Salim brought in zero funds to capture Meralco


Second of a series on the Salim Empire in the Philippines

ONE compelling economic justification for foreign investments is that a capital-deficient developing country like ours needs capital from abroad, which developed countries with capital-surpluses can provide.

This is not the case, though, in the accumulation of the controlling stocks in Manila Electric Co. by firms controlled by the Indonesian magnate Anthoni Salim.  It is a cautionary tale proving that the presence of foreign business does not necessarily entail capital inflows into the country.

According to publicly available data, Salim’s firms acquired what now makes up the 50 percent controlling stocks of   Meralco —now under the corporate vehicle Beacon Electric Assets Holdings— through the following two main avenues.

First, was a clever, but I would say questionable, scheme that involved the funds of the Beneficial Trust Fund of Philippine Long Distance Telephone Co., the giant telephone firm which Salim also got to control in 1998.

The Fund was used in 2009 to purchase 10 percent of Meralco shares —which made up, as it were, the Indonesian tycoon’s first beachhead in this capture of Meralco.

And second, domestic borrowings, both short- and long-term, from local banks totalling at least P30 billion, financed the rest of the purchase of the Meralco shares, collateralized by those very stocks.

In effect the savings of thousands of Filipinos, both small depositors and corporate investors. financed the acquisition by an Indonesian magnate of our biggest power firm.

PLDT Beneficial Trust Fund

PLDT’s Beneficial Trust Fund in February and March of 2009 had quietly bought Meralco shares totaling for 10 percent of its shares.  To this day, the cost to the Trust Fund of its purchases had not been disclosed, as the price during that period ranged from a low of P90 per share to a high of P123.

However, PLDT’s 2009 reports to the Philippines Securities and Exchange Commission as well as to its US counterpart, did not report the Fund’s purchases of  Meralco shares. The Fund had assets of over P20 billion at that time, accumulated through contributions both by the company and its staff, as required by various agreements with its labor unions and as part of its compensation scheme.

It is run by a board of trustees, which although theoretically independent, has been controlled by PLDT management, which is in turn is appointed by its controlling stockholders—since 1998, Salim’s firms.

The fund’s chairman when it bought the Meralco shares was now Foreign Secretary Albert del Rosario, who had been a board member of the PLDT ever since the Salim Empire got to control it in 1998.  He was also a director of First Pacific, Salim’s flagship for his Asian empire since 2003—even when he was Philippine Ambassador to the US from 2001 to 2006—until 2011, when he was appointed Foreign Affairs Secretary.

“Del Rosario is not MVP’s man, but Salim’s,” an investment banker explained. “He opened the doors in Manila’s business world for MVP, who then was an obscure investment banker in Hong Kong.”

“MVP” is Salim’s chief executive in Manila, the face of his empire here, who chairs most of the Indonesian magnate’s main companies here. “That’s how well connected the Salim Empire here has been,” the banker said.

One of Pangilinan’s top executives, Ray Espinosa, who has been vice chairman of the fund from that time until now, claimed then that the fund’s Meralco shares were merely portfolio investments it bought just like shares of other listed firms.

However, seven months later, in October 2009, Salim’s holding firm in the Philippines, Metro Pacific Investments, bought all of PLDT Beneficial Trust Fund’s Meralco shares, for a purchase price of P14.2 billion, or P126 per share.

But Metro Pacific didn’t pay the pension fund cash.

Metro Pacific swap

Payment was in the form of new shares in Salim’s flagship in the Philippines, Metro Pacific Investments Corp, which it issued and valued at P9.5 billion.  It cannot be determined how much the Fund gained or lost, since it had not disclosed how much it spent in buying the shares in the market early in October.

The Fund though got to turn those shares into cash only a year later, when it sold these in the stock market, in tranches in April and October for a total of P12.9 billion—lower than the P14.2 billion sale price of its Meralco shares.

final image for col 209 Salim and Del Rosario


Apparently encouraged by the role of PLDT Beneficial Trust Fund in acquiring Meralco shares for the Salim group, and with nobody opposing such utilization of a pension fund, his executives have used it to the hilt, by using its funds to organize what would be a very aggressive MediaQuest Holdings.

If you’ve never heard of it, its investments are in firms that you would certainly know unless you are a hermit.

MediaQuest wholly owns Channel 5 together its website; 80 percent of the Business World newspaper (whose editors it will soon replace); 20 percent of Philippine Star (which it plans to completely control soon by buying the shares of Speaker Feliciano Belmonte’s family); and 18 percent of the Philippine Daily Inquirer.

Business sources say that Salim’s media holdings could explain why he has been able to remain virtually invisible to the public here, while Mr. Pangilinan, who has only microscopic shares in Salim’s firms, has been the conglomerate’s face.

The use of the PLDT Beneficial Trust Fund was a brilliant, though controversial, financial maneuver, and one would have to give a lot of credit to Pangilinan.

Sources claim though that it was the brainchild of two British First Pacific executives who control tightly the conglomerate’s finances and who report directly to Salim: Christopher Young, PLDT’s “Financial Advisor” since 1998, and Metro Pacific’s Chief Financial Officer David Nicol.

The bottom-line of it all: It was the thousands of stock market investors who bought those MPIC shares held by PLDT Beneficial Trust Fund that were exchanged for the Meralco stocks. They financed Salim’s Metro Pacific acquisition of that 10 percent bloc in the power firm.

Cash-out: Zero

How much therefore did Metro Pacific in effect spend for that block of shares now valued at a mind-boggling P31 billion?


The financing for the purchase of the rest of 40 percent of Salim’s Meralco shares also came not from fresh capital from Hong Kong or Indonesia, or the British Virgin Islands, but from our country’s financial system.

The P21.4 billion that financed the July 2009 purchase of 20 percent of Meralco shares by PLDT subsidiary Piltel  (later renamed PLDT Communications and Energy Ventures, or PCEV), according to PLDT’s report to the US SEC, came from the telephone company’s   “cash flows from operations and borrowings.”

The rest of the Meralco shares which the umbrella firm Beacon Electric Assets Holdings in 2012 bought were financed first through bridge-financing facilities and then through Corporate Notes with 5 to10 years’ maturity all totaling P30 billion, mostly arranged by the investment banking units of Metro Bank and the Philippine National Bank.

And the collateral used for these borrowings?

The very Meralco shares Salim firms had bought with the money they borrowed.
And how would the Salim firms pay these loans?

With Meralco dividends.

Since the advent in late 2009 of the Salim-picked management of Meralco, the firm’s dividends have rocketed, from just P2.8 billion in 2009 to P9.4 billion yearly from 2010 to 2013.

Because Salim’s firms are the 50 percent owners, they got half of that bonanza or P18.8 billion in the last four years.

That would be more than enough for the Salim firms to pay off in the coming two to three years the debts they incurred to buy the Meralco shares.

And they would have still billions of pesos, first, to remit to Salim’s investment company First Pacific in Hong Kong, and then to his offshore firms in the  tax havens in the British Virgin Islands and Liberia. and


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  1. i admire amb.tiglao greatly. but i won’t whine about pldt or meralco. i bought my pldt stocks at ave. price of 1,400 and meralco at ave. price of 175. just look where they are now. to each his own in making money sa daang matuwid.

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  3. Grace C. Valerio on

    So where do we go, to whom do we go? It seems that there’s nobody left to trust in our country.

  4. SEC have know this kind of dealing when acquiring big volume of transaction, Pldt trust fund becomes the coduit of such purchase indisguise of another porfolio and there’s no question on part of meralco whose buying their stock, now we know who are the players this is transaction.
    Only in the the philippines could happen things like these , in some other countries players are bound to disclose the transaction and even have antitrust law when acquiring a ticket item specialy a primier company like meralco which caters to a million household and no one else to choose frm ,its a sure money in the bag why not just the goverment take a share of meralco? Like SSS or GSIS..? Where employees contribution have the share of its dividend.
    It just reminds me of Bobby Ongpin , a quick money comes from, the bank .I return your money when I sold my stock….no money involved frm my pocket…..PLDT Beneficial Trust fund is the looser…he just make you as the front and dump you when Salim gains his controls of meralco

  5. Hoy Belmonte! Tulog kpb? Gusto mo pang mag CHACHA? Baka naman Belmonte wanted all them power generators, transmition and Meralco to be owned 100% by foreigners. BELMONTE GISING!

  6. Bert O. Romero on

    Ambassador Tiglao: congratulations on a well-written and superbly researched commentary on the acquisition of MERALCO by the Salim Group, through the Quisling-like maneuvers by our Filipino “patriots” Pangilinan and Foreign Secretary del Rosario. Can we still seriously entertain the possibility of letting MVP run for the presidency in 2016? Or shall we still allow del Rosario to manage our country’s foreign relations with his proven non-squeamishness to sell Filipino interests down the river? A well-known Amboy sleeping with Indonesian business interests is capable of selling Philippine interests to ANY highest bidder.

  7. MVP is not rich. From 1978 we know that he is an employee of Salim, But the brilliants of MVP with the prodding of President Ferdinand Marcos to attract the biggest Indonesian Salim Group invest in the Philippines has the blessing of Indonesian Dictator President Suharto.

    • Your information is inaccurate. MVP in 1978 was not an employee of the Salim Group. He was athen working as an investment banker. The first investment of the Salims through First Pacific was in mid 1986, after the fall of the Marcos regime.

  8. Wow! This is an eye opener….so much for the philantrophic attributions to MVP…he is really a traitor to the people….

    And likewise to our very own US ambassador DEL ROSARIO…kaya pala sobrang yaman niya! Mga magnanakaw na DILAWAN…

  9. There will be no investigation because big business contributed much during election time. I am not accusing but allow me to ask: How much did the Salim Group contribute to the 2010 presidential election? Why was del Rosario appointed as the new DFA secretary right after Pnoy won?

  10. Great analysis, Mr Tiglao. You cut through the corporate-speak and let us understrand how the deal was made. Several questions though: Is there not a law or ruling which disallows employee trust funds from being invested in highly speculative trading such as buying shares in the open market? By their very nature, employee trust funds (such as the PLDT Beneficial Fund perhaps) should be invested primarily in secured instruments such as T-bills and government bonds. What complicates this issue is the seeming lack of document disclosing the original transaction of buying PLDT shares. Perhaps more research is needed. On the issue that the Salim Group sourced the funds from local banks, it may be true that bottom line the transaction did not bring in external/foreign capital. Unless there is a law which prohibits that (i.e., the sourcing of funds from local banks), it actually is a good opportunity for the PH banking system. Perhaps a law should be crafted to make sure that there is ample foreign capital brought in as opposed to a wholly locally sourced funding.

  11. I used to received even a P1.20 stock PLDT dividend before PLDT bought Meralco. Now for more than five years its ZERO. Maybe PLDT used our stocks, many of whom converted their deposits to PLDT stocks after EDSA I, to buy Meralco. This maybe is the reason why we, small PLDT stockholders receive NO MORE DIVIDENDS from PLDT. SEC please check.

  12. Indeed it’s a clever financial maneuver by MVP and his master Salim. For all these years, especially, in this PNoy regime, their financial holdings increase in multiples. We owe greatly Mr. Tiglao on this valuable information. I thought one of the requirement in accepting a vital government position, is to divest oneself from the management position of a business entity, or even his assets. Does DFA Sec. Del Rosario have delicadeza? Does his clout rub on Sec. Petilla, when the DOE secretary endorsed the idea for Meralco to petition the SC for favorable consideration on their rate increase?

  13. wow ginawang palabigasan ang mga kawawang pilipino! nasaan ang ating magigiting na mga senador na nag husga sa impeachment ni Chief Justice Renato Corona? Dapat itong si MVP parusahan

  14. God bless you, former Ambassador and former Gloria M. Arroyo PR man Tiglao.
    Please continue writing your analyses of the way this hypocritical “Daang Matuwid” president and his key people have betrayed his own announced moral thrust.

  15. Congress should investigate this and then recommend any of those liable criminally just like what they are doing in America or the government is just complacent anyway they are being silenced while they are being showered by MVP and Del Rosario?

  16. Wow what an analysis how about the money they brought out when salim buy PLDT shares how much to complete the analysis.

  17. whew, ganoon ba yon? nagisa tayo sa sariling mantika? Bakit si Salim pa? Hindi ba kaya ng mga local businessmen natin gawin yong manuevers na yon? Kahit pa pala e takeover ang Meralco ok lang kay Salim, hindi mababawasan pera nya. Ang masama pa nito ang kita nila dito sa labas pumupunta. Gumawa naman sila ng new big investment na makadagdag ng trabaho, mag isip naman sila MVP at Del Rosario, Hindi yong puro takeover lang gagawin nila walang madagdag na trbaho doon.

  18. Manuel C. Diaz on

    And a bunch of lunatic Filipinos wants the Constitution amended to accommodate these carpet baggers. No wonder the Salim Group is repatriating the money of MERALCO by investing one billion US$ to buy into a Singapore power plant while here in islas de ladrones we are looking for money aka foreign carpet baggers to invest in our power plants.Our acclaimed leaders have been selling us down the river first the American Parity Rights Amendment giving equal right to the Americans now this an amendment to the Cory 60/40 Constitution to accommodate these carpet baggers.

    • Our corporate elites and high-ranking politicians – the bourgeoisie, are prostituting the country. And who gets to suffer most from these malevolent schemes? The poor folk, who toil night and day just to sustain their meager everyday needs while the rich extravagantly waste the money that came from the taxes of ordinary Filipinos!!

  19. Your financial ingenuity, analysis, observation is superbly right, we got fried with our own sweat and blood….

  20. Just wondering….what’s MVP’s response to all of these claims? He must be totally embarrassed having been exposed that he is just a very minor player on this mega-million transactions and that he could be given the boot anytime. So he is not that rich after all…no wonder his name does not even appear on the top tier of the BIR’s list of high paying taxpayers.