In a season not jolly, small investors slam corporate folly

Marlen V. Ronquillo

Marlen V. Ronquillo

The Philippine investment context has yet to turn out the likes of Carl Icahn, the activist—investor who does not shy away from fighting the management of the US corporate giants when he feels that these giants have been shortchanging their investors—or have been underwhelming in their performances. Icahn has fought so many battles on behalf of investors and for increasing shareholders value that his investing genius has been largely overshadowed by those crusades.

More often than not, Icahn’s aggressiveness has pushed even the iconic corporations to heed his advice on investment, management and profit-sharing strategies. Icahn, you see, is predisposed to fight very public and very nasty corporate battles, damn the egos and reputations that get skewered in the process. Right now, his big preoccupation is a challenge to Apple, the technology behemoth.

The likes of Icahn, proactive and aggressive, may have prevented many a corporate busts in the US.

Icahn and his crusades for investors big and small came to mind after reading an e-mail on the continuing woes of around 15,000 small investors who acquired around P4 billion worth of shares from the initial public offering of the failed Uniwide Holdings in 1996 . At the time of the IPO, Uniwide was the largest mall operator in the country. The development of the Coastal Mall at a reclaimed area strategically located just off Manila Bay, a portion of which Uniwide had leased from a developer, was supposed to boost its corporate fortunes by leaps and bounds .

Then came the 1997 Asian financial crisis. Unwide went belly up as a result of the crisis and has been placed under receivership by the Securities and Exchange Commission (SEC) in 1999. It has been struggling to recover lost footing under the SEC receivership.

Sabotaged viability
The small investors, led by one Brenelie Rualo, believe that Uniwide can easily transition to viability even under the receivership – which shall lead to the recovery of their investments no matter how minuscule . But the road to viability allegedly had been sabotaged by three people: Jack Ng Sr., the president of the Manila Bay Development Corp, that owns the Uniwide-leased property and two former top officials of Uniwide , former chief finance officer Jimmy Cabangis and former comptroller Corazon Rey.

Rualo et al recently filed estafa cases against Ng Sr., Cabangis and Rey on the grounds that the three allegedly bled Uniwide dry of its resources. First, the three convinced the original owners of Uniwide, the Gow family, to build a P1.7-billion Coastal Mall from the IPO proceeds, a mall that Ng Sr., was supposed to complement with developments of his own but did not. Then they prepared the terms of an “iniquitous” lease agreement under which Uniwide continued to pay rentals despite its woes . A total of P380 million has been paid to MBDC under the unjust lease agreement, according to the small investors.

In short, Rey and Cabangis, were two Uniwide insiders who allegedly conspired with Ng Sr., instead of working for the interests of Uniwide and the 15,000 small investors.

Schemes to shortchange investors
The small investors claimed that the schemes to shortchange Uniwide and its investors have been deliberate and sustained. For one, the group of Ng had prior information that the highway, now known as the Diosdado Macapagal Boulevard, was to be constructed and it would cut through the Uniwide-leased area. But Uniwide was not informed about the major road project.

The highway construction halved the size of the Uniwide-leased area from the original 20 hectares to 10 hectares, according to the small investors, and this dramatically altered the development plans that were all based on a 20-hectare lease. The financial impact was also huge as companies that advanced P400 million to get prime spaces at the 20-hectare Mall got their money back.

With MBDC’s failure to complement the Coastal Mall with developments of its own, including a commitment to build a massive commercial center, the Uniwide Group demanded softer lease terms from the developer. The MBDC responded by an effort to evict the Coastal Mall.

The Uniwide group, according to the small investors, did not enjoy the usual moratorium on payment of rentals even during the construction phase. So, even during the initial phases of the construction, which began in earnest in 1998, rentals were demanded by the MBDC.

The original contract period agreed upon by the lessee and lessor was for 20 years . It was shortened to 19 years under the final contract.

The small investors claimed that “ fraud” was written all over the Coastal Mall agreement and that was the motivation behind the filing of the estafa charge against Ng Sr., Cabangis and Rey.

While corporate fraud cases are a big thing in the developed economies , there is very little attention paid to such cases in the Philippine context . And in developed economies, there are activist-investors like Icahn who carry out high-profile efforts to seek redress for the grievances of investors in listed companies.

It is in that light that any quest for justice from small investors, who feel that they have been shafted by corporate chicanery, is worth watching and supporting.


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  1. The rich & powerful have no feelings towards anyone. Its their profits that matter. If you lose your money they dont care. We all know big businesses will rip you off if they can. The rule is investor beware.