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We know
what the worst were. From the national broadband fiasco
to the dubious sale of electricity-transmission assets,
to the deadliest officially declared industrial
accident. These were not only tainted with controversy,
but infested with politics, conflicts of interests and
multibillion-dollar questions, they take away from
economic development.
In each,
accountabilities have been demanded but remain elusive.
With humongous costs sunk and precious lives lost—some
resulting from malfeasance, others from negligence—most
hide behind fine print, legalities and political smoke
screens.
The
unholy alliances between business interests and
political benefactors reminiscent of the fraternity that
sustained a predicate 20-year dictatorship provides
business comfort, but also opportunities for corruption.
Midnight cabinets do not disappear at dawn. That these
nightmares perpetuate in 2008, worsening as details are
revealed on negligence, greed and the systematic
fleecing of our economy, is a testament to the evil that
afflicts us.
It is
difficult to scrape from the soles of our shoes what
leaves a noxious trail of alimentary excesses discharged
from the avaricious interests of the pit bulls circling
the Palace. An incumbency focused on survival needs
funds to keep kennels at bay. Mouths have to be fed and
voracious appetites satisfied. There is nothing more
dangerous than a ravenous junkyard guard dog.
Fearful
of righteous indignation, threatening tax audits, thugs
along the Pasig’s banks declared war on businesses
critical of Gloria Arroyo. That happens when, excised of
morals, a clandestine cabal thinks with its testicles
and leaves to technocrats simply the administration of
the economic household. It aggravates a tenuous
demarcation between Arroyo’s boasts of development
against a coterie fearing threats from businessmen who
are agents of that development.
The
scandals of 2007 reveal the dark side of our economy,
one simply shellacked for show-room sheen. For many,
assessments through stories of shame and scandal cannot
and must not be avoided.
We
agree. But as counterpoints, the business successes have
also been good. Necessarily, our method for determining
the best recognizes political underpinnings, but also,
we recognize higher purposes that subordinated those and
resulted in an exemplary business event.
One such
is the acquisition of Equitable PCI by Banco de Oro (BDO),
a coup de grace that ended a political aberration long
hounding the banking industry.
Starting
in 1999 up to 2001, in what was one of the largest
mergers in local banking, the larger Philippine
Commercial International Bank merged with the smaller
Equitable Banking Corp. with the latter emerging as the
dominant entity.
Because
the merger involved the questionable application of
state pension funds, with controversial capital, the
merged entity would carry errant equity until BDO eyed
it for acquisition.
Meanwhile, BDO expanded. In 2001 it acquired the
Philippine subsidiary of Dao Heng Bank. In 2002 it
acquired First E-Bank. In 2003 it acquired the local
subsidiary of Banco Santander Central Hispano. In 2005
BDO acquired the branches of the Philippine subsidiary
of the United Overseas Bank.
Capping
its expansion program, BDO’s 2007 Equitable PCI purchase
exorcised what remnant politics had infested. The deal
exemplifies the dogged vision of BDO’s prime mover,
Teresita Sy, and how consumerism can found what is now
one of our largest financial institutions.
The
other significant business event of 2007 was the
6.42-billion- share public offering of
Vista Land and
Lifescapes Inc. Simultaneously delisting C&P Homes Inc.
after a share swap and a tender to minority
shareholders, the offering was a financial feat of
sorts.
Insulated from political undertones even as the prime
mover behind the property conglomerate is Senate
President Manuel Villar, a prospective presidential
candidate for 2010, the company’s growth is exemplary.
Five times oversubscribed, the shares were highly sought
by international investors, thus raising $535 million in
the biggest equity offering in history.
The
aspect of exorcising incessant political infestations
brings us to what we think is 2007’s best success story.
Given a government that tried to sabotage the deal by
throwing unnecessary roadblocks, such as collectibles,
consents and even compensation issues, last year’s
Mirant equity sale is perhaps the most extraordinary
success of 2007.
Never
mind that the underlying values in the acquisition by
Marubeni and Tokyo Electric were substantially more than
the nominal $3.4 billion both invested. For a government
hard-pressed to attract incremental generating capacity
investments, the exit of its most prolific foreign
investor seemed like a political slap and embarrassment.
But
before panicking, factotums at the Energy department
should first have done the math. From Mirant’s internal
rates of return, prospective revenues and development
platforms—values competently marshaled for the 2007
transition by Mirant’s chairman and CEO, industrialist
Jose Leviste—the sale implied even greater confidence in
the economy.
To
appreciate the trust in both Mirant’s values and the
Philippine economy, add to the $3.4-billion price tag
the $120-million working capital required to run
Mirant’s assets at the same operational levels. Add also
the investor’s own equity infusion and the full support
of the Japan Bank for International Cooperation for at
least $2.5 billion. Given that asset values were a
fraction of those, the premium transacted by Leviste et
al. records a substantial net investment value that
surpasses even the BDO and Vista Land expansion programs
for 2007. |
