Anonymous loan defaults

Some debtors of the Government Service Insurance System (GSIS)—the primary financial lifeline of majority of retired government employees—are smarter than others. They were able to obtain loans from the GSIS for free.

The latest audit report of the Commission on Audit (COA) on the GSIS had shown that P2.11 billion in loans, with unpaid interest of P823.15 million, by 21 private companies remain outstanding for 24 to 53 years, or as far back as the 1970s.

The COA had attributed that huge amount of uncollected debt to the failure of the GSIS to come up with a concrete action plan on its settlement.

With its corps of highly-paid lawyers and accountants, it comes as a big surprise that the GSIS had been remiss in its fiduciary obligation to preserve and protect the contributions of its members.

In the legal circles, debt collection and mortgage foreclosure are considered “de cajon” (or templated) or similar to a cut-and-paste process that a rookie lawyer can do with minimum supervision.

And referring those accounts to collection agencies is out of the question because of the strict rules against the engagement of outside lawyers to handle government cases.

Considering the simplicity of those actions, which are basically documentary in character, it is doubtful if the Office of the Solicitor General, which passes upon referrals to private lawyers, would agree to that arrangement.

Noticeably, the identity of the 21 deadbeats was not disclosed by the COA. Instead, it named them as “Company 1, 2 and 3” and did a striptease-style of indirectly identifying them by describing the properties they had mortgaged to secure the payment of their loans.

The readers of the audit report who may be interested in finding out who those loan defaulters are can simply ask around in the business community or go to the internet’s search engines to find out the stockholders are of the companies that own the mortgaged properties.

Judging from past experience with reports of a similar nature, the reneging debtors could be politically exposed persons, influential government officials or their close relatives, or erstwhile high-flying business persons whose businesses had floundered.

The debts may even be in the nature of “behest loans” which gained notoriety in the past as the reason behind the collapse of some government financial institutions.

In keeping the identity of the debtors under wraps, the COA may be playing safe lest it step on sensitive toes. Of course, it can argue that observing the rule of omerta (or silence) in its report is consistent with existing data protection rules.

Well, if those debts were sourced from private banks, that argument may fly. The rule of thumb is, data on transactions that involve private parties cannot be publicly disclosed without the express agreement of the parties or if it is a matter of national interest.

But note that under Republic Act No. 10173 (or Data Privacy Act of 2012), the rule on confidentiality of private data does not apply to “information relating to any discretionary benefit of a financial nature such as the granting of a license or permit given by the government to an individual, including the name of the individual and the exact nature of the benefit.”

The mention of “license or permit” should not be construed as limiting the nature of a financial benefit to those two items only. They are merely descriptive or examples of the financial benefit the government can give to a person.

If the lawmakers intended to restrict the application of the coverage of financial benefit to license and permit, it would have done away with the phrase “benefit of a financial nature”—simple and no longer subject to interpretation.

In 2019, then GSIS president Rolando Macasaet sent a letter to GSIS members asking them to pay their loan amortizations on time. He further said “Responsible borrowing keeps the pension funds healthy. Up-to-date loan payment makes the GSIS fund adequate to lend to other members as well.”

The same message should be sent to and forcefully enforced on the 21 companies that have made a piggy bank out of the premium contributions of government employees. INQ

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