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By Johnna Villaviray, Senior Reporter
In 1990 Mel Velarde, then 26, carved out a name
for himself as a telecommunications whiz by introducing cable
television to low-income households.
In 1998, at 34 Velarde sold his shares in Sky
Cable to concentrate on providing two-way broadband satellite
Internet service throughout the country.
Four years later, Velarde engineered the buyout
of Nextel Communications Philippines Inc. (NCPI), renamed Next
Mobile, to go head-on with established cell-phone companies.
Velarde’s record in the telecommunications
industry, however, was insufficient to put out the controversy over
the company’s actual ownership.
“There is no evidence that the ‘Mel Velarde
Group’ has the required financial muscle and wherewithal to
acquire such a big amount of P11 billion, or $200 million, in order
to justify its acquisition of NII’s shareholder advances in the
NCPI,” said the Congress resolution that called for an
investigation into the NCPI’s corporate structure.
The NII is the US-based mother company of the
NCPI, whose foray into mobile-phone operations without a proper
franchise–its license was for trunk radio operations–also
boggled lawmakers looking into perceived misdemeanors by the
company’s previous owners.
Rep. Prospero Nograles, an author of the
resolution, admits the panel needs more time, and more information,
to digest or dismiss consistent reports that Velarde and his
partner, Maxwealth International, are fronting for another interest
group.
“Mahirap mo ng ma-link on the basis of
the document. But with the testimonies of the people there, we’ll
dig deeper into [this],” Nograles said.
There is little direct evidence to support the
theory, but Nograles acknowledges that there is a preponderance of
suggestions that NII executives had very influential people, both in
the private and in the public sector, helping them.
Nograles could not understand how the Securities
and Exchange Commission (SEC) and the National Telecommunications
Commission allowed the NCPI to go beyond its license.
In the quarterly registration statement filed
before the US SEC in 1998, the NII acknowledged that its
transactions were open to legal challenge.
“The company believes, and has been advised by
Philippine counsel, that the above-described transactions with
Gamboa Holdings comply with Philippine law, including applicable
Philippine corporate ownership rules,” it said. “However, there
can be no assurance that the above described transactions will not
be subject to legal challenge.”
In another document, the NII narrated how it
acquired 87 direct and indirect shares of the NCPI through holding
companies that it helped establish.
The SEC received a complaint against the NCPI
around April this year, but the deliberation by the SEC en banc was
preempted by the congressional inquiry, which asked the SEC to
provide a status report of the case.
“The Office of the General Counsel is on top
of that now. It is working with the congressional inquiry,”
assured Fe Gloria, a two-term commissioner.
Dan Gabuyo, a lawyer from the SEC’s Company
Registration and Monitoring Department, said the NCPI was told over
a month ago to explain why it has not been complying with the
government’s reportorial requirements. Registered companies are
required to submit a general information sheet and financial
statements to the SEC.
Questions on NCPI’s ownership seeped out with
the disclosure of its former president and chief executive officer,
Antonio Urera, that the NII used dummy corporations to buy out local
shareholders.
Urera, a veteran in the telecommunications
field, went public with “personal knowledge and/or information
about the management, operations and affairs of the NCPI.”
In the affidavit filed before the congressional
panel, Urera described how the NII violated laws on the limitations
of foreign ownership and the antidummy law, suggesting that the
consolidation of NII’s interests in the NCPI was marked by the
entry of Gloria Tan-Climaco into the board of directors of Infocom,
the NCPI’s previous name.
Climaco started her career with the accounting
firm Sycip Gorres Velayo & Co. (SGV & Co.) and became its
youngest and only female chairman and managing partner. She had been
President Arroyo’s adviser for strategic projects and figured
prominently in the brouhaha over the bidding for the Ninoy Aquino
International Airport Terminal 3.
The Gos, who owned the share in the NCPI that
Gamboa Holdings bought, were a client of Climaco while she was with
SGV. Climaco also engineered the merger of Equitable Bank and PCI
Bank.
Equitable-PCI Bank is among many on the stable
of clients of the Angara, Abello, Concepcion, Regala & Cruz Law
Offices (ACCRA). The NCPI is among ACCRA’s clients.
Urera is convinced that NII executives would not
have been able to skirt the law had influential groups not helped
them.
“What I know is, if you got a powerful firm
here, they will be close to many things, many offices,” Urera
said.
Velarde’s takeover of the NCPI lent credence
to rumors about the special treatment the company has received owing
to his past business dealings with the Villaraza & Angangco Law
Office–known as the Carpio, Villaraza and Cruz Law Offices before
its two founding partners joined government service.
The firm of Arthur “Pancho” Villaraza is
disreputably close to President Arroyo and her family. Its founding
partners, Avelino Cruz and Antonio Carpio, were appointed
presidential legal adviser and Supreme Court justice. A senior
partner, Simeon Marcelo, serves as Ombudsman.
A ranking SEC official said that NII executives
approached the Villaraza firm, known in law circles as a spotter for
troubled companies, to help quell a government investigation into
its ownership structure.
Velarde, through a subordinate, denied that the
Villaraza firm was behind his acquisition of the NCPI. He
acknowledged, though, that Villaraza has been his legal counsel for
a number of years.
In a faxed statement, Velarde said his
involvement in the industry consisted of “building blocks of a
personal vision for his country: an establishment of a nationwide
wireless infrastructure that is dedicated to delivering education on
all levels as the core intent to Filipino masses.”
“The convergence of education and ICT
[information and communication technology] will pave the way for a
truly life-changing, fate-altering impact on the Filipino masses. My
personal goal is to have as many millionaires and billionaires in
the Philippines,” it continued.
Velarde’s good intentions appear to be
overshadowed by the alleged involvement of the Villaraza firm, which
also represented the tycoon Lucio Tan, a losing bidder for the NAIA
Terminal 3 project.
The Villaraza firm is known to be an aggressive
and thorough firm. The Manila Times tried to get Villaraza’s
comment but was told by his secretary that he was “not
interested.”
Former SEC chairman Perfecto Yasay recalled
that, at one point, Villaraza and Carpio lobbied him to reject the
application of Pilipino Telephone Corp. for a public corporation.
“At that time Pancho Villaraza was going
around talking to the commissioners,” Yasay said in an interview.
“’Yung law firm na ’yun, very influential at the SEC.”
Yasay, who blew the whistle on Estrada’s
efforts to protect the businessman Dante Tan during the BW stock
manipulation scandal in 1999, acknowledged that he has nothing solid
on wrongdoings by the other SEC commissioners.
But he said some instances, including a supposed
request by now Supreme Court Justice Rene Corona for an injunction
on his wife’s case, buttressed his impression that the other
commissioners were not working independently as called for by SEC
policies.
“If the Villaraza firm says do what we want,
and the commissioners know that the firm is close to the
administration, they would side with the law firm,” Yasay said.
Fe Gloria, a career official who has been
serving the agency for over three decades, was the senior
commissioner during Yasay’s chairmanship of the SEC.
Yasay expressed disappointment with Gloria,
saying she does not appear to be upholding the changes made to
ensure SEC’s independence from political pressure.
He acknowledged being told that Gloria is a
“silent partner” in the Villaraza firm, but that no direct
evidence links her to Villaraza, a Sigma Rho fraternity brother of
her late husband.
The Sigma Rho has members spread across the
biggest law firms in the country, including the ACCRA.
Gloria acknowledged that she knew Villaraza, but
said professional and personal interaction between them was minimal.
“There are instances when we would meet in the
office, but that’s common among lawyers in the SEC,” she said in
a telephone interview.
She added that while her husband and Villaraza
were fraternity brothers, Villaraza was “very much a junior.”
A colleague of Gloria agreed that it was very
hard to substantiate the influence of the Villaraza firm in the SEC.
“Their names don’t appear in anything. There
are hardly any appearances. They are very discreet,” the SEC
official said.
“But that’s how [the firm] works, in the
background.”
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