ONCE upon a time, the Securities and Exchange Commission (SEC) was an assertive securities regulatory body and repository of investment statistics. Its officials, led by the chairperson, dealt cautiously with allegations of violations of full disclosure rules purportedly committed by listed companies.
Let me take you to the past: The public, particularly those who were old enough to be familiar with what was then Engineering Equipment Inc. (EEI), would easily recall the company’s audited financial statements in the early1980s, which contained serious errors.
EEI is now EEI Corp., a subsidiary of House of Investments Inc., a holding company of the Yuchengco group.
I am retelling the story of the old EEI because former SEC Chairman Perfecto Yasay Jr. asked me over lunch on Monday what has happened to the present SEC, which he finds not as active as it should be as a regulatory agency. I told him the commission that he used to head still exists but has become a passive agency, submissive to politicians.
It is sad to note that the SEC annual reports have ceased to be a reliable measure of investment flows and outflows because their content is no longer as detailed as it used to be. These filings posted on the SEC website are informative only as far as the number of active companies are concerned.
In its 2013 annual report, the SEC had this table: “total SEC Philippines: 533,142, which was an entry under “No. of Active Companies.” (For comparison of contents, please see SEC 2001 annual reports and you will be amazed at the efficiency of SEC collators of investment statistics.)
Chairman Teresita Herbosa and the four SEC commissioners are lucky because their President, Benigno Simeon Cojuangco Aquino 3rd, and other Malacañang’s temporary occupants are not expected to be very meticulous to have asked: Where are the figures representing the amount of investments by new companies? How about foreign investments? Have they not been coming at all? Where are the comparative figures?
If the public who trade on listed stocks want to know how much foreign investments flowed into the country last year, they would have no way of checking the numbers based on SEC’s annual reports.
Back to EEI. I am citing the company as a suggestion to SEC officials to do things right and not the way they think they should do them to please certain senators, who, in the first place, should study the postings on the PSE website of listed companies they prosecute before they ask stupid questions in their Senate hearings.
If SEC Chairwoman Teresita Herbosa and her fellow commissioners want full appreciation of an audited financial report, they should call the attention of the external auditors. If they doubt the content of the annual filings of Greenery Holding Inc., they should have asked SEC examiners if they—the examiners—have found anything wrong with the company’s audited financial statements. If these examiners said yes, then they should have called the attention of Reyes Tacandong & Co., Greenery’s external auditors.
What can Herbosa and Commissioners Manuel Huberto Gaite, Antonieta Ibe, Ephyro Luis Amatong and Blas James Viterbo say about the explanation of Antonio Tiu, president of Greenery? Don’t these SEC officials not embarrassed at all by the fact that annual reports for 2013 do not cover corporate events such as investments that happened in 2014?
If Herbosa and company want to learn how their predecessors deal with violators of SEC rules, then they should start their lesson by reviewing EEI’s misleading financial reports.
As had happened, EEI reported earnings of close to P2 billion—if my recollection is right—sometime in the early 1980s, when in fact, it has been losing that much. What SEC officials then did was to call the attention of SGV and Co., then the company’s external auditors and asked their representatives to explain the wrong accounting entry.
The rest of the story about the EEI audit fiasco is now part of history. If SEC officials want more details, they should go over the files of the company from 1983 to 1986 when EEI was a subsidiary of Benguet Corp.
By the way, Sen. Alan Peter Cayetano should instruct his people to surf www.pse.com.ph and look for the November 14 filing of Greenery Holdings Inc. so that he would know the answer or answers to his query on the “very surprising” provision in a memorandum of agreement providing for “four hundred million in tranches in cash or in listed shares in the PSE to be agreed upon by the parties based on deliverables to Mr. Gregorio.” If he and his fellow prosecuting senators Aquilino Pimentel 3rd and rebel soldier-turned-lawmaker Antonio Trillanes 4th are not satisfied with the answers or refused to be satisfied with them, then they should ask the company or its president, Antonio Tiu, to elaborate. By doing so, they would prolong their media exposure.
How much have Cayetano, Pimentel and Trillanes spent so far in going after Tiu, the businessman? I am asking this to remind them to remember the poor who never benefit from their pork barrel.