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THE
Securities and Exchange Commission (SEC) may issue a
show-cause order against the Manila Electric Co. (Meralco)
for defying an earlier directive involving the proxy
shares solicited by the Lopez bloc.
SEC
corporate secretary Gerard Lukban said the show-cause
order would basically ask Meralco to explain why it
should not be cited in contempt for defying a prior
commission order stopping them from voting challenged
shares at the company’s annual stockholders’ meeting
held Tuesday.
The
commission, as of press time, was still in the process
of drafting the directive.
According to the SEC, Meralco disregarded the
cease-and-desist order (CDO) issued Monday restraining
Messrs. Manuel Lopez, Felipe Alfonso, Jesus Francisco,
Christian Monsod, Elpidio Ibañez and Francis Giles Puno
from voting the challenged shares.
The
Lopez-led camp decided to proceed with voting after
noting apparent irregularities in the issuance of the
SEC order.
The
corporate regulator acted on the verified complaint
filed by Government Service Insurance System (GSIS)
president and general manager Winston Garcia.
The
circumstances behind the SEC’s order, however, will
likely be subject to a legal challenge in light of the
unusual sequence and divergence of moves by the SEC
officials—especially the moves taken by, on one hand,
SEC Chairman Fe Barin, who is abroad but had sent
observers following SEC practice; and the unilateral CDO
of Commissioner Jesus Martinez on behalf of the entire
body.
The GSIS
claimed the “manufactured proxies” represent more than
30 percent of the outstanding shares of stock of the
power-distribution company and are shares owned by
brokers, banks, investment managers, the Meralco pension
fund and Union Fenosa.
“Respondents Lopez, Alfonso, Francisco, Monsod, Ibañez
and Puno, being among those named in the proxies sought
to be invalidated, are also impleaded to restrain them
from voting the challenged shares solicited by Meralco
management in violation of the Securities Regulation
Code [SRC],” the CDO stated.
Garcia,
in his complaint, claimed there was massive solicitation
of proxies by the Meralco management and that Meralco
corporate secretary Anthony Rosete is poised to validate
and honor these proxies despite the fact that there was
no compliance with the legal requirements for
solicitation of said proxies.
The CDO,
however, did not stop Meralco from voting the questioned
shares after its board and legal counsel deemed the SEC
order as null and void on several grounds, including the
absence of due process, claiming the order was
predetermined and without proper investigation.
SEC
director for compliance and enforcement department
Hubert Guevarra, who was present at the annual meeting,
warned Rosete that while the SEC may allow Meralco to
continue with the election, the results of the same will
be subject to a review and decision of the commission.
The
case, he said, will be heard on Friday at the SEC.
Meralco
was just furnished, in the middle of its stockholders’
meeting, with the copy of the order signed by SEC
Commissioner Martinez and read by lawyer Guevarra.
Rosete said the SEC order does not have a docket number
and was not dated. The Meralco official said the order
does not bear the official SEC seal. Rosete pointed out
that the order was signed by only one commissioner,
Martinez.
“Upon verification, we have received information that
this order was issued without the benefit of a
commission meeting, and that we are not aware of any
complaint filed with the compliance and enforcement
division of the SEC,” he added.
Rosete
said the authority of Martinez as officer in charge is
on a day-to-day basis, and he has no authority to issue
this order on his own in the absence of the SEC
chairman—who is out of the country—and other
commissioners. Rosete noted the order was issued in
violation of due process, after Martinez, on his own,
predetermined the validity of GSIS proxies without
proper investigation.
“The
company or any of its directors were not served notice
and given an opportunity to be heard in respect to this
matter. And this matter is an intracorporate issue, a
jurisdiction of which, based on Section 5.2 of the
Securities Regulation Code, has been transferred to the
regular courts,” said Rosete.
A
whopping 86.8 percent of the total number of
stockholders was represented in the annual meeting
through the proxies in question.
Garcia
said the high number of proxies was very dubious,
considering only 70 percent to 75 percent of
shareholders are normally represented in a stock meet.
“We
should not disrespect the lawful order of the SEC. I
appeal to the chairman [Lopez] to please obey the order
of the SEC and not the order of Mr. Rosete. Rosete
should step down as assistant corporate secretary of the
Meralco board,” the GSIS chief said.
Garcia
unfazed
Garcia,
nonetheless, expressed confidence that the tide will
turn on their side.
“Today
is the beginning of the end of Mr. Manolo L. Lopez. I
see the light at the end of the tunnel because I firmly
believe whatever Meralco has accomplished this morning
will not last long. Truth and justice is on our side,”
he told reporters.
“I am
confident that in the days ahead, we will succeed in
changing the management of Meralco. And once we do that,
we assure you that power rates will go down. At least to
the level the rest of the country is paying right now.”
Garcia
reiterated that should the move to reform Meralco
management succeed, Metro Manila customers can expect a
guaranteed reduction in their electricity bills by at
least 10 percent.
Aside
from the complaint at the SEC, Garcia will also file
charges of large-scale estafa and fraud against the
Lopezes and their allies in the Meralco board.
He
singled out Lopez and Rosete, against whom he will also
file a complaint for violation of the Corporations and
Securities Code of the Philippines.
The GSIS,
which owns one-third of Meralco along with other
government financial institutions (GFIs), is campaigning
for transparency in the running of Meralco and the
lowering of its power rates.
Analysts’ reactions
Jomar
Lacson, head of research at Campos, Lanuza and Co., said
the tussle within the Meralco board is alarming.
“It is
worrisome because no one is giving an inch. The only
solution is to take this to the next level, and when
that happens, there will be a lot of uncertainties and
the share price will be affected.”
Astro
del Castillo, managing director at First Grade Holdings,
said the ongoing issue could further dampen sentiments
on the company’s stock price. “It will be a yearlong
battle, except if a middle ground will be found. There
should be backdoor negotiations.”
Palace
reaction
Asked to
comment on the SEC order, Executive Secretary Eduardo
Ermita told reporters: “I suppose the board is
answerable to the SEC if there’s a legitimate
cease-and-desist order. Let them be answerable to the
SEC....They have to comply.”
He said
SEC’s decision to issue the order is “within its
mandate” since it is a regulatory body, and does not
necessarily mean that it was issued on instructions from
Malacañang. |
