Inside stories on PAL divorce of Ramon Ang & Lucio Tan

I’ve always believed that there can’t be two strong-willed, visionary and self-made leaders in one company or organization, so I wasn’t very surprised to hear the sad news about the US$1 billion sale by Ramon Ang-led San Miguel Corp. of its indirectly held shares in Philippine Airlines (PAL) — equivalent to nearly half of the company, plus loans and other advances — to former strategic partner Lucio Tan.

What happened after two years of this mega-partnership that caused a parting of ways between two business leaders I admire for their guts and grit?

Whatever the circumstances of their decoupling on Sept. 15, it seems PAL has progressed in the last two years in terms of revenues, fixing of the old labor problems, better overall public image and service, better information technology, good working relationships with government agencies, opening of many new routes including direct access now to Europe and US airports (which RSA attributed partly to support from aircraft supplier Airbus), better planes, etc.

Tan & RSA both self-made successes, philanthropists, audacious

Although Tan and RSA are different in terms of personalities, life stories, age and management styles, coincidentally, both 80-year-old Tan and 60-year-old Ang are inspirational self-made success stories. They are examples of people born to humble beginnings who mastered their destiny without excuses. Both studied engineering at Far Eastern University — Tan attended night school for chemical engineering due to work, while RSA studied mechanical engineering.

Both are known for their breathtaking audacity in business ventures in sheer scale and vision. Both are also among the Philippines’ most generous philanthropists for charities, education, sports and other civic causes. They are examples of my theory — based on observation of many well-off people — that first-generation wealth or self-made people are usually more generous when deciding about philanthropic donations.

By the way, another similarity between RSA and Lucio Tan is that they run breweries, they are the country’s No. 1 and No. 2 beer producers with the iconic San Mig beer and the latter with Asia Brewery’s Coors directly run by son Michael Tan.

I contacted the industrialist and philanthropist Lucio Tan via mobile phone to ask for an interview on his side of the PAL saga, since I had gotten an unprecedented exclusive interview with him before at the height of the Open Skies controversy during the administration of President Joseph Estrada. This time around, Tan answered that he wasn’t ready yet to talk, saying: “I am now still busy.” I will wait for his version of the PAL divorce, to share more details of Ang’s stories.

When I contacted Ramon S. Ang of SMC, he readily agreed to talk in detail about his side of the PAL divorce over breakfast. He invited three executives and a few friends from media to join, and the breakfast lasted three and a half hours. Leaving out the more acrimonious details pending the side of Lucio Tan, here are some of the thoughts of RSA on what happened.

I asked Ang his most important lesson learned from the breakup of their business partnership. He replied: “With all these experiences at PAL, what we have learned is to be more patient in dealing with anyone. Don’t be angry, kasi kung hindi ka matiyaga, yari ka (because if you are not patient, you’re gone). Be patient.”

Tessie Sy Coson, MVP, Wash SyCip, GMA & FG

RSA recounted that the “divorce” proceedings at PAL were signed at the headquarters of BDO Universal Bank in the presence of its talented boss Teresita “Tessie” Sy Coson and also witnessed by Tan’s adviser, the 93-year-old SGV Group founder Washington “Wash” SyCip. Ang explained: “My condition (was) for the sale to be signed by Tan in front of Tessie at BDO, I want her to witness the signing.” RSA also recounted that Wash SyCip not only shook his hand, but also took a picture with him (I forgot to ask if SyCip took a “selfie”).

When Ramon Ang pointed out my earlier column here in the STAR quoting a source claiming that he couldn’t raise the cash to buy out Lucio Tan from PAL, thus causing Tan to instead buy him out, he said: “No such thing, because ang San Miguel kung tumawad, may pera (if San Miguel negotiates, we have the money). Never did we negotiate without the money.”

On why San Miguel agreed to sell its PAL stake, Ang compared the situation to an unhappy marriage: “I’m happy to get out. Hindi na maayos ang samahan (Our relationship wasn’t good anymore), after one year, there was an attempt at a hostile takeover.”

On the possibility of Tan getting a foreign airline like Etihad or others to quickly put in new investments into PAL, Ang said: “If a foreign partner, it will take years of due diligence.” In contrast, in the same way with seemingly easier philanthropy, self-made people like both Ang and also Lucio Tan are so much faster in deciding risk-taking ventures like RSA’s shaking hands with Tan in 2012 to seal the PAL partnership.

On rumors that Manny V. Pangilinan of the multinational First Pacific Group might be invited to be the new strategic partner of Tan in PAL, Ang said: “Kung mabola ni Lucio Tan si MVP (If Lucio Tan can bluff MVP into it), with two or three months, kaya daw ni Washington SyCip eh (Washington SyCip supposedly can do it). PAL would need $1 billion from First Pacific… His possible strategic partners, maybe Etihad, Hainan Airlines or First Pacific Group.”

On allegations that RSA has earned commissions due to massive purchases of planes, Ang responded: “Lucio Tan personally signed the new plane purchases, but I signed only as a witness, so those plane purchases were not done singlehandedly. Also commissions can be given usually via agents or brokers.”

RSA also shared a photocopy of a three-paragraph letter from Airbus senior vice president Contracts Christophe Mourey of France, stating that on PAL’s purchase of 54 aircraft signed on July 4, 2012, they “have not paid, agreed to pay, authorized the payment of or caused to be paid directly or indirectly in any form whatsoever any commission, percentage, contingent fee, brokerage or similar payments of any kind, in connection with the establishment or operation of the Agreement referred to above to any employee of the other party or to any person or entity in the other party’s country or elsewhere.” 

When asked about rumors that former President Gloria Macapagal Arroyo and her husband former First Gentleman Atty. Mike Arroyo have secret investments in San Miguel, RSA replied without equivocation: “Not true, we were not even close… When we searched, we found they only owned 1,000 SMC shares, which were originally bought by the late President Diosdado Macapagal… Don’t forget they sued Danding (Cojuangco) and me to try to take us out of San Miguel. We were the biggest supporters of GMA’s election rival the late Fernando Poe, Jr. Even during the Oakwood military mutiny, some in power then accused me of being close to the mutineers like Zagala, Querubin…”

Continuing on this issue, RSA said: “For those rumor-mongering that we’re close to the former president, I want to remind them that then President Gloria M. Arroyo suddenly visited us here in SMC six months before her departure from office. We were surprised and of course had to show courtesy to the President and welcome her. I was at a meeting then, so I was even wearing an SMC uniform when she came.”

Good things fall apart so better things can come together

One of the best ways to recover and move on from a soured relationship is to get busy with new things.

In the case of Ramon S. Ang and San Miguel Corp., he said that among their new projects will be new infrastructure to support Philippine economic development, oil exploration and drilling in the Middle East and Africa (Petron is controlled by SMC), new investments to support the modernization of GMA-7, his multibillion-dollar bid for Britain’s famous biscuit giant which produces Jacob’s crackers, his rapidly-expanding Eagle Cement, possible new moves in the mobile phone sector with new technologies, the building of new power plants, etc.

RSA still dreams of helping the national government build a totally new and world-class $10 billion airport with four runways.

Whatever business or personal misunderstandings between the two titans of Philippine business, what is important is that all’s well that ends well. Both have parted ways cleanly, not a single centavo is owed by either to the former partner, and the country’s flag carrier as well as Asia’s first airline PAL has emerged from the two-year strategic partnership in better shape than ever to face the exciting future.

I wish Ramon S. Ang of San Miguel and Kapitan Lucio C. Tan of Philippine Airlines great success, because their risk-taking spirit, sense of adventure and investments as well as philanthropic acts have had a positive impact on Philippine progress. Not all separations or decouplings are bad; sometimes they are beneficial for both sides. I believe good things fall apart so better things can fall together.

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