JOSE ARNULFO VELOSO, president/general manager of state-fund Government Service Insurance Corp., and five other GSIS officers were ordered suspended for six months by the Ombudsman over its controversial P1.45-billion investment in Altenergy Holdings of former Energy Secretary Vince Perez in Pililla, Rizal.
Reports said Ombudsman Samuel Martires ordered their immediate preventive suspension, without pay, that cannot be interrupted by any appeal, motion or petition, unless otherwise ordered by a competent court or the Ombudsman itself,” Bilyonaryo.com noted.
Veloso approved the deal without board clearance, exploiting a policy that allows investments under P1.5 billion to bypass board review, the business news portal said three days ago.
Also suspended were: Michael M. Praxedes, Executive Vice President; Jason C. Teng, Executive Vice President; Aaron Samuel C. Chan, Vice President; Mary Abigail V. Cruz-Francisco, Vice President; Jaime Leon K. Warren, Officer II and Alfredo S. A. Pablo, Acting Officer IV.
STRONG EVIDENCE OF GUILT
Martires in his order dated July 15 cited “strong evidence showing their guilt” for grave misconduct, gross neglect of duty, and violation of reasonable office rules and regulations, based on a preliminary investigation completed in January.
The probe found that GSIS’s subscription to 100 million perpetual preferred shares of Alternergy in November 2023 violated multiple provisions of the 2022 GSIS Investment Policy Guidelines (IPG) and was done without approval from the Board of Trustees (BOT).
GSIS bought the shares after Alternergy’s stock had fallen 31 percent below its IPO price of ₱1.28 in March 2023. The stock hit an all-time low of ₱0.65 in September and is currently trading at ₱1.06. The Alternergy scandal was first reported by Bilyonaryo in April 2024.
G.S.I.S. STRICTURES
Under GSIS investment rules, a)GSIS is only allowed to invest in stocks listed on the Philippine Stock Exchange (PSE) and issued by financially sound Philippine companies and b) Investments must be in companies with a minimum market capitalization of ₱15 billion.
GSIS cannot invest more than 10 percent of a company’s publicly traded shares, unless it seeks a board seat and gets prior BOT approval.
For newly listed stocks, the company must be worth at least ₱5 billion for trading purposes, or ₱10 billion for long-term holdings.
For Initial Public Offerings (IPOs) or Follow-On Offers (FOOs), companies must meet the same ₱5 billion (trading) or ₱10 billion (core portfolio) thresholds.
The Ombudsman noted that Alternergy’s shares were unlisted, did not meet capitalization requirements, and GSIS’ purchase was not endorsed by both the Assets and Liabilities Committee (ALCO) and the Risk Oversight Committee (ROC)—required steps before seeking BOT approval.
A month after the investment, Teng certified the ₱1.45 billion payment as a “lawful expense… incurred under his direct supervision.”
With Veloso’s imprimatur on the disbursement voucher, Warren and Pablo issued a payment instruction via real-time gross settlement (RTGS) to Cruz-Francisco, who, along with Praxedes, authorized Land Bank to debit the GSIS account and transfer funds to AHC’s BDO account.
Chan, investigators said, “justified” the purchase of shares despite noncompliance with the rules.
Under Section 24 of the Ombudsman Act of 1989, preventive suspension may be imposed when the evidence of guilt is strong, the charges warrant dismissal, or when the official’s continued stay may compromise the investigation.
All officials face suspension without pay for up to six months, pending the outcome of the case.
REBUTTAL FROM ALTENERGY
But Business Mirror reported that Alternergy Holdings Corp. on Monday cited a statement from its financial advisor, Investment & Capital Corporation of the Philippines (ICCP), saying that all its capital-raising activities are compliant with relevant laws and regulations.
Founded by former DoE Secretary Vince Perez, the renewable energy (RE) firm’s financial advisor said it adhered to strict regulatory requirements and market practices.
“All disclosures were made to regulators and investors in line with the best standards of fairness, transparency, and investor protection,” said ICCP President/COO Manny Ocampo.
Alternergy itself did not issue a statement following the suspension of Veloso over the pension fund’s P1.44-billion investment in Alternergy. Reports indicated that GSIS’ investment in Alternergy was executed without the green light of the state firm’s board.
In 2023, the GSIS injected a total of P1.45 billion into Alternergy’s perpetual preferred shares 2 series A under a private placement. Back then, GSIS said its investment would help the energy company push through its wind, solar, and hydropower projects.
As sole issue coordinator and joint lead underwriter, ICCP advised Alternergy in structuring and executing its IPO in March 2023, where it successfully raised funds to support its RE projects. The IPO met the stringent requirements of the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE), including the minimum market capitalization, track record, and profitability.
Following the IPO, ICCP also supported Alternergy as sole arranger in a Redeemable Preferred Shares (RPS) offering and its PSE listing. ICCP affirmed that the RPS issuance to institutional investor, GSIS, was conducted in accordance with corporate governance standards and existing securities regulations.
“These transactions followed strict due diligence and compliance processes. We ensured transparency at every stage of these transactions in line with our commitment to ethical and professional standards,” said ICC Chairman/CEO Val Bagatsing.
“In addition, Alternergy has reported to the PSE the payment of the first full annual coupon to the RPS in December 2024.”
Alternergy reported last May that its net income in the nine-month fiscal period ending March 31 reached P109 million, lower than the previous P158 million. The company cited a one-time gain from the full acquisition of the Tablas Straits offshore wind projects in the same period a year ago.
Revenues surged 43 percent to P261 million, up from P182 million, mainly brought about by the strong performance of its Palau Solar Battery Storage System project. EBITDA also went up by 9 percent to P291 million during the same period.
The company’s goal is to develop up to 500MW of additional wind, solar, and run of river hydro projects. Alternergy’s portfolio currently stands at 86 MW.
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