Amid the fallout from the Best World Resources Corp. mess, the head of the Securities and Exchange Commission (SEC) wants measures to promote a new type of reporting that will effectively put curbs on press freedom.
SEC Chairman Perfecto Yasay said the body will soon require news publications, including foreign news agencies, to comply with "due diligence" requirements regarding information disseminated to the public on the stock exchange and publicly listed companies.
These new rules will mean reporters can no longer hide their sources or maintain their anonymity. Even newspaper columnists will be required to reveal their sources.
Meanwhile, Vice President Gloria Macapagal-Arroyo said "heads should roll" in the ongoing investigation into charges of insider trading and stock manipulation involving the gaming firm BW Resources.
"No matter who gets hurt, there should be an impartial and transparent probe of the BW scandal to avoid further damage in the capital market. There should be a level playing field," Arroyo said at her regular press conference at the Philippine International Convention Center.
In Davao City, President Estrada called for a revamp of both the Philippine Stock Exchange (PSE) and the SEC to help restore investor confidence in the stock market.
The President down-played anew the continuing plunge in the stock market, which hit a 15-month low last Tuesday, saying the reported capital flight was of the "hit and run" type of investments coming in and out of the country.
Finance Secretary Jose Pardo, meanwhile, said Dante Tan, a presidential friend and majority owner of BW Resources, faces possible criminal and civil charges in connection with the BW scandal.
In a talk with reporters, Pardo reiterated the government's assurances that there would be a "full-blown inquiry" into the BW mess. "There will be no partiality. It has to be a full-blown inquiry as to what happened in BW," he said.
Yasay said that under the Revised Securities Act, the SEC has the authority to regulate the flow of information in the media. The new regulations on news publications and wire agencies will apply to publicly listed companies.
The new impositions, he admitted, were inspired by the ongoing scandal that rocked BW Resources.
"The obligations of press freedom should be to attribute their sources and not hide them because we do not want to start a rumor mill," Yasay said, citing the case of BW wherein principal players such as Tan could only deny the charges against him after these came out in the papers "and the damage already dealt with."
"If news comes from press releases or statements, the company publishing it can be accountable," he added.
Yasay said the publication of unverified information from anonymous news sources could be detrimental to the public, who may become victims of deliberate attempts to mislead them.
"For instance, if people rely on news in making critical decisions such as investing in the stock market which later turned out to be disastrous as a result of fabricated information, then we cannot allow it to continue happening," he added.
"We are coming up with a licensing requirement for this, when an entity or person decides to be part of the system of disseminating information for the good of the investing public. They will be required to comply with due diligence requirements where they must verify the truthfulness and accuracy of the information they will be publishing. Failing to do that, we can hold them accountable for the damage sustained by the investing public," Yasay said.
The new requirements intend to elicit more responsible dissemination of information which, he said, has been regularly abused by some newspaper outfits.
On the other hand, Sen. Raul Roco charged that Yasay violated the law and the oath of his office when he ordered SEC officials not to disclose to the Senate public documents on the trading of BW shares of stock.
"Mr. Yasay should not participate in any cover-up (of BW)," Roco, chairman of the Senate committee on banks and financial institutions, said in a statement.
He lambasted the SEC for allegedly not acting diligently on the BW controversy. He said his committee was compelled to move "because of the paralysis in the SEC and the PSE."
"Fortunately, there will be a new chairman and two new commissioners in the SEC by March 25. I hope the President appoints diligent, honest and trustworthy individuals of a caliber better than Mr. Yasay," Roco said.
Yasay had proclaimed he will be stepping down on March 25.
Arroyo, an economist, disagreed with the President's earlier pronouncement that the stock market is just a small part of the economy. "It reflects the level of confidence of investors in our economy," she said.
Arroyo explained to reporters that the stock market is the barometer of business confidence in the country and its steep dive "should be taken seriously."
She called for the speedy resolution of the BW case to encourage investors to come into the country. "The sooner it is resolved, the better for the economy," she said.
Arroyo urged the PSE and the SEC "to look at the bigger picture, particularly the scandal's effects on the economy" as she called for transparency in the investigation.
"If heads must roll, then so be it," she said.
The SEC reported yesterday a breakthrough in its investigation of insider trading and stock manipulation at BW.
Ruben Ladia, head of the SEC's prosecution and enforcement department, said they have found traces showing the culpability "of one of the named suspects."
"There is one certain violation which has been documented," Ladia said. However, he refused to name the suspect, which could be an individual broker-member of the PSE or a brokerage firm.
But interviewed aboard the Ang Pangulo which has been his home since Saturday while visiting Mindanao, the President expressed confidence that the stock market dive can be arrested and checked as soon as the PSE and the SEC are revamped.
"We must really regain the confidence of our local and foreign investors. We really need to revamp the SEC and the PSE. Those are the things we need to change in order to restore the confidence of capitalists," the President said.
"Changes are needed, especially at the PSE, because we saw the confidence of local funders as well as foreign funders was really lost. I think this is one of the solutions," Mr. Estrada added.
The PSE will elect a new set of officers within the week. - With reports from Aurea Calica, Marichu Villanueva, Marianne Go, Efren Danao