UOBL disputes legal basis of Farmix’s derivative suit

The United Overseas Bank Ltd. (UOBL) of Singapore said the legal action taken by the Farmix group should not have been focused on its subsidiary, the United Overseas Bank of the Philippines (UOBP).

Rather the dispute was actually between the two factions within the minority shareholders in UOBP, the Espiritu and the Farmix groups.

"We are prepared to make sure that UOBP’s interest is fully protected in this legal battle that is actually a fight between two former allies over how much each would get from a settlement with UOBL for control of the bank," lawyer Alex Poblador, legal counsel for UOBL, said in a statement.

Poblador said that the charges against UOBP "have no legal basis" and that the present board of directors of UOBP, composed mainly of officials of UOBL, had the right to hold the annual shareholders meeting last May 30.

"UOBL did not violate any law in voting all its outstanding common shares totaling close to 20 million," he said.

All the common shares are under the control of UOBL as majority stakeholder including those, which were sold by the minority group represented by then Finance Secretary Edgardo Espiritu.

However, UOBL admitted that it failed to submit one of several requirements sought by the Bangko Sentral ng Pilipinas before the monetary authorities could issue its final verdict on the acquired shares.

Poblador said that the lone "delinquency" was an undertaking from the UOBP and the Espiritu group stating to the effect that "the BSP was free and harmless from suit by reason of the agreements in relation to the acquisition of the 33-percent stake sold by the Espiritu group (to the majority stakeholders)."

"The proposed wordings have been submitted to the BSP for their pre-clearance," he added.

The statements issued by Poblador in behalf of UOBL were in reaction to a petition filed by the Farmix group seeking a court injunction on the May stakeholders meeting and the new UOBP board members.

If granted, the courts will bar for a period of time members of the board of UOBP from holding office and that "all the public defendants (be barred) from approving the actions of the Board."

Named defendants in the case are UOBL and several personalities including Wee Cho Yaw, Chua Teng Hui Wee Ee Chong, Samuel Poon Hon Thang, Terence Ong Sea Eng, Wang Lian Khee, Asian Institute of Management chief executive Roberto F. de Ocampo, Florentino M. Herrera III, Marianne Malate-Guerrero, Securities and Exchange Commission chief Lilia Bautista, and BSP governor Rafael Buenaventura.

The Farmix group, meanwhile, is composed of the Farmix Fertilizer Corp., PearlBank Securities Inc., Manuel Tankiansee and Juanita U. Tan.

The group controlled 10.4 percent of UOBP’s total outstanding shares worth over P25.8 million.

The focus of the petition was the election of the directors of the UOBP, a pending derivative suit, and other complexities arising from continued and unresolved "intra-corporate relations between and among stockholders, and the bank."

The majority group represented by UOBL bought out the minority group but the payment was allegedly coursed through the Espiritu group. However, the Farmix group claims that they had already withdrew the power of attorney of the Espiritu group as their representative prior to the purchase.

UOBP used to be Westmont Bank, controlled by the Espiritu clan, before it was acquired by UOBL for $1.6 billion to get majority control of the bank. After infusing P3 billion as part of its

rehabilitation funding, the Singaporeans agreed to tap the P1.4-billion worth of uncollectible loans, or the so-called "political loans", of the bank as their payment for majority control.

Bank officials said there has been a significant drop in deposits since UOBL took majority control which resulted in an intra-corporate squabble.