E·N·Q·U·I·R·Y
DEMAREE J.B. RAVAL
DEMAREE J.B. RAVAL
In High Places
Sunday, 04 09, 2006
Some people ensconced in that rarefied strata of power in High Places are keeping the group of former Ambassador Manuel Nieto in control of Philcomsat Holdings Corp. (PHC), despite that group’s tenuous hold of 48 percent of the controlling stock of PHC’s parent company, Philcomsat. But that is not the beef of this article. After all, these power brokers might just be able to grease themselves out of the corruption charges related to PHC, in the fashion that they extricated themselves in many a tight and hairy situation in the past. So let us concentrate on what is clear on record.
By some corporate mumbo-jumbo that rendered impotent all that the Corporation Code provides, the Nieto Group has seen through the decline in the value of the government shares in PHC — from P1.4 billion in 1998, to a niggardly P175 million in 2004. So what we see here is the sad story of an otherwise robust corporation that has been turned into a cash cow, milked of its resources by some very pedigreed names. This dissipation of assets has been due to questionable deals, which my friend Jake Macasaet of Malaya has been detailing without let-up. He’s exposed them all, I mean Jake.
The Code plainly states that control over a corporation is vested on the majority. But not by a long shot at the PHC! When one considers that the Nieto Group has only 13 percent of the shares, and together with what it claims to be 40 percent of government shares courtesy of the power brokers, then they should be in control. But here’s the rub: the Supreme Court has, since 2000, recognized that the Ilusorio Family owns 5 percent more in PHC because of the 673 shares ceded to them by the government under a compromise agreement (CA). The remaining government shares, then, together with the Nieto Group’s, would only add up to 48 percent. So how have they perpetuated themselves in power? Simple: They secured a temporary restraining order (TRO) by falsely claiming that the 5 percent has not in fact been given to the Ilusorio Family, that is, the final and executory decision in 1999 of the Sandiganbayan in Civil Case 009 has not been implemented. By strength of that TRO, the Ilusorio Family is being prevented from voting the 673 shares they secured under the CA.
But wait: The decision of the Sandiganbayan had already been implemented as far back as 1999, with the stock certificates for 35 percent of the shares issued to the government, and 5 percent issued to the Ilusorio family. Now, do the math.
The TRO has since been lifted, with the SC admitting it committed a mistake in issuing the TRO — in fact declaring that “we were then misled in issuing the TRO” — yet the Nieto Group is still in control! What gives here? Ten months since the court decided in G.R. 141796 to write finis to the legal remedies of the Nieto Group, the mindless looting still continues.
One of the looters is a suspended member of the Philippine Bar, who is facing as well a large-scale estafa case. A seat in the PHC board of directors entitles one to a hefty sum, plus perks and huge expense accounts, and dividends from the looting. That should explain his tenacious insistence on sitting in the board, notwithstanding the filing of a disbarment complaint against him by the rightful claimant to the seat, his client in the Ilusorio Family.
Figures don’t lie: From an average annual operating expense of P30 million, PHC suddenly registered over P91 million in expenses in 2004; a loss was booked on money-market income of P84 million; a wholly-owned subsidiary was set up, a subterfuge called “Telecommunications Company Inc.,” which has since siphoned out over P100 million, and counting.
Also consider these transactions which anyone will instantly recognize as plunder: A cash outlay of P390 million for the purchase of 12 hectares of undeveloped land, preliminary to a merger with a realty company, wherein the beneficiary of both the cash and the merger is related to somebody big and powerful. Here’s another smelly deal: An investment of P367 million in a company which doesn’t know shit about the difference between telekinesis and telecommunications, and which has since defaulted from its financial obligations. Clearly, those who are pocketing the money are untouchable, so brazen this long, owing to relatives in High Places.
After a barrage of complaints from shareholders, a procrastinating Securities and Exchange Commission (SEC) finally issued an order for the PHC to hold its long-overdue Annual Shareholders Meeting (ASM) by April 17. Yet, in defiance of the order, PHC instead circulated notices for a Special Shareholders’ Meeting on April 18, to extend the life of the corporation which expires in May. So preoccupied must have been the PHC directors with the looting that they forgot they had less than a month of corporate life left. But what about the long-awaited ASM to elect the rightful directors representing the real stockholders? If and when the ASM takes place, the looters will surely be kicked out. Will the SEC once again, as it did in 2004, bend to the wishes of the power brokers? Or, for a change, will it follow the Code and call for the much-awaited ASM and allow the real stockholders to vote their shares?
The Ilusorio, Africa, Benedicto, Poblador and Ponce-Enrile families, comprising the majority block of PHC’s parent company, are waging a lonely battle out there. They have realized early in the fight that power corrupts, and absolute power corrupts absolutely. How sad it is that the wrong sort of people are always in power, because they would not be in power if they were not the wrong sort of people.
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