GPF: Internal audit can never replace independent probe

But when that move on Monday was seen as an attempt to pre-empt the demand from the Public Sector Anti-Corruption Commission (PACC) to check the GPF's books, there immediately arose questions ranging from a lack of transparency to attempted cover-ups.

That is not a pretty picture for a fund that looks after a combined investment portfolio of Bt380 billion. The officials' pension fund has insisted upon its professional management style all along.

The reported 5 per cent erosion of its portfolio value last year due to the collapse of stock prices wasn't such a major scandal in itself, considering the fact that the same decline also hit other major funds of a similar nature around the world.

Perhaps the only real problem for the GPF's management was that, having recorded an overall good performance in the past decade (averaging an annual return of 7.04 per cent), it had been too successful in the past. As long as the dividends kept coming, the 1.1 million pensioners with stakes in the fund weren't raising too many questions regarding how their pensions were really being managed.

But things turned sour as soon as the GPF's secretary-general Visit Tantisunthorn admitted earlier this year that the fund's value could go down by about 5 per cent because of the overall drop in stock prices.

Suddenly everybody wanted to know how investment decisions were made. Not many people wanted to know who made the right decisions, but once the overall performance went bad, the first question was: Who should be held responsible?

Of course, the board of directors must be accountable to the shareholders. But out of nowhere came the charge that a "secret" investment account had been set up that could circumvent the board's authority. Then the whispers turned into wild screams.

Doubts were subsequently raised about the fund's exposure to the failed US investment bank, Lehmann Brothers.

Hot on the heels was the allegation that the management had bought up stocks of some blacklisted companies.

The man in the eye of the storm, the GPF Secretary-General Visit, of course denied all the allegations and rumours.

Visit should be given a fair hearing. After all, he was also in charge when the fund was reporting double-digit profits and he was hailed right and left as the darling among the country's top-rated fund managers.

Visit has insisted in the past weeks that the 5 per cent drop in the fund's value was only a "paper loss" and that the bottom line should turn black this year and next. He even indirectly admitted to having misjudged the capital market by saying that his revised investment strategy would reduce the fund's exposure to stocks in favour of the more secure government bonds.

But then things started to get murky when the GPF's board met on Monday and decided to set up its own "internal inquiry subcommittee" to probe into three areas: Whether the GPF's operation has been in line with its regulations; whether it has fully protected its members' interests; and how the fund has communicated with its members on its performance so far.

Nothing wrong with trying to get insiders to find answers to those questions - except that the "internal audit" was immediately seen as a tactical move to block the PACC from launching an independent audit.

 It didn't help at all that the board chairman, Finance Permanent Secretary Suparut Kawatkul, said that the members to join the special panel would comprise "experts with experience as well as representatives from the PACC".

It's the credibility of the GPF's management that is at stake.

An "internal audit" can run parallel to an independent investigation. But the former can never replace the latter.

It's worse when the GPF's board gives the impression, deliberate or not, that alleged scandals, founded or not, could be amicably settled among insiders.

The anxious pensioner waiting for the next cheque on his or her dividend that never came, will never tolerate that.

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