Negative Allegations on RICH
16 November 1998
RSBS Investment House a Vehicle for Fund Growth and Economic Development
With regard to allegations reported in your November 16, 1998 issue that the Resources and Investments Corporate House (RICH) was used as a "vehicle to siphon money legally from the RSBS for the personal benefit of a few high-ranking officers and civilians," the AFP Retirement and Separation Benefits System (RSBS) categorically denies and laments the falsity and gross inaccuracy of such baseless accusations wanting attention and clarification. RICH, formerly the RSBS Investment House Corporation, is a wholly-owned subsidiary of RSBS which provides financial advisory and capital raising services to both the private sector led growth initiatives and the government’s own large infrastructure and modernization projects. Established in 1996 with the vision of becoming a premier investment house in the country. RICH aims to develop and merchandise financial products and services that will enhance the earning capability of its parent company, RSBS, ultimately for the benefit of its soldier-members. RICH is a lawful and worthy investment of RSBS which has performed considerably well despite its very short period of operations and the current economic crisis. From an initial capitalization of P200 Million in March 1996, total assets of RICH as of December 31, 1997 amounted to P210 Million as reported by its external auditors Alba, Ledesma and Company. Interim or unaudited financial statements as of end-September 1998 reveal that year-to-date income after tax amounted to P5.9 Million, while total assets increased to P265.7 Million (inclusive of a P50 Million additional equity infusion last March 1998 as required by the Bangko Sentral ng Pilipinas) with liabilities of only P7.2 Million. These figures will show that the RSBS initial equity investment of P200 Million has not "disappeared" as reported but has, in fact, even grown. As an investment house, its activities and financial performance are strictly monitored by the Bangko Sentral ng Pilipinas. Hence, it is quite impossible to give the allegations of using RICH to siphon money legally from RSBS by certain officials, any benefit of truthfulness or any intelligent attention. With respect to the recurring issue of conflict of interest which has repeatedly been the subject of controversy, RSBS would like to, again, correctly note and emphasize that officers of RSBS who are also members of the Board of Directors and Officers of any RSBS project, affiliate or subsidiary, merely hold qualifying shares as nominees of RSBS. They do not hold any personal investment or interest, whatsoever, other than representing and protecting the interest of RSBS and its soldier-members in its investments. Suffice it to say that whatever profits these subsidiaries and affiliates earn through business operations, the earnings or dividends are then remitted to the parent company, RSBS, and not to the assigned officers or nominees who do not own the RSBS shares in the first place. This has been a time-honored business practice of responsible representation consistent with our mandate to protect and safeguard our members’ interest, which has, for no credible reason, been questioned by many quarters for the sake of merely justifying flawed, unproven and unfair speculations, to perhaps further put the System in a bad light. In fairness to Vice Admiral Luisito Fernandez, we would like to make it clear that he was never involved in the organization of RICH. He became Chairman of RICH only on July 1, 1996, a full four months after the company’s incorporation and only by virtue of his appointment by the RSBS Board of Trustees which he was then a member of in his capacity as AFP Comptroller. When Vice Admiral Fernandez ceased to be AFP Comptroller and hence, also ceased to be an "ex-officio" member of the RSBS Board, he relinquished the Chairmanship to then RSBS President BGEN Jose S. Ramiscal, Jr. (Ret.). Upon General Ramiscal’s resignation from the System last July, the Chairmanship of RICH was then assumed by LtGen Ismael Z. Villareal, who is concurrently the RSBS President and the AFP’s Vice Chief of Staff. As a business investment of RSBS, RICH is a viable and noteworthy undertaking of the System pursued with the interest of its contributing members in mind. RICH was formed with the noble intention of further enabling the System to have better access to the financial markets and be able to take advantage of the opportunities in the highly competitive business sector with the end goal of enhancing the security and diversification of the soldiers’ pension fund. We sincerely hope that our members will come to appreciate these investment projects and opportunities that will accelerate the growth of the soldiers’ pension fund, which incidentally, has a performance record of increasing from a mere P162 Million in 1977 to almost P10 Billion in just two decades of operations.
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