Bangko Sentral ng Pilipinas. (File photo / Philippine Daily Inquirer)
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) said the Monetary Board (MB) can still perform most of its functions even as the “unprecedented” scandal involving “ghost employees” fuels speculations of a shakeup at a crucial time for the economy.
In a statement, the BSP said the seven-member MB, the highest policymaking body of the central bank, can decide on all major actions as long as there is concurrence of at least four members.
Normal operations
Five MB members have to concur when granting emergency loans in times of financial panic that can threaten financial stability.
“The Monetary Board has functioned as normal,” the BSP said “in response to speculation that vacancies may occur that would affect the board’s operations.”
Sources said the BSP wants to recover a “significant” amount of salaries and bonuses paid to the ghost employees, as well as give the MB members tied to the controversy an “orderly exit.”
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Various reports link MB members Bruce Tolentino and Anita Linda Aquino, both appointees of former President Rodrigo Duterte, to the controversy.
In October 2023, the BSP said the Office of the General Counsel triggered an investigation after receiving “credible” information that several staff members in the offices of two MB members had not been reporting for work for extended periods of time but were nonetheless receiving their salaries.
The investigating team later identified four employees and their two immediate supervisors. From late February to early March, four of the employees and one direct supervisor implicated in the probe tendered their resignation. Administrative disciplinary cases were filed in March before the effectivity of their separation.
‘Highly politicized system
The scandal could potentially trigger a major revamp in the MB at a time when the BSP is battling stubbornly high inflation and tackling a volatile peso. Markets are watching how the BSP will come out of this crisis that has brought serious reputational risks to an institution revered for professionalism.
Robert Dan Roces, an economist at Security Bank, said the central bank’s “proactive” approach to addressing the issue suggests that the scandal’s impact on financial markets “may be managed and short-lived if any at all.”
“As the BSP continues to handle the situation transparently and decisively, it can help maintain confidence and minimize any lasting consequences,” Roces said.
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But Leonardo Lanzona, an economist at Ateneo De Manila University, said the controversy showed how the BSP was not spared from political risks.
“Markets cannot accept an institution that is as professional as the BSP to be infiltrated by these corrupt employees. First, it shows that institutional reforms have not developed strong enough to get rid of these practices,” he said.
“Second, the presence of these employees shows a highly politicized system. This could frighten away investors who place their trust in a fair and detached monetary system,” he added.