Cutting off your
nose to spite your face

WHEN Philippine Ambassador to the US Albert Del Rosario asked for the Filipino community's support to lobby the California Public Employees Retirement System (CalPERS) not to pull out its investments from the Philippines, more than 300 Filipino-Americans heeded his call and showed up at the CalPERS auditorium in Sacramento on March 15 to express their solidarity with the Philippines.

"We are a very poor country," Ambassador Del Rosario told the 13 CalPERS trustees, and we badly need to attract investments and create jobs," he said. "An unwarranted indictment from CalPERS could be a major factor in delaying this forward advance and could lead to an exacerbation of our problems. I don't think your intention is to hurt or damage our country."

Based on the failing grade for the Philippines that was provided by its contractor, Wilshire Associates, CalPERS had been set to divest itself of the 67 million dollars it has invested in companies in the Philippines.

The Philippine ambassador warned that a CalPERS withdrawal would send a signal to other investors not to invest in the Philippines and that this would trigger a run on the Philippine stock market that would cause it to plummet.

Wilshire Associates managing director Rosalind Hewsenian was clearly not concerned with any damage that would be inflicted on the Philippines.

At its February 17, 2004 meeting, the CalPERS board had given the Philippines 30 days to provide Wilshire Associates with information to justify a passing grade. A meeting with Wilshire and Philippine officials was set for March 3 but, ahead of this meeting, on March 1, Wilshire prematurely published its recommendation to delist the Philippines.

The World Bank's favorable assessment of the Philippines, which would have been worth .125, was not included in the country's grade for 2003 because, according to Hewsenian, it was only published in March of 2004. But, as Hewsenian herself admitted, the World Bank is notoriously slow in preparing its reports. So a March 2004 report must have reviewed and assessed 2003 and not just the first three months of 2004. This was critical because Wilshire wanted to ignore the World Bank's favorable assessment.

The Philippines previously received a 1.46 grade, just below the 1.5 minimum grade required to remain on the CalPERS list of permissible countries to invest in. After passing laws and regulations required by CalPERS, the Philippines' rating improved to 1.87, an increase of .41, by far the largest increase of any country. But Wilshire had raised the passing bar to 2.0 and the Philippines' score was not enough.

Ambassador Del Rosario disputed the grade of 1.87 by pointing out that Wilshire had not accorded the Philippines sufficient credit for adopting the IONESCO principles which should have added another .125. The World Bank's favorable rating would have awarded another .125 to add to a total of 2.125, well above the minimum required for the Philippines to retain its CalPERS investments.
But Wilshire directed its third party source, Oxford Analytica, to include the World Bank's favorable rating of the Philippines for the 2004 assessment to deny the country credit for the 2003 year.

To justify the failing marks that Wilshire awarded the Philippines for "political stability," Hewsenian pointed as examples the impeachment of the country's Central Bank governor and its Chief Justice.

The largely Filipino audience hooted and hollered that this was false. National Federation of Filipino American Associations national vice chairperson Greg Macabenta shouted, "You're supposed to be accurate."

CalPERS trustee and state controller Steve Westly advised Wilshire to be careful when it comes to the image of political stability. To the laughter of the audience, Westly said, "Let's not forget, we impeached our last president and just recalled our governor."

I had a front view of this colorful exchange as I sat behind the table on the front row to the right of Ambassador Del Rosario and beside Wilshire director Hewsenian.

I was startled when Ms Hewsenian commented that she had received e-mail and calls from Filipinos in the Philippines who supported Wilshire's recommendation to "delist" the Philippines.

Who are these Filipinos? Why do they want to see the Philippine economy suffer? What is their agenda?

Are these Filipinos connected with or supportive of the opposition candidates in the Philippines? Do they view the delisting of the Philippines by CalPERS as a major campaign issue that can be used against Philippine President Gloria Macapagal-Arroyo? A failing economy is certainly ammunition for the opposition.

As Macabenta pointed out, the folly of this self-destructive act is "like killing your mother because you dislike your sister." It's like cutting off your nose to spite your face.

The CalPERS trustees should demand that Ms Hewsenian publicly disclose the identities of the Filipinos who have contacted her to lobby her to delist the Philippines. If the Philippines loses its CalPERS investments, the blame should be placed squarely on the shoulders of these quislings.

In my brief remarks to the CalPERS trustees, I introduced myself as a 13-year publicly elected member of the San Francisco Community College Board of Trustees. "Like you," I said, "we also hire our share of contractors like Wilshire Associates to do evaluations and make recommendations. But, like you, we never abdicate our judgment for theirs. They only recommend, we decide."

I also pointed to a quote from Theologian Harry Fosdick that I had just read in their own CalPERS handbook -- "He who chooses the beginning of a road chooses the place it leads to. It is the means that determine the end.

"When you choose a road, you also choose the place it leads to. If you choose the road of retaining your investments in the Philippines, you choose the road of prosperity for the Philippines. You choose to help a poor country lift itself up by providing investments and jobs.

Or if you choose to pull all your investments out of the Philippines, you choose the end of economic failure for the Philippines, condemning 83 million people to a future of endemic poverty.

"You have the means to determine which end you want to see for the Philippines."

At the end of the long session, the CalPERS board voted unanimously to grant the Philippines a 30-day reprieve, directing Wilshire Associates to review the current figures and to make the appropriate adjustments in the Philippines' score.

CalPERS will meet again in Sacramento on April 19. If you're free on that date, make plans to go to Sacramento. Your Mother needs you.

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