Explanation of PCGG officials on SMC investments sought

MANILA, Philippines - The House oversight committee will summon officials of the Presidential Commission on Good Government (PCGG) to explain the string of investments made recently by conglomerate San Miguel Corp. (SMC).

Quezon Rep. Danilo Suarez, committee chairman, told The STAR yesterday that he would schedule hearings on Resolution 1024 either during the current congressional break or upon the resumption of session on April 13.

“The resolution has already been referred to us. We will have to conduct an inquiry,” he said.

It is Suarez’s Quezon colleague Proceso Alcala is the author of Resolution 1024. In particular, Alcala wants an explanation on SMC’s investments in Meralco, the country’s largest power distributor, and Petron, the biggest oil refiner-retailer.

Alcala said there has to be a public accounting of SMC investments since the conglomerate is 27 percent owned by the country’s 18 million coconut farmers.

He said farmers and their families have to be informed on whether their money has been used in SMC’s recent string of “unusual” investments, and how it has affected the value of their shares.

He said there is no longer any question about the farmers’ 27-percent ownership of San Miguel as the Sandiganbayan already ruled on the issue in 2007.

Alcala pointed out that in addition to the 27-percent stake, farmers are claiming ownership of an additional 20 percent of San Miguel.

“Recent reports indicate that SMC has made or is set to make a series of substantial investments which would impact or affect the value of the 27-percent and 20-percent blocks of SMC shares,” Alcala said.

“The number of such substantial investments happening in a short span of time appears unusual,” he stressed.

Alcala said it is PCGG, together with the Philippine Coconut Authority, that is supposed to look after the coconut farmers’ funds in San Miguel.

During martial law, the farmers contributed to coconut industry funds through the coconut levy.

Besides the billions SMC has sunk into Meralco and Petron, Alcala wants to look into other recent investments, business plans, and financial maneuvers undertaken by the company.

These include its reported interest in acquiring a Bataan power plant, its P48-billion water venture, its sale of 43 percent of San Miguel Brewery to Kirin Beer of Japan, its $1-billion stock offer, and its deal with Qatar Telecom, among others.

Meralco was the darling of stock players last week because of market rumors that Hong Kong’s First Pacific Group, represented in the country by businessman Manuel V. Pangilinan, has accumulated a substantial number of shares.

The Philippine Long Distance Telephone Co., which First Pacific partly owns, has confirmed that it bought shares equivalent to 10.17 percent of Meralco.

There are speculations that Pangilinan, known in business circles as MVP, is allied with the Lopezes, who run Meralco and who are reportedly girding for a boardroom battle with SMC’s Eduardo Cojuangco Jr. and Ramon Ang.

The Meralco shares SMC has acquired were those of state pension fund Government Service Insurance System (GSIS). MVP was eyeing the same block of shares and reportedly had a deal with GSIS before SMC inexplicably bagged them.

SMC’s acquisition of Petron is in itself a controversial story. Ashmore Group of the United Kingdom bought Saudi Aramco’s 40-percent stake in the oil refiner and then gobbled up the government’s 40 percent in a subsequent deal.

It then turned around and sold the bulk of its Petron stake to SMC.

Ashmore’s representative in the country is Marcos-era trade minister Roberto Ongpin.

There are reports that the Ashmore-Petron-SMC deal violated securities laws.

Some congressmen are asking why the government did not sell its remaining 40-percent ownership of Petron through public bidding.