THE bureaucracy must take its cue from its boss, President Duterte, who pointed out in his State of the Nation Address the other day that the news website Rappler is American-funded, in violation of the Constitution that bans even a single peso (or dollar) invested in a media company by a foreigner.
It is the Securities and Exchange Commission (SEC) that is the body authorized to enforce the Constitution’s provisions on limits to foreign investments. Will it ignore the President himself, and bow to powerful foreign interests?
Minutes after Duterte pointed this anomaly out in his speech, Rappler.com’s president Maria Ressa tweeted: “President Duterte, you are wrong. Rappler is 100 percent Filipino-owned.” She even used the issue to question Duterte’s qualifications to be President: “Any leader should vet his information.”
Ressa is as terribly wrong as in the fake news of “7,000 killed” in Duterte’s anti-drug war that Rappler reported in September.
The online-only news site in its report yesterday on Duterte’s allegation claimed: “ Rappler has debunked this claim on foreign ownership… Rappler is 100 percent Filipino-owned even if the company uses Philippine Depositary Receipts (PDRs) to allow foreign partners to have commercial interests. (Foreign firms) Omidyar Network and North Base Media… have economic interests but own no part of Rappler.”
This is such absurd legal contortions, at the very least.
I had written about Rappler’s violation of the Constitution two months ago, and debunked its asinine justification involving PDRs. I hope the SEC does its job and rule whether or not Rappler violated the nation’s basic law. That column follows:
While mining and energy magnate Benjamin Bitanga is the principal Filipino owner of Rappler, the firm got a reported $2 million in investments in 2015 from US firms Omdiyar Network (funded by the founder of the world’s biggest online retailer eBay) and tech investment firm North Base Media.
Rappler’s excuse that these firms merely invested in it (through “Philippine Depositary Receipts”) but “don’t own” (sic) is total hogwash, as I explain below.
The Constitution’s Article XVI, Section 11 is categorical: “The ownership of mass media shall be limited to citizens of the Philippines.” That means that not a single peso of foreign money can be invested in a media company. Indeed, even in an era of free-flowing capital, most countries in the world have maintained their restrictions on foreign capital in their media. For good reason, since only its citizens must have primary control of the means of forming public opinion.
Rappler has even been at the forefront of the Yellow Cult’s efforts to portray—falsely—the country as one in which the streets are flowing with blood and littered with corpses as a result of Duterte’s anti-drug campaign.
It was Rappler that fabricated the false figure of 7,000 which it said was the number of extra-judicial killings under this administration as of September last year. Despite the fact that this figure has been totally, completely debunked, Rappler has refused to apologize for it and correct it. It has been that false figure that the New York Times, BBC, the Guardian and nearly all Western media have quoted as “facts” to condemn this administration as guilty of massive human rights violations.
It was Rappler’s biased articles that Sen. Antonio Trillanes’ minion Jude Sabio quoted the most in his “mass murder” allegations against Duterte and 11 other government officials in his complaint before the International Criminal Court. So did Magdalo party-list Rep. Gary Alejano in his rejected impeachment complaint, so much so that Rep. Rodolfo Fariñas blurted out in anger, scolding this former mutineer: “You’re wasting our time by basing your complaint on Rappler articles!”
How can we not be in outrage against a news outfit funded hugely by foreigners that spreads lies about our country?
Rappler itself in a February article (by-lined by “Rappler.com”) admitted that foreign firms invested in it in 2015. Yet this is not reported in its financial statements submitted to the Securities and Exchange Commission.
It claimed that the foreign capital it received was in the form of “Philippine Depositary Receipts” (PDRs).
It argued in a contortion of logic: “PDRs do not indicate ownership. This means our foreign investors do not own Rappler. They invest, but they don’t own. Rappler remains 100 percent Filipino-owned.” It said that other media firms have been using PDRs to get foreign investors. The anonymous Rappler writer was referring of course to the PDRs that ABS-CBN, GMA 7, and even Indonesian Anthoni Salim’s media empire have been using.
In the first place, PDRs actually violate the Constitution’s foreign-capital restrictions, since these are mere legal constructs precisely designed to skirt our Charter to give crooked regulators and judges the excuse to look the other way.
Corporate laws all over the world, including the US, all define a person as an owner of a corporate stock if he is the” beneficial owner” of it, that is, if he gets the monetary benefits from it. Only in the Philippines do we have such a scheme of “depositary shares” in which a foreigner is technically not the owner of the stock but gets all the income because of that share.
The invention of “depositary shares” was actually because of PLDT’s political power: the strongman Marcos secretly became its biggest stockholder through dummies when US firm GTE sold it in 1967. To pretend compliance with constitutional restrictions, the Marcos-controlled SEC authorized it to replace with “depositary shares” American-owned PLDT stocks that had been listed in the New York Stock Exchange, because after 1974 when the Laurel-Langley Agreement ended, even Americans could no longer own more than 40 percent of a public utility firm.
GMA-7 and ABS-CBN
On the basis of that precedent, media firms GMA-7 in 2007 and ABS-CBN in 2013 ware authorized by the SEC to sell PDRs to foreign firms in order to expand their capital. That of course was a demonstration of the power of media in this country—and of the Lopezes’ clout with Aquino 3rd’s government.
However, Rappler wasn’t even careful in giving its PDRs a semblance of legality as GMA-7 and ABS-CBN at least did.
PDRs have been defined by the SEC as “securities”—instruments of participation in a company’s shares (and income) offered to the public. All existing PDRs in fact have been issued on the justification that this would expand our stock market.
Thus GMA-7’s and ABS-CBN’s PDRs are traded in the Philippine Stock Exchange, duly approved by the SEC and were issued after circulating the required prospectus to the financial markets.
The Securities Regulation Code (Section 8.1) emphasizes: “Securities shall not be sold or offered for sale… without a registration statement duly filed with and approved by the Commission. Prior to such sale, information on the securities, in such form and with such substance as the Commission may prescribe, shall be made available to each prospective purchaser.”
The SEC has not authorized Rappler to issue any public securities for listing in the stock market, much less those special PDRs. It hasn’t been given an exemption for such registration by the SEC. Rappler isn’t even listed in the stock market. How can it issue PDRs?
Rappler not only violated the Constitution, it also violated the country’s securities laws, the penalty for which could reach up to 21 years of imprisonment for the firm’s officers.
Enforce securities laws
I would think that if the Duterte administration executes our laws, as it is required to do, it would have to enforce the Securities Regulation Code on this matter, which other than huge financial penalties would require the suspension of Rappler’s authority to operate as a corporation.
The past regime of course had looked the other way in this case of Rappler’s violation of the Constitution (or of our securities laws), just as it did in the case of the Philippine Daily Inquirer’s tax case and refusal to vacate government lands. After all, these two media outfits were big supporters of Aquino 3rd.
We cannot allow Rappler’s violation of the Constitution to continue, as it would be a very dangerous precedent. Filipinos are among the biggest number of internet users in the world, the 15th largest, with an estimated 54 million users. This is such a huge market for the business of internet news sites, which is now, after TV and radio, the biggest source of Filipinos’ information about the country.
Because Rappler has been able to get away with having foreign investors, the biggest internet firms in the world could also set up their own news sites for the Philippines and use unscrupulous Filipinos as dummies. With their mammoth finances, they would be able control the dominant news vehicle of this era, the Internet, and bury even the Philippine media giants now, the broadsheets and the TV networks.
Rappler has indeed demonstrated—what with its P250 million capitalization, half from foreigners—how an outfit with little journalistic excellence but with tons of money to burn in internet technology can get a huge chunk of the market in a few years’ time.
And as Rappler has also demonstrated, a foreign-funded internet news site can seriously and very easily damage the country’s reputation.
Facebook: Rigoberto Tiglao