This statement refers to the annual report presented by Mr. Oscar Harasic at the Staff Assembly on July 19, 2004, in his capacity as the outgoing Staff Representative on the Retirement and Pension Committee, in which he makes grave accusations against the Committee in charge of the Fund from 1994 to 1999. I cite below the text that has prompted this response.

"...It was recently reported in the run-up to the election of a staff representative on the Retirement and Pension Committee that in the 1994-2000 period, approximately, conditions were such that the Fund was able to distribute benefits averaging 14.4% per annum. Although the figure is correct, I personally do not agree with the view that “conditions were such…”; in my view they were in part created as a result of adopting an aggressive policy of granting accreditations above the return on the portfolio. For instance, by adjusting the minimum accreditation in such a way as to reduce the Fund’s operating reserve requirement and creating a larger pool for distribution.” (Bold and italics added)

Unfortunately, this affirmation is totally groundless and affects all members of the Committee equally, since the Committee makes its decisions by consensus. Consequently, those remarks imply that the members of the Committee in 1994-1999 in bad faith violated their responsibility as trustees to the detriment of the Fund. I should like to recall that the Retirement and Pension Committee comprises three members, namely: a representative of the Permanent Council, the OAS Secretary General (acting through a representative), and the representative elected by the staff of the General Secretariat and of the agencies participating in the Fund.

Given the seriousness of the above, I should like to inform all staff that I have obtained copies of the reports presented to the Staff Assembly by representatives Mr. Harasic and Mr. Vilariño from December 2000 to December 31, 2003. These are attached to this statement as Appendices A-G. A reading of those reports reveals that none of them contains any accusatory opinion such as that now voiced by Mr. Harasic. It is therefore curious that today, on June 30, 2004, after having acted as staff representative for four years, Mr. Harasic surprises us with his accusatory statement against all the Committee members, alleging that they adopted an aggressive policy of granting accreditations above the return on the portfolio, adjusting the minimum accreditation in such a way as to reduce the Fund’s operating reserve requirement and creating a larger pool for distribution.” This accusatory statement is groundless and affects all trustees from 1994 to 1999, because it implies that in bad faith they violated their responsibility as trustees.

I have asked Mr. Daniel Vilariño, the current Treasurer of the Retirement and Pension Fund, for the historical data corresponding to 1994-1999, in order to demonstrate irrefutably the falseness of Mr. Harasic’s statements. I acted as staff representative trustee from June 1994 to June 1999, and Mr. Juan Carlos Jordán was alternate representative.

The Treasurer provided the information I requested, which is attached to this note as Appendix H. That Table shows half-yearly figures for assets, participants accounts, the reserve for retirees, the operating reserve, the accreditation granted, and the balance of the Fund.

As Appendix H shows, at the end of 1994 the accreditation was 2.25% (line VI), the minimum pursuant to the policy in force, and the Fund showed a negative balance of (US$6,063,303) (line IX). By the end of 1995, there was a positive balance, even after accreditation, of + US$7,748.293. Although between June 1996 and June 1997, the balance of the Fund, after meeting all requirements, was lower, in subsequent semesters it grew in such a way as to total US$20,094,234 (line IX) in December 1999, even after discounting the reserve for retirees (line II), the operating reserve (line III), and the accreditation (line VII). The official figures in Appendix H clearly show that the accusation level by Mr. Harasic is inexact, groundless, and therefore imprudent. In 1994 the minimum accreditation was granted, in line with the Committee’s policy at the time, while in subsequent years the Committee authorized accreditations above the minimum only after having satisfied all reserve requirements. Between 1995 and December 1999, there were no accreditations causing reserves to fall below the required levels. Moreover, while it is true that in June 1999 the Committee lowered the minimum accreditation percentage (line VIII), the reason it did so was to adjust the minimum accreditation level to the major drop in inflation in the 1990s. Furthermore, it should be noted that that measure was adopted at a time when the balance of the Fund, prior to accreditation, had already risen to over US$62 million (line IV). It should also be underscored that the initiative was proposed and defended before the Committee by the representative of the Secretary General at that time for the reason referred to above and not in order to alter the reserve level in such a way as to facilitate larger accreditations for participants, as Mr. Harasic rashly asserts.

It is possible for the Committee members between 1994 and 1999 to voice their concern and disagreement to the Retirement and Pension Committee regarding the accusations leveled by Mr. Harasic. For your information, I shall proceed to list the names of the persons involved: Chair, the Ambassador of Panama Lawrence Chewning Fabrega, representative of the Permanent Council; Vice Chair, the representative of the United States, Joan Segerson; as representatives of the Secretary General, Mr. José Luís Restrepo and Mr. Jorge Sakamoto; and, finally, Mr. Juan Carlos Jordán, as alternate staff representative, and the undersigned, as Principal Staff Representative.

Sincerely yours,

Alfonso Munévar Márquez
Principal Staff Representative
Retirement and Pension Committee

Appendix A
http://www.staff.oas.org/documents/SN080405_AnexoA.doc

Appendix B
http://www.staff.oas.org/documents/SN080405_AnexoB.doc 

Appendix C
http://www.staff.oas.org/documents/SN080405_AnexoC.doc

Appendix D
http://www.staff.oas.org/documents/SN080405_AnexoD.doc

Appendix E
http://www.staff.oas.org/documents/SN080405_AnexoE.doc

Appendix F
http://www.staff.oas.org/documents/SN080405_AnexoF.doc

Appendix G
http://www.staff.oas.org/documents/SN080405_AnexoG.doc

Appendix H
http://www.staff.oas.org/documents/SN080405_AnexoH.xls

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