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THIS corner is not particularly keen on horseracing.
However, when the so-called Sport of Kings begins to involve
corporate governance and constitutional issues, then it becomes a
matter of public interest. The following is a case in point.
Lately, Philippine Racing Club,
Inc.—owner and operator of the P12-billion Sta. Ana
racetrack—has attracted much attention following revelations from
the Philippine Stock Exchange that PRCI has exceeded the
constitutional limit on foreign ownership since 2005. PSE has asked
the Securities and Exchange Commission to look into the possible
infractions by PRCI and four other publicly listed firms.
Not too long ago the
Malaysian-led faction in the PRCI board was stopped by the court
from consummating a deal, which would have swapped ownership of its
P12-billion property in Makati for shares in JTH Davies, described
as a P25-million firm with no visible earning asset.
Disclosure denied
PRCI’s Filipino shareholders
sought a full disclosure of the deal—as is their right—but the
Malaysian-led group apparently believes the locals do not deserve
transparency.
The discovery of the breach of
the 40-percent foreign ownership limit on PRCI is itself an
interesting story. According to PSE, that breach took place in
2005—the very same year the Malaysian-led PRCI group purchased JTH
Davies. It was probably also the same year when a plan to place the
racetrack beyond the reach of Filipino shareholders was put in
place.
The Malaysian interest in the
racing club is represented by the Kuala Lumpur-based Magnum Holdings
Berhad. Since it is the biggest foreign interest already present in
PRCI, the same group was probably referred to by PSE as having
expanded its stake in PRCI—in violation of the Constitution.
The Cua family—led by Santiago
Sr., also known as Cua Sing Huan, and his sons Santiago Jr., Solomon
and Simeon—also owns significant holdings in PRCI. Santiago Sr. is
honorary chairman and director of PRCI while Santiago Jr. is a
director together with Solomon who also sits as president and Simeon
as executive vice-president.
The Cuas also held major
shareholdings in the now-defunct Westmont Investment Corp. (Wincorp).
Observers hope SEC acts with
dispatch on the PSE revelation.
If the PSE exposé proves true,
then the lack of transparency becomes a more significant issue. It
goes beyond the question of whether or not Filipino shareholders are
given the full picture concerning corporate deals.
The question also concerns who
among the Filipino shareholders are conniving with foreigners to
commit a brazen violation of the basic law of the land.
Ordinarily, Filipinos do not
object to foreigners investing in the country—much less to the
expansion of their financial presence here. However, we expect them
to play by the rules as spelled out in the Constitution and other
laws.
The Sta. Ana racetrack is a
valuable piece of property and its investors have every right to
dispose of it as they see fit—provided, again, no law is violated.
What upsets observers is the
evident contempt for the Constitution in the bid to control the
disposition of one of the most prized pieces of real estate in the
country.
The public may find funny the
swap of a P12-billion property for paper shares in a P25-million
firm with no earning asset. However, the suspected breach of the
Constitution in the effort to consummate that deal was not comic at
all but alarming.
Ray of hope
There, however, appears to be a
ray of hope in this worsening row—and it is in the person of
former Defense Secretary Renato de Villa who sits in the PRCI board.
This column is not aware of the
interest de Villa represents in the racing club board; neither does
it know if he is part of the Malaysian-led faction. Nevertheless,
his record is one of honor, courage and integrity. Although he once
ran unsuccessfully for president, his admirers are still legion.
With de Villa in the PRCI board,
could he be expected to put his foot down on an attempt to violate
the Constitution for the sake of a real-estate deal?
Could he be expected to object to
a corporate transaction that violates the laws of the country he was
sworn to defend and uphold as a military officer and later as a
Cabinet member?
Will de Villa provide the
much-needed elements of sobriety and patriotism in this row, which
now involves the Constitution no less?
Given de Villa’s background,
those are reasonable expectations.
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