Malacañang on Monday belittled a report that the Aquino administration plotted to shake down San Miguel Corporation (SMC) in 2011.
“How is government trying to shake-shake-shake, down-down-down?” Palace spokesman Edwin Lacierda replied laughing, when asked if the government is bent on destroying the SMC, the country’s biggest industrial conglomerate.
“I’m at a loss at that question. You have to give me specifics. It’s a general accusation which I’m not familiar with,” Lacierda said.
In a front-page article in The Manila Times on Monday, Ambassador Rigoberto Tiglao, the chairman of the paper’s Editorial Board, wrote that the Bangko Sentral ng Pilipinas’ bank supervisors plotted to discredit SMC’s financial viability and “trigger a credit crunch.”
Citing a BSP source, Tiglao said Nestor Espenilla, the BSP Deputy Governor for Supervision and Examination Sector (SES), led an investigation of SMC’s loan situation.
Espenilla was acting on orders “from a building by the Pasig,” a veiled reference to Malacañang.
But Lacierda said there’s no reason for the government to clamp down on SMC. “SMC is one of our biggest companies in the Philippines. We see no reason why we should be shaking down some—a corporation, which is in the top 10 of the 1,000 corporations in the country,” Lacierda said.
SMC President and Chief Operating Officer Ramon Ang expressed surprise at the supposed plot.
“Wow grabe,” Ang said.
Budget Secretary Florencio Abad refused to comment on the article, saying “I have no competence to talk about this concern.”
Palace deputy spokesman Abigail Valte was also asked for a reaction on the alleged shakedown on SMC.
“Where is the report from?” she said.
When told that it was written by Tiglao and published by The Times, Valte did not respond at all.
In his column, Tiglao said that the move to investigate SMC’s loan situation was led by Espenilla because the unit that he headed oversees banks and financial institutions.
“It was also Espenilla, when he was acting chairman of the BSP-led Anti Money Laundering Council, who ordered the freezing of billionaire businessman Roberto Ongpin’s bank accounts, for which Ongpin filed a graft charge against him on grounds of unjust harassment,” Tiglao said.
He added that “the SES in a confidential memorandum 29 March 2011 to Governor Tetangco and the Monetary Board jointly signed by Espenilla and his subordinates alleged that “SMC Group’s aggressive expansion to new/noncore businesses that have yet to establish earnings contribution together with its continued reliance on external funding exposes the Group to funding cost pressure.”
“This may result in “financial distress” for the conglomerate, and “cause cascading breakdowns that can have systemic consequences because of the Group’s extensive linkages and interdependencies not only to the banking system but also to the Philippine economy as a whole,” the SES told the Monetary Board. The SES even practically alleged that SMC was concealing its true finances through its “opaque inter-relationships among SMC (Parent Company), its stockholders and subsidiaries.”
However, a reading of the SES memorandum leads to no other conclusion that it is biased against SMC and maliciously alarmed the Monetary Board by exaggerating the conglomerate’s financial difficulties in order to get authority to raise a red flag in the markets against the group,” he added.
The former ambassador said that “the SES’ ill intent is obvious in the intricate “conglomerate map” (see image) it included in its memorandum. The map for “SMC Group” included the more than two dozen companies under the family of Antonio Cojuangco, the nephew of then SMC controlling stockholder and chairman Eduardo Cojuangco, Jr., making the conglomerate appear to have so many disparate enterprises. It is well known though that Antonio is not at all involved in SMC, and his connection with his uncle is only through Paniqui Sugar Corp., the clan’s old sugar milling in which both have equity. (Antonio, 12% and Eduardo 15%).