Yuchengco voted PSE chair in controversy-marred elections

Controversy marred yesterday’s elections for the new set of directors of the Philippine Stock Exchange (PSE) as the camp of Robert Coyiuto Jr. declared they would legally challenge the board’s decision to install Vivian Yuchengco as the bourse’s new chairman.

In a surprising development, the PSE’s newly-elected 15-man board voted through a non-customary secret balloting process in favor of Yuchengco, winning over Coyiuto by a slim 8-7 count. This, despite the fact that Coyiuto’s entire five-man ticket made it to the list of the seven new directors.

Coyiuto, a re-electionist director who was the first president of the Unified Exchange in 1992 and its chairman in 1994, came out second in the membership votes, bringing in with him his team consisting of fellow re-electionists Eddie Gobing of Lucky Securities and Harry Liu of Summit Securities, Federico Lim of Belson Securities and Edwin Luy of Triton Securities.

Yuchengco, a former president of the pre-unification Makati Stock Exchange and also a re-electionist director, ranked third just behind Coyiuto and the top vote-getter, RCBC Securities’ Alicia Rita Arroyo, the only other candidate in Yuchengco’s slate who made it to the winning circle.

Out of the 10 candidates who ran to fill up the remaining seven seats in the board reserved for brokers, three failed to get enough votes from the 184 broker-members of the PSE. They are Regina Capital’s Marita Limlingan and Philippine Equity Partners’ Joseph Madrid, both from Yuchengco’s party, and independent candidate Senen Magtoto of BPI Capital.

Although the general membership meeting and elections went on smoothly, notwithstanding delays caused by the counting of votes, the board meeting that followed proved to be the exact opposite.

Trouble erupted when the board results were known, leading a visibly disappointed Coyiuto and his team to walk out of the proceedings. They subsequently brainstormed with symphatizers made up mostly of brokers and former PSE governors on the possible legal steps to contest the results.

The group’s spokesman and legal adviser, Judge Cesar Cruz, said they would challenge before the court the election of Yuchengco as well as the qualification of Ernest Leung for the Exchange’s presidency.

Interestingly, Leung was unanimously elected earlier by the same board as PSE president for a two-year term.

"The mandate of the membership clearly showed support for Mr. Coyiuto’s team, hence it’s a clear indication that the five should lead the Exchange, not the non-brokers," Cruz said. "We believe there is a cabal against the group," he added.

Cruz was referring to the crucial swing vote by the non-brokers led by Leung, which eventually led to Yuchengco’s victory against the broker-supported Coyiuto.

For his part, Coyiuto said: "Since the non-brokers were not voted by the members, they also should have not voted in the board elections as they used to abstain before. This is a very sad day for people like us (the brokers) who campaigned and worked hard for the interest of the Exchange to be later on overruled by the non-brokers."

The seven non-brokers who form the majority bloc in the PSE board consist of Leung, second-termers Eugenio Lopez III of the Benpres Group, former Meralco president Mario Camacho, Constitutionalist Fr. Joaquin Bernas and Asian Development Bank executive director Cayetano Paderanga, and first timers former Customs Commissioner Tomas Apacible, former Petron president and SEC associate commissioner Monico Jacob and banker Peter Favila, replacing accounting guru Washington Sycip of SGV, industrialist Patricio Lim and Metro Pacific head Manuel Pangilinan.

Under the Securities Regulation Code passed in August 2000, the PSE board is required to constitute a majority of non-brokers to represent the interests of the listed companies, investors and other market participants.

Cruz said they would file legal charges against Leung to disqualify him for the presidency, citing the SRC provision that disallows any official in the PSE management from assuming office if he or she has been connected with a securities firm at least two years from appointment.

He said Leung, who served as chairman of DBP-Daiwa Securities until June 2001, did not fully disclose this information to the PSE even after he was appointed and confirmed by the Securities and Exchange Commission last December.

Leung, on the other hand, merely shrugged off the charge, noting that he was serving in an ex-officio capacity for the government in the securities firm, a partnership between the Development Bank of the Philippines and the foreign-owned Daiwa Securities.

Cruz pointed to the fact that there appeared to be a double standard in choosing the candidates since former PSE president Ramon Garcia, Leung’s predecessor, was disqualified due to the same rule, although he had given up management of his own securities firm to his son since he was appointed president in May 2000.

Meanwhile, Yuchengco said that despite the impending case, they will buckle down to work even as the other board officers (treasuer and secretary) have yet to be elected. She pointed out that her program of action includes pushing for revisions in the SRC like the broker-director, broker-dealer and tender offer rule, as well as other bills related to the capital market.