GSIS Trustees Face Ethics Probe Over Dubious ₱2B IT Deal

The Government Service Insurance System (GSIS) finds itself embroiled in another governance scandal, this time involving a questionable ₱2-billion information technology contract that exposes troubling lapses in institutional oversight.

Newly obtained records reveal how three GSIS trustees, Evelina Escudero, Merceditas Gutierrez, and Rita Riddle, facilitated a dubious IT modernization deal with DBP Data Center Inc. (DCI), a government-owned firm whose executives later admitted they lacked the technical capability to deliver on their promises.

A Deal Born in Haste

The controversy began on September 2, 2025, when DCI representatives met directly with the GSIS Board of Trustees to pitch their IT services. What raised immediate concerns was the unusual nature of this presentation: DCI, as a government-owned corporation under the Development Bank of the Philippines, was allowed to bypass standard procurement protocols.

Just two weeks later, on September 15, trustees proposed executing a Memorandum of Understanding with DCI through a fast-tracked board referendum that avoided full deliberation. For an institution managing billions in pension assets for government employees, such rushed decision-making represents a dangerous precedent.

Presidential Intervention Exposes Weakness

GSIS President and General Manager Jose Arnulfo "Wick" Veloso intervened on September 29, requesting that the MOU approval be deferred. Having missed the earlier presentations, Veloso demanded a direct meeting with DCI's top executives to understand their proposal better.

The October 9 meeting proved devastating for DCI's credibility. Company President Michielson Luakian described DCI as a "40-year-old startup" providing basic IT support services. When pressed about their core capabilities, DCI executives admitted they had not developed DBP's own IT systems and merely provided manpower support "when needed."

Most damning was Luakian's confession that "GSIS is significantly more advanced in IT than most government-owned corporations" and that DCI "does not have the capability to undertake the development of GSIS's core systems." Faced with these revelations, DCI formally withdrew its interest.

Trustees' Role Under Scrutiny

Investigation revealed that trustees Riddle and Escudero had introduced DCI to GSIS, with backing from Gutierrez. They proposed that GSIS's IT systems be "reviewed and audited by DCI" through an "agency-to-agency procurement" arrangement.

This procurement method, while legal under Republic Act 9184, exempts government entities from public bidding requirements. Critics argue such arrangements create loopholes that allow massive expenditures without competitive scrutiny.

Troubling Connections Surface

Background checks revealed that DCI President Luakian previously served as business development head of M.E. Sicat Construction Incorporated, a DPWH contractor involved in public works projects. This connection between IT modernization and construction contracting, particularly given ongoing flood-control scandals, raises serious conflict-of-interest concerns.

Pattern of Institutional Decay

The DCI affair represents a troubling pattern in Philippine public finance: the weaponization of "modernization" projects. Agencies caught in scandals often announce grand reform initiatives, usually IT-related and worth millions or billions of pesos, that rarely address core problems but may create new opportunities for questionable dealings.

For GSIS, already facing scrutiny over investment losses and governance lapses, this latest controversy undermines efforts to restore public confidence. The institution serves millions of government employees who depend on its pension and insurance services.

Reform Imperative

The evidence suggests GSIS needs ethical reform more than technological upgrades. Until the board addresses governance issues and ensures proper oversight mechanisms, no digital system can restore public trust.

Gutierrez and Riddle have since resigned from the GSIS board, but questions remain about accountability and the institutional changes needed to prevent similar incidents. The case highlights the ongoing challenge of ensuring transparency and good governance in Philippine public institutions.

As the country continues its development journey, incidents like the DCI affair underscore the critical importance of ethical leadership in managing public resources. The Filipino people deserve institutions that prioritize their welfare over questionable business arrangements.