THE GOVERNMENT Service Insurance System (GSIS) has come a long way from its founding as a pension fund to a state war machine seeking the destruction of its branded enemies in the private business sector.

The GSIS underwent its most rapid transformation from being purely a custodian of the contributions of hundreds of thousands of civil servants into a giant investor in the stock market as well as a political storm trooper of the unpopular Arroyo administration.

The political role of the GSIS was sharply outlined in the unprecedented offensive mounted by its president and general manager, Winston Garcia, to grab control of Manila Electric Co. (Meralco) from the Lopez family on behalf of President Gloria Macapagal-Arroyo.

The war against the Lopez business conglomerate came to a showdown at the Meralco annual stockholders’ meeting on Tuesday. The Lopezes retained a precarious majority in the 11-member Meralco board of directors in disputed results of the proxy votes garnered by the family.

The rapid transformation of GSIS functions from purely financial transactions in the market took place in the milieu of a government on a war footing since it was elected in the 2004 presidential election, whose results were marred by charges of rigging in the Commission on Elections.

This government has declared war to crush the communist insurgency and its political enemies in the legal system by the end of its term in 2010. This is the backdrop against which the GSIS and Meralco conflict has been staged.

War on two fronts

This has put the government at war on two fronts — the military-police-security sector and the financial sector. In the latter, the main combat zone is defined by the government’s campaign to demolish the Lopez family’s 47-year control of Meralco and its other power base and sister company, ABS-CBN radio-TV network.

Meralco and ABS-CBN stand astride two strategic sectors of the economy and information dissemination — the first crucial to industrial expansion and the second, in influencing public opinion. ABS-CBN, the country’s dominant private broadcasting combine, has been identified as consistently critical of the Arroyo administration.

In the war on insurgency, the toll has been bloody, with nearly a thousand casualties in the shape of the extrajudicial killings of leftist suspects operating in the legal political system. Death squads associated with the security and military forces are believed to be behind the killings.

The trail is not soaked in blood in the financial sector, where the government has opened a new front without calling in uniformed men. But without the clash of arms, the government has mobilized its immense financial resources in takeover bids, the most blatant example is the GSIS campaign to dismount the Lopezes from Meralco.

Garcia has Arroyo blessing

In some of the interventions of the GSIS in the market, aside from funding home loans and real estate development projects, it has pumped money into investments that the GSIS has helped through buy-outs of proxy votes in certain bank takeovers, such as, according to a recent report by Newsbreak magazine, the takeover by the Sy family of control of Equitable-PCIBank from the Go family.

According to Newsbreak, Garcia had laid the ground for increase of GSIS shares in Meralco several months ago, with the blessings of Ms Arroyo. Garcia engineered a buyout that increased its shares in Meralco from an initial 8 percent. It bought more shares in the open market, so that it now owns 23 percent of Meralco, allowing it to mount a strong bid to increase its seats in the Meralco board in Tuesday’s meeting.

In all of the GSIS interventions to leverage takeovers, which expanded its presence in the stock market, none caused more alarm in the private business sector over the state’s creeping interventions than the takeover attack on Meralco because of its overt political color.

Shock force

For the first time, the GSIS started to uncover itself that it was acting as the administration’s shock force for a narrow political agenda. During the Meralco takeover campaign, Garcia emerged as the front man and the ugly face, combative, confrontational, pugnacious and inquisitorial. His arrogance and bullying terrified the business community.

No longer did the conflict appear as a contest for control of proxy votes in the free market.

Garcia had morphed from a manipulator of the stock market, backed by millions of pesos of the pension fund, into a political agent, promoting partisan interests, an investigator and prosecutor of alleged misdeeds of Meralco, hit man to oust the Lopez majority in the Meralco board, and, worst, a “crusader” to bring down electricity rates on behalf of electricity consumers victimized by Meralco’s alleged rip-off.

More comprehensive than ASSO

Garcia has led the lodging of charges in the Energy Regulatory Commission and the Securities and Exchange Commission against Meralco officials for alleged irregularities, including “large-scale estafa” and of invalidating the results of the board election. These charges are blanket in coverage, including criminal charges.

Nothing more comprehensive has been issued by any Philippine administration since 1972 when President Ferdinand Marcos, armed with martial law, issued the notorious ASSO (arrest, search and seizure order). ASSO allowed Marcos to jail his opponents and to seize Meralco from the Lopez family.

Garcia has exercised prosecution powers that shaded the justice department in its most repressive moment, making Secretary Raul Gonzalez look harmless. The cover for all these posturing is that it is all for the purpose of bringing down electricity charges.

Little has been said by Garcia about how the electricity charges can be reduced, except through the simple formula that when the GSIS takes over control of Meralco, lower electricity charges will follow.

Edicts will be issued fixing the rates. Nothing is said about whether government takeover of electricity generation and distribution will result in more efficient and profitable operation.

Government, big brother, knows best. Trust us, Garcia says.

This, in simple terms, is seizure of assets without guns and soldiers.

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