They Got What They Wanted

The controversial Maharlika Bill was passed by the Legislature.

To be fair the bill was approved through the democratic process in the House and the Senate. Never mind that some 300 Congressmen signed off on a complex bill in merely seven days (the time it took God to create the world) what it took some 5 months for 24 Senators to assess. This tells us our Representatives are either intellectually more gifted than their Senate peers or, as is more likely the case, they never read it. The Senate vote was 19 in favor and one against (Sen. Hontiveros). Sen. Nancy Binay abstained and Senators Imee, Escudero and Pimentel did not show up. The latter probably thought it better to remain silent and absent than bend over.

Never mind that Maharlika will weaken our financial system. The BSP is now mandated to hand over 100% of its dividends to the Fund, monies that were allocated to shore up the BSP’s capital. The DBP and the Landbank will have to contribute P75 billion to Maharlika diverting funds allocated for lending to SMEs and agriculture.

Never mind that Maharlika will crowd out resources for education, health and social safety nets.

Never mind that the Dept. of Finance wants to merge the DBP and the Landbank to strengthen their capital base (and lay off several thousand DBP employees); while in the same breath forcing them to hand over 50% of their capital to the Maharlika Fund which will weaken them.

Never mind that the Fund was deemed too risky for the GSIS and SSS to invest in but not too risky for the DBP, the LB and the Filipino taxpayer to do so.

Never mind that the DOF wants to reduce pensions of the military for fiscal reasons while diverting hundreds of billions to a Fund with no track record, no value added and no disclosed management.

Never mind that the DOF wants to downsize the Government bureaucracy potentially laying off 300,000 civil servants; when Maharlika will be spending in its first year P2 billion for salaries and admin expenses.

The DOF Secretary will likely chair the Fund with an attractive compensation.

The bill’s passage is what investment bankers call a “cram- down”. The essence of a cram-down is the application of superior power however legitimate to screw hapless and unsuspecting minority holders.

What makes the Maharlika bill a cram-down?

One, the President assured reporters in January the bill would be passed even before he knew what it would look like. A Chief Executive only speaks this way when he knows the deal has been wired.

Two, the House approved the bill in record time with minimal due diligence. The Senate superficially consulted a few business groups and academics but by and large dismissed their key concerns. The Senate President shortened interpellations even if there were no real reasons to rush the bill. There are unanswered questions like who will manage the Fund, an essential disclosure.

Three, the bill was passed against the opposition of the academic community, the intelligentsia and business associations. The latter’s  CEOs most of whom compose the Presidential Private Sector Advisory Council; were mum.

The average Filipino did not oppose the Maharlika bill because he does not understand it. Like mushrooms, the public is kept in the dark and fed manure.

Four, the Fund was cleverly designed so its sources of funding – GFI monies, BSP and PAGCOR dividends and privatization proceeds – and its uses are not subject to budgetary scrutiny. Sec. Diokno was previously Budget Secretary so he knows where all the dead bodies are.

Five, the Fund has no reason for its existence. Our finance team assures us the Fund will trigger “inclusive and sustainable economic growth” without saying how.

What have we learnt from Maharlika?

One, after a year of treading carefully lest it be compared to the first Marcos Administration, this Government is now playing hard ball. The passage of Maharlika has shown how easily it can get away with what it wants. 

Two, we have a failed democracy. The constitutionally mandated system of checks and balances among the three branches of Government – the Executive, the Legislative and the Judiciary – is gone. The House is severely compromised with the President enjoying a super majority. The Supreme Court is the last bastion of democracy so let us see what happens when the Maharlika bill is brought before it. 

Three, there are no longer any safety valves in the Executive. Our economic team is now drinking from the same political Koolaid as its master. Our technocrats are now totally politically subservient to Malacanang. In its eagerness to please the Palace, our finance team rushed an initial Maharlika draft to the House which was so shabby even our Congressmen and women berated it. And these are the people tasked with protecting our Treasury.

There have been some differences of opinion between BSP Gov. Philip Medalla and DOF Sec. and ex-BSP head Diokno on Maharlika with the former initially expressing reservations. Medalla’s term ends this month and Diokno has said: “The new BSP head should be better than the incumbent”, degrading words for someone he recommended to replace him last year.

The Maharlika Fund is seemingly the last piece in a scheme to politically and economically dominate this country for decades. There is no visible opposition although there are rumblings from the Sara group now allied with GMA and Imee with former President Duterte stirring the pot. PPRD is still bent on making his daughter President. He is extremely popular with the military and police whose salaries he doubled; and the general population. Sara will not go against BBM to whom she has pledged loyalty and she is probably good for her word; at least until 2028. Malacanang insiders however are fair game. Note that Sara won the VPship with 32 million votes vs the 31 million votes of BBM for President.

The “pinks” are another solid political base (Leni garnered some 14 million votes) but they are lacking a strong leader. It is hard to see them ideologically allying with Sara for what would be a formidable group but if sufficiently angered by what is going on anything could happen.

The military has remained silent but there are ripples of discontent with the announcement their pensions will be cut. The Palace with the help of the U.S. will try to appease them. PBBM is a little more comfortable now that his trusted friend Gibo Teodoro is Defense Secretary but the jury is still out on this one.

The rapid and easy passage of Maharlika will embolden this Government to push the limits of its power. The rumor is a BBM family member will run for the Senate in 2025 to further cement their hold on the nation. With the money in place and the Legislature in its pocket our Government looks to be a family affair for some time.