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I just
finished reading a 286-page book by Ronald J. Alsop
titled The 18 Immutable Laws of Corporate
Reputation.
This is
not to brag, but I read the whole thing in one sitting
just the other day. What kept me glued to the book was
the thought of its relevance to the present corporate
crisis in which the Manila Electric Co. (Meralco) is
currently embroiled.
You’ve
probably noticed that putting an end to the
blood-boiling power rates being imposed by Meralco on
its 4.4 million customers has been one of this column’s
major advocacies. Thus, Meralco was at the back of my
mind as I took in all 18 chapters of Alsop’s opus.
Alsop,
by the way, is editor and senior writer at the Wall
Street Journal with extensive experience in the coverage
of corporate brands and reputations. This book was first
published in the United States and Great Britain in 2004
coincidentally and not as a response to the Enron blowup
and other corporate scandals that followed.
The book
was already in the making, he says, “long before the
scandals broke… I had sensed that companies were
beginning to understand how important—but
neglected—their reputations were.”
On the
Enron debacle, Alsop points out the irony that just
months before the energy company was exposed as a fraud,
“it was ranked as the most innovative company in a
survey of executives, directors and securities analysts
by Fortune magazine. . . .”
The
author proceeds from the bedrock premise that a
corporation’s reputation is its most valuable long-term
asset. An unblemished name guarantees a solid
performance. A ruined reputation—especially as far as
service companies like the Meralco are concerned—is
usually fatal. In other words, a company that fails to
nurture its reputation over time is bound to fail—and
fail disastrously.
For 47
years, Meralco has been in the hands of the politically
influential Lopez family. It was only lately that the
Lopezes’ continued control of the giant utility firm has
been questioned—by no less than the government itself,
through the Government Service Insurance System (GSIS),
which has a 25-percent stake in that company.
What
prodded the government to move against the Lopezes was
the fact that for the past five years, the power rates
imposed by the Lopez-controlled Meralco have soared to
unbelievably high levels; in fact, to the second-highest
in Asia.
Winston
Garcia, president-general manager of GSIS, has made it
his business to launch a takeover bid of Meralco, a
legal question that even now awaits resolution at the
Securities and Exchange Commission, Court of Appeals and
Supreme Court.
But for
now, we will focus on how Meralco is perceived by its
own stakeholders—including its stockholders, employees,
the government, its customers and the public in general.
For that is what corporate reputation is all about—it is
the people’s perception of a company over a period of
time.
The
first major blow to Meralco’s unscratched reputation was
the Supreme Court’s finding that it had illegally passed
on to its customers its income-tax liabilities amounting
to more than P30 billion. The High Court ordered it to
return the overcharged amount to its customers, but
until now it has yet to fully comply.
It was a
major blow to its reputation because it showed that the
Lopezes had been less than honest in its impositions on
its captive market. As a consequence, it also raised a
host of questions on the fairness of other items it
charged its customers.
The
second major blow was delivered by Garcia, who has
voiced suspicions that accounting fraud and executive
greed are the two major reasons why Meralco customers
are being made to pay outrageously high electricity
rates.
All of
Meralco’s financial transactions—including the
“sweetheart” contracts with Lopez-owned suppliers and
subsidiaries—have been deliberately hidden from the
public, even to Meralco’s major stockholders, such as
the GSIS. This has thus encouraged speculation that
beneath the veil of secrecy lie a slew of horrific,
unpardonable violations of the law, and the very terms
of its exclusive franchise to provide power to its
customers at the least possible cost.
The
Lopez management only made matters worse for itself when
it railroaded the election of its nine-man board to
thwart Garcia’s takeover bid during the recent
stockholders’ meeting. It did so by defying a
cease-and-desist order issued by the Securities and
Exchange Commission in connection with the use of
improperly validated proxies.
The
third big blow was the series of fully documented
tirades on the floor by Rep. Luis Villafuerte (Camarines
Sur), cochairman of the House Committee on Energy, about
ghost deliveries of power from the Lopez-owned Sta. Rita
plant of First Gas, and the billions upon billions of
meter and billing deposits that customers are required
to make, which, he said, Meralco has yet to fully
account for to this day.
Can the
GSIS prove its suspicions of accounting fraud and
executive greed? In my view, the fact that the Lopezes
have stonewalled for so long has only deepened public
suspicions of rotten goings-on inside the Meralco. To
the ordinary housewife religiously paying her monthly
Meralco bills, it is quite plain that Meralco doesn’t
have an iota of a corporate social conscience. To all
the households who must make their payments in less than
five days after they are billed lest they be cut off, no
further evidence is necessary.
Meralco’s corporate reputation, in short, is already
shattered, as it is. It can enlist a hundred wholesome
telenovela stars to its cause, but it will be too late
to do any good to a totally ruined image.
Omerta_bdc@yahoo.com |
