The arrogance of an Indonesian magnate’s lackey
June 26, 2016 10:13 pm
First of a Series
What kind of a nation have we become, that an Indonesian magnate’s corporate executive – the modern equivalent of a “lackey” in the pre-capitalist era – tells an incoming government “to get out of the way?”
I am referring to Manuel V. Pangilinan, chairman of Philippine Long Distance Telephone Co. (PLDT), its subsidiary Smart Telecom, Meralco and all companies controlled and mainly owned, through intermediary firms, by Indonesia’s Anthoni Salim. The Indonesian tycoon is heir to the vast wealth of his father, the late Soedono Salim, the closest and richest crony of Indonesian strongman Suharto.
In a June 18 interview with provincial reporters brought to Makati City to cover PLDT’s annual stockholders’ meeting, Pangilinan reportedly said that the company’s digital shift was likely to succeed if the government would not meddle too much. “The government’s share is to get out of the way,” he said. What arrogance to tell the government not to exercise its duty to regulate public utility firms!
Did Pangilinan forget that his boss is a foreigner, an Indonesian, and that foreigners own a total of 76 percent of PLDT, and therefore they do not have the right to tell this sovereign state what to do, and what not to do?
President Rodrigo Duterte (according to one of his Facebook accounts and online new sites) purportedly replied to Pangilinan’s remark: “Simply recall that you are just a puppet of the foreign-based Salim Group, while I am the chosen President of the Republic of the Philippines!” I couldn’t confirm if he really said that through any of Duterte’s official spokesmen. But if Duterte really said that, he has added a new meaning to the MVP initials – Most Valuable Puppet for Salim, Most Vexatious Puppet for Duterte.
One can’t, perhaps, blame Pangilinan for his bluster, as he may have started to believe his PR operators’ colossal deception, the biggest this country has seen: that there is an “MVP Group of Companies,” of which he is the controlling or even majority stockholder.
The reality, however, is that Pangilinan is merely Salim’s staff, albeit a very highly paid one and chief staff in the Philippines, and has insignificant shares in the “MVP Group of Companies” – unless he has been deliberately hiding his shares from regulatory bodies for some dark reason.
Salim owns, through offshore firms, 45 percent of First Pacific, the mother firm and controlling stockholder of PLDT and his other firms in the Philippines. The next biggest stockholder, with 3 percent indirect shares, is Sutanto Djuhar (and his son Tedy), another Suharto crony and one of First Pacific’s original founders with Salim’s father Soedono. Pangilinan owns just 1.4 percent.
Salim’s effective stake in PLDT is 25.6 percent, with the next biggest stockholders being the two subsidiaries of the Japanese NTT with 20 percent, and Philippine tycoon John Gokongwei with 8 percent. Pangilinan has 0.1 percent.
In Metro Pacific Investments Corp. (MPIC), the holding company for his now mammoth public utility and infrastructure firms in the Philippines, Salim, through Metro Pacific Holdings, has 52.1 percent. The next biggest individual stockholder is former foreign affairs secretary, Albert del Rosario, Salim’s closest associate in the country after Pangilinan, with 0.4 percent. MPIC’s official filings with the SEC (such at its General Information Sheet for 2015) don’t even include Pangilinan as one of its top 100 stockholders.
There is a major motive, though, for this corporate imaging that Pangilinan is a major and even controlling stockholder of what is elsewhere more realistically called the Salim Group: to conceal from Filipinos’ minds the fact that an Indonesian magnate, Salim, is the biggest, controlling stockholder of these companies engaged in telecoms, power, water distribution and other public utility firms, which skirts constitutional limits on foreign ownership of such companies.
Salim, in fact, has become the country’s newest – but low profile, if not hidden – magnate, the only tycoon almost completely based on public-utility firms.
The last time in Philippine post-war history that a foreigner wielded such economic power in the country was in the 1950s, when a G.I. who fought here during World War II and stayed on, Harry Stonehill, built a conglomerate of cigarette, glass and cement manufacturers. His net worth was estimated at $50 million at the time, equivalent to $400 million today – peanuts, compared with Salim’s estimated assets in the country of $6 billion, based on the value of his shares in PLDT, his holding firm Metro Pacific Investments Corp. and Philex Mining
Pangilinan was actually lashing at the Philippine Competition’s Council, which, to his mind, wasn’t jumping fast enough to approve PLDT and Globe’s P69-billion purchase of San Miguel’s telco assets, which included the rights over the 700-megahertz radio spectrum.
The gall of a foreign agent to make such a comment on this issue! It involves not only the question whether PLDT and Globe together have become a monopoly, or a duopoly, in the telecoms industry – a privilege that in all Asian countries is reserved for state corporations (such as Singtel in Singapore) and firms controlled by their citizens.
Supreme Court decision
The Supreme Court in 2011 and 2012 even ruled that foreigners owned more than 40 percent of PLDT, in violation of the Constitution. The ruling, however, was practically ignored by the SEC, purportedly under President Aquino’s orders.
Equally important is that the issue involves Salim’s company (as represented by Pangilinan) and another foreign-controlled firm, Globe Telecom, and their use of the crucial 700 MHZ band of the radio spectrum. The use of such natural, national resource is the duty of a sovereign state to regulate, as practiced in all other countries of the world, the same way they regulate mineral and oil resources.
Given that the 700MHz band is such a valuable natural resource, and would yield huge profits for telcos using it, countries have, in fact, been auctioning the rights to bands of that spectrum. The US in 2008 put bands of its 700 MHz on the auction block, and got $19 billion (P798 billion), while Canada made $5.3 billion (P210 billion) in 2014 – figures which dwarf PLDT and Globe’s P69 billion offer for the 700MHz band sold by San Miguel.
Pangilinan may have a penchant for taking the government-must-leave-business-alone stance since his boss Salim was able to quickly take over PLDT in November 1998, precisely because government got out of the way.
Then President Joseph Estrada, just three months into his term, ordered Securities and Exchange Commission (SEC) Chairman Perfecto Yasay (President Duterte’s choice as his foreign affairs secretary), who wanted to first approve the takeover, to get out of the way. When Yasay refused, he was suspended on flimsy graft charges. When the Supreme Court ordered Yasay reinstated, Estrada issued an order taking away from him the authority to investigate the PLDT takeover.
In his 2005 book “Out of the Lion’s Den,” as well as in my 2015 interview with him, Yasay claimed Estrada received P3 billion for his role in PLDT’s takeover, although he didn’t identify which party – the buyer or the seller – provided what Estrada’s associates euphemistically called “commission.”
Pangilinan doth protest too much, methinks. The deal for San Miguel’s sale of its telco assets was sealed only on May 30. He made his remarks that government should get out of the way only June 18. Yet, it became a screaming banner story on the front page of the Philippine Daily Inquirer, in which a Salim-controlled firm is the second biggest stockholder, with 22 percent of its capital. (Philippine Star, which is a Salim-controlled newspaper, is the biggest stockholder, with a 70 percent stake. However, it did not report Pangilinan’s statements.)
Why the pressure on government now?
I’ll discuss that on Wednesday.