on the Philippine Stock Exchange (PSE) on March 24, 2023, debuting with a market capitalization of P4.9 billion, which is far below the P15 billion minimum reportedly required under GSIS policy to qualify as an investible company. As of July 18, 2025, Alternergy’s market cap has fallen another 14% to just P4.2 billion. Not only did the company not meet initial listing requirements, but its decline since its IPO further undercuts any justification for the scale of GSIS’s investment.

What is perhaps most startling and concerning is that Alternergy is now highly overleveraged. With P8.2 billion in debt and P4.3 billion in equity, the company’s debt-to-equity ratio stands at a distressing 194%. Its interest coverage ratio — a measure of its ability to pay interest on outstanding debt — is a dangerously low at -5.9x, implying that its core operating income is not only insufficient to cover interest, it is deeply in the red.

Its cash balance of P3.2 billion may appear sufficient for now, but with free cash flow bleeding P3.4 billion annually, that runway won’t last a year. Inexplicably, the company declared an approximately P40 million cash dividend on July 15, 2025, payable in September — raising questions about management’s priorities and whether financial optics are being massaged for investor confidence.

The Office of the Ombudsman has left little room for ambiguity. The suspension order explicitly stated that Veloso and his co-respondents demonstrated “a strong indication of administrative liability,” and warned that their continued presence at the GSIS could compromise the investigation. The order is immediately executory, meaning no appeal, petition, or motion can delay it, unless overruled by a court or the Ombudsman itself.

Cited under Section 24 of Republic Act 6770 or the Ombudsman Act of 1989, the suspension is valid for up to six months, unless the officials themselves delay proceedings. Investigators are particularly focused on whether the suspects may have tampered with or will tamper with key documents, altered financial records, or influenced witnesses.

As of writing, the GSIS has not issued a public response.

The implications of this scandal are far-reaching. The GSIS is one of the Philippines’ largest institutional investors, managing over P1.8 trillion in assets. The fund exists to provide retirement, disability, and life insurance benefits to government workers — such as schoolteachers, soldiers, police, healthcare workers — many of whom live on fixed incomes. A misstep of this scale, compounded by potential legal liability, threatens to undermine public trust in the country’s pension system itself.

If the P1.45 billion investment proves unrecoverable, this will represent a direct hit to the fund’s capital base and, more critically, a loss that the government may ultimately be forced to backstop with taxpayer funds.

The GSIS-Alternergy case encapsulates a dangerous convergence of poor financial oversight, dubious governance, and the seductive narrative of ESG investing. A state pension fund — mandated to protect the long-term security of its members — appears to have deviated sharply from its own mission and policies. And it did so, not just once, but twice.

While renewable energy deserves patient capital, and while risk-taking is not inherently wrong, the way this investment was executed appears to have been riddled with shortcuts and potential concealment. At a minimum, the GSIS’s internal controls failed catastrophically. At worst, they were deliberately sidestepped.

This episode serves as a stark warning to other state pension funds in the region: mission drift — when combined with opaque deal-making and weak internal guardrails — can transform well-meaning investments  into ticking time bombs. – Rappler.com