George Sycip, independent director and chairman of the board

Emeterio Sd. Perez

Emeterio Sd. Perez

UNLESS his sense of delicadeza intervenes, George Sycip will preside over the annual meeting today of the stockholders of Alliance Select Foods International Inc. Being one of two independent directors, he automatically becomes the chairman of the board. And being the chairman, he calls the shots, whether during board meetings or during the company’s once-a-year regular stockholders’ gathering.

But the public should not be misled by the dictionary definition of “independent.” As a matter of fact, they should not expect Sycip to be fair to them or to act neutral as chairman of the board. They should remember that he is an independent director in favor of the Dees, who are the majority stockholders of Alliance Select.

As owners of 57 percent of a public company, the Dees will have their way. They should not be accused, though, of forcing their will on the public stockholders who include Singaporeans. Not only do they have the numbers, but their control even gets a big boost from Strongoak Inc., a late entrant to the company’s ownership profile that holds 28.69 percent, and the Social Security System.

Ibarra A. Malonzo, the SSS nominee, is expected to vote for the Dees the fund-held shares equivalent to 9.9 percent. SSS members should not blame him for his choice. He is only playing safe by siding with the powers-that-be in the boardroom. Otherwise, he would have nothing to surrender to the SSS treasury should he fight the Dees, who can ably deprive him of his director’s fees.

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Dr. Hong Hin Kay and Hedy S.C. Yap-Chua, the Singaporeans who own the corporate stockholders of Alliance Select such as Harvest All Investment Ltd. and Victory Fund Inc., should not begrudge either Sycip or Malonzo—or both—in allying themselves with the Dees in what could be a protracted intra-corporate battle over the true financial performance of Alliance Select.

As I have made clear in an earlier series, I do not believe in the independence of an independent director. Remember, a nominee to such post is subject to the approval of the majority and the minority, with the former enjoying the numbers to overrule the latter. This could be construed as the majority’s imposition of their will on the minority. But it is not. This is how the numbers game is played whether inside the boardrooms or in stockholders’ meetings.

As a result of the way the numbers are played, the public or minority shareholders will always be at the losing end. They would never gain any edge because the majority always rules the game. The numbers often, if not always, prevail. Their only hope and that of the significant minority, who in this case are the Singaporeans, should come from the presiding officer. Unfortunately, they could not expect fairness and neutrality from Sycip unless a miracle happens. Why bite the hand that feeds him?

What would be the miracle? As far as Due Diligencer could guess, the miracle would be a big one if Sycip were to give up the chair in favor of a neutral presiding officer. For sure, the Securities and Exchange Commission would send at least two junior if not ranking officials to monitor today’s proceedings of Alliance Select’s stockholders’ meeting. How about allowing one SEC observer to conduct the meeting?

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Generally speaking, Filipinos go for the underdog. But this is never true of Sycip. Being an American like his father Washington, he goes for the Dees, who hold the power either to re-select him as independent director or elect him as a regular member of the board. Welcome to the family.

Yes, Sycip would be a welcome addition to the Dee faction should he succeed in overruling any question or series of questions on the family’s self-dealings. He would be up against lawyers hired by the Singaporeans.

But Sycip is lucky. The Dees have at their disposal a battery of company-paid lawyers to assist him in executing a well-planned strategy to allow their patrons to remain in control of the board.

To reiterate: The Dees have the number to ratify the resolutions in today’s agenda of the annual stockholders’ meeting of Alliance Select, resolutions such as the entry of Strongoak as a significant stockholder and the questionable advances the Dees made to their own company in which Sycip is one of their board nominees.

With these credentials, will Sycip be fair to the public minority of Alliance Select or will he remain loyal to the controlling owners that make it possible for him to stay on chairman of the board?

By the way, a filing posted on the website of the Philippine Stock Exchange described Alliance Select as more public than others because the public ownership of its outstanding voting shares has increased to 55.33 percent as of end-2013 from 54 percent as of end-2012. If this is so, Sycip should be able to explain to the public how the Dees are still in control of the board. Are they among the “public?” If not, then Alliance Select is being ruled by the minority.


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1 Comment

  1. Gustave Fernandes on

    wonder when will all these board fight ends? Alliance Select is already registered as a Singaporean Company.

    the fun part? it is the same address as Bondeast Pte Ltd.

    what could this mean? maybe we will know in coming days.