Blackout

To be fair, let’s start by saying that it is not usual for shareholders’ meetings to be covered live by the broadcast media.

But that is not because these meetings are covert or attended by very shy people. On the contrary, many of these meetings try very hard to lure media attention, offering excellent meals and loads of freebees, so that their corporate accomplishments might get through to the larger public.

To be sure, their doors are wide open for business journalists wanting to cover these shareholders meetings. The only problem is that the larger public is, most often, uninterested in the proceedings. As a result, these meetings attract only scarce media coverage.

Today, however, we are about to witness a very different shareholders meeting.

Even as the company affects public interest profoundly, and despite the fact that controversy hounds this particular shareholders’ meeting, the Lopez-controlled management of Meralco has adamantly refused media coverage of today’s face-off. Journalists will likely be left out in the streets, along with protestors clamoring for greater transparency in the manner this electricity distribution monopoly is run.

GMA 7 requested permission to cover the proceedings of today’s meeting and air it either live or on a delayed telecast basis. The Lopez-controlled management rejected the request.

This is bizarre. It is as if the management of Meralco is trying to impose a news blackout on an event the public is quite excited about.

This is bizarre because the restriction on media coverage has been ordered by a family-owned business bloc that is itself in the media business. It is a family that has traditionally positioned itself as defender of media freedom in this country. Indeed, their media holdings provide live coverage of even the most inane Senate hearings.

Are they now, when it is their own business practices that have come under intense public scrutiny, turning around to become advocates of managed news? Are they going to provide the public a sanitized “official version” of what will happen on the floor today?

Restricted media coverage may be only the tip of the proverbial iceberg.

Today’s shareholders meetings has been preceded by loud complaints on the part of minority investors about the refusal of the Lopez-controlled management to release the list of proxy shareholders. The controversy over the release of the proxy list led to the resignation last week of Meralco’s interim corporate secretary.

The GSIS holds 25% of Meralco shares. Its representative, Winston Garcia, correctly holds that the GSIS is entitled to examine the proxy list and examine the authenticity of the proxy certificates. He has accused the Lopez-controlled Meralco management of serious misdemeanor regarding these certificates, including coercing small shareholders and forging signatures.

Proxy certificates are issued by smaller shareholders in favor of preferred major shareholders. These certificates enable the major shareholder blocs to vote as proxies for the smaller shareholders.

The Lopez group holds roughly the same amount of shares as the GSIS. But the Lopez group controls the proxy certificates of the Meralco employees, including the company’s provident fund. With the proxy certificates of other small shareholders, the Lopez group enjoys five seats in the 11-man Meralco board.

The GSIS, voting the shares of other government financial institutions, holds four seats on the Meralco board. The two remaining seats are occupied by independent directors looking after the interest of small shareholders who bought Meralco stocks from the open market.

Garcia accused the Lopez bloc of maneuvering to solicit more proxy votes in order to increase their seats to six and reduce the GSIS-led bloc to three seats. The GSIS is fighting to retain its four seats because this gives them the ability to veto the Lopez-led bloc.

This is the vital context for the GSIS’ insistence that the proxy certificates be duly vetted by their lawyers. Garcia has threatened to bring the matter to court if the Lopez-led management refuses to open the certificates for examination.

Over the past few days, too, there has been an intense effort by both sides to solicit support from stock brokers who control proxy votes. A group of brokers led by Vivien Yuchengco has aligned with the GSIS bloc. Another group, led by Robert Coyiuto, is said to be aligned with the Lopez bloc.

The great suspense, this morning, is whether or not the status quo will be maintained.

Should the Lopez bloc succeed in reducing the GSIS bloc’s seats to three, they will be able to solidify their control over how this vital company is run. Should Garcia hold on to his number of seats and win over the two independent directors, he might be able to push for a new management team to run the business.

Reforms in Meralco management might reduce the possibility that this company would again pull the wool over the consumers’ eyes. Remember that the present Meralco management did try to pass on to consumers the company’s income tax obligations from 1994 to 2002. Then, in 2004, they awarded themselves a provisional rate increase. The Supreme Court ruled against Meralco in both cases and commanded a refund — which has yet to be fully refunded to the consumers.

The court also ruled that the “deposits” on electricity meters was irregular. The consumers are still awaiting a refund on this as well. But alas, without full and independent media coverage of this day’s meeting, we will remain in suspense.