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On
Thursday, Manila Electric Co. (Meralco) stocks closed at
P63 per share—the lowest in 52 weeks. The electricity
distributor’s share price actually hit P60, but
bargain-hunters raised it a bit just before the end of
trading.
Whether
or not bargain-hunting will cause Meralco share prices
to rise further by the time this piece sees print is a
matter for bourse speculation. One thing remains clear,
however: The brawl between the Lopezes and Winston
Garcia has caused the utility’s value in the Philippine
Stock Exchange to plummet.
As a
direct result of the boardroom offensive launched by
Garcia, as president and general manager of the
Government Service Insurance System (GSIS), share prices
of the publicly listed Meralco have tumbled. Not too
long ago—May 2, to be precise—Meralco shares had closed
at a monthlong high of P81. By May 16, as Garcia stepped
up his much-publicized verbal assaults on the utility,
Meralco share prices had dropped to P69.50.
The
stockholders’ meeting Tuesday should have resolved the
dispute between Garcia and the Lopezes. Unfortunately,
the GSIS chief’s failure to grab enough board seats to
take full control of Meralco only saw him threatening,
not just to go on rocking the proverbial boat, but to
actually capsize it.
The
government, in fact, managed to win an extra seat in the
Meralco board, from the previous three to the current
four—despite Garcia’s charges of fraud in the proxy
vote. Far from being placated, the GSIS chief has
instead publicly vowed to continue waging his so-called
crusade for “lower power rates.”
That
Garcia’s fulminations against Meralco have scared off
investors should be obvious. That they have hurt the
Lopezes is, likewise, evident. What the GSIS boss seems
to care little for is that they have also jeopardized
the interest of the 1.4 million or so members of the
government pension fund, which he heads.
Next to
the Lopezes, the GSIS is the single-biggest shareholder
of Meralco. It used to own just 8 percent of the
utility, but after it unloaded its shares in San Miguel
for a whopping P14 billion, the GSIS was able to up its
ante in Meralco. Now, the GSIS by itself owns about 25
percent of Meralco.
But
instead of ensuring that its Meralco investments lead to
more benefits for its members, the GSIS has succeeded in
driving down the value of its own shares in the
electricity distributor. Early on in this controversy,
bourse analysts had reckoned that the GSIS was in danger
of sustaining a P1.2-billion loss as the value of its
recently acquired Meralco stocks fall. The hit could be
much bigger.
In any
other company, such a financial debacle would trigger an
immediate decimation of upper management, starting with
the CEO. No business could hope to survive, much less
prosper, in the face of such blatant fiduciary
imprudence and executive recklessness. Heads would have
to roll, and the higher they are, the better, if only to
reassure the company’s stakeholders, potential investors
and customers.
Not in
the GSIS, apparently.
On top
of a quasistate entity, the management of the GSIS
obviously does not hold itself accountable to its
members. The members actually have no say on who should
head the pension fund—to which part of their monthly
income goes, whether they like it or not. This lack of
accountability within the GSIS explains for the rise of
an imperious character like Garcia who has been placed
in command of vast financial resources.
Garcia
has been wielding those same resources to bludgeon
whoever gets in his way—or, more accurately, in the way
of the person who appointed him the GSIS boss.
No
wonder, then, that Garcia has found little sympathy even
among those quarters that must bear the high cost of
electricity. Instinctive and widespread is the suspicion
that his bid to dislodge the Lopezes from Meralco has
little to do with his proclaimed aim of reducing power
rates and more with humbling the detractors of his
unpopular boss.
Besides,
where in the GSIS charter is it written that the pension
fund must drive down power rates?
In a
company that is professionally managed and abides by the
principles of corporate governance, there would be
little tolerance for Garcia’s antics. The GSIS, however,
is an altogether different animal.
Need we
say more? |
