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With the
closure of Bankwise by the Bangko Sentral ng Pilipinas (BSP)
because of insolvency issues, focus on the capital
adequacy of investment houses, especially those that are
considered affiliates of banks, should be given greater
emphasis, if only to forestall another Bankwise in the
making.
This is
borne by the emerging picture of the way Bankwise’s
investment-house affiliate, Wise Capital Investments and
Trust Corp. (Wise Citco) was able to conduct its
investment housing functions even with the discovery of
its impaired capital base—for almost four years.
Wise
Citco, found to have capital below the P300-million
requirement set forth by the BSP, was allowed to
continue operating its investment-housing functions with
impunity. This meant that the company was able to source
funds from the public for its business, which included
trading of corporate-debt papers and even of getting
investments, as a result of its trust license from the
BSP. But what is incredible is that the BSP itself found
the company to have booked a loss arising from its
failure to get its receivables from its own stockholder,
Wise Holdings Inc.
If BSP
Director Candon Guerrero was able to come up with audit
findings that Wise Citco had P259.74 million long
overdue, unsecured receivables from its stockholder back
in October 2002, how come this insider dealing was not
flagged? Did the BSP auditors gloss over the fact that
the company classified the uncollected receivable as a
loss—for which reason its capital went below the
required minimum? How come the BSP was not able to
follow on its own audit findings, thereby resulting in
more losses for the investing public?
That
Wise Citco affair was a harbinger of the present state
of disrepair in Bankwise, for which the BSP came up with
a P700-million rescue package, plus some more, the
extent of which is yet to unravel. Had Director Guerrero
raised the warning flag on the investment house
affiliate of Bankwise, the BSP and Philippine Deposit
Insurance Corp. (PDIC) support—amounting to more than P2
billion for the insolvent Bankwise—would have been
prevented. That is a big hole in BSP and PDIC books that
would have to be shouldered by the government.
We
understand that the emerging paper trail of that of Wise
Citco and that of Bankwise shows what can be gleaned as
tell-tale signs not just of the fudging of the books but
of outright attempts to deceive the Bangko Sentral.
There are indications that even the collateral for loans
that Bankwise granted to its borrowers consist of
non-existent land and even of undocumented mining
rights. It is said that Bangko Sentral failed in its
oversight function even when it extended the first
P700-million lifeline, about two years ago, to the bank.
Petron
sale ramifications
Is there
an emerging conflict-of-interest situation in the
forthcoming Petron sale by Saudi Aramco? This is the
buzz in the investment-banking circle following the
announcement by Saudi Aramco of its impending sale of
its 40-percent stake in Petron Corp., one of the three
major oil players in the country. That
conflict-of-interest scenario is emerging from the way
the deal is set to be consummated, thanks to the entry
of former Trade secretary Roberto Ongpin.
The
proposed sale by Saudi Aramco, the world’s biggest oil
producer, to Ashmore Plc., a big investment fund,
however, has raised the eyebrows of those who are privy
to the negotiations on one significant point: the
strategic role that Petron plays in the country’s oil
market. How come, it is asked, that the government
should even consider the sale of Saudi Aramco’s share to
a fund manager? What strategic value can a fund manager
give to Petron is a question uppermost in the minds of
those who know the market.
With the
emerging realities of above-$100-per-barrel price of
oil, the big question mark is the “security of supply.”
Should Petron lose its strategic partner, and gain for
itself a fund manager, then what would happen to the
country’s oil supply, especially when a tight situation
arises, like, say increased tension in Iraq or a
disruption in the oil pipelines of Nigeria or Iran? This
would be akin to the emerging tight rice-supply
situation where the government has to bite the bullet
and bid up the price of rice to P30 per kilo just to
ensure rice supply.
Should a
disruption in the price of oil arise due to geopolitical
concerns in the Middle East, what would happen to the
country’s oil-supply line should Ashmore take the place
of Saudi Aramco? Ashmore cannot bring to Petron any
strategic value that Saudi Aramco or any oil refiner or
oil producer can bring in. Thus, what would happen would
be a bidding up of the price of oil for consumption in
the Philippines, and all because the government failed
to see accurately read the need for a strategic partner
for Petron.
What if
Ashmore flips its investment into Petron, which is what
an investment-fund manager does to earn a living, and
another entity ends up as the owner of the 40 percent of
the Petron shares? And if this owner does not have the
interest of the
Philippines
at heart, what happens, then? These are questions that,
right now, are being asked in the boardrooms of some
corporations, the answers to which raise uncomforting
thoughts.
Thus, it
is important that Energy Secretary Angelo Reyes match
the Saudi Aramco sale offer and, after that, devise a
plan by which the 40-percent holdings go to a strategic
partner, notably an oil producer or oil refiner. We
believe there are other partners who could fill the void
that would be left by Saudi Aramco’s sale of its Petron
holdings.
E-mail: hugagni@yahoo.com |
