TOO BIG TO BE REGULATED?

Is the Senate afraid of exposing that foreigners now control 74% of Smart?

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RIGOBERTO D. TIGLAO

RIGOBERTO D. TIGLAO

WHAT kind of Senate do we have now, which in the past several decades, had proven to be the Republic’s last bastion of nationalism—as when it rebuffed in 1991 the pressures of the then very popular President Cory Aquino to retain the US military bases here?

Now some senators are falling over each other in their rush to give a foreign-owned telecom company, Smart Communications, almost everything it wants in a franchise. This includes exemption from all local taxes and the repeal of the requirement for it to list 30 percent of its shares in the stock market.

Even if public listing was a specific requirement of the franchise it got it in 1992, Smart has refused to do so for the last 25 years. Talk of regulatory capture: the Securities and Exchange Commission did nothing to enforce that requirement.

When Smart Communications was given its first franchise in 1992, helped by President Ramos then in order to pose competition to the then monopoly Philippine Long Distance Telephone’s (PLDT) Piltel, it was 100-percent Filipino-owned.

Twenty-five years later and needing its franchise renewed for another quarter of a century by this month, Smart is now majority-owned by foreigners, because it had become a 100-percent subsidiary of PLDT. That this telecom mammoth has become 74 percent-owned by foreign companies, is due to a great extent to deposed President Joseph Estrada who facilitated the foreigners’ takeover of it in 1998.

WHO HE? Do the senators even know that Indonesian Anthoni Salim is the biggest single stockholder of PLDT and therefore of its subsidiary, Smart, to which they’re giving a 25-year franchise? Did they even ask him to appear in Congress to argue why Smart should be given that permit to operate for a quarter of a century?

PLDT’s—and therefore Smart’s—controlling, and biggest single shareholder is the Indonesian magnate Anthoni Salim, with 26 percent of PLDT through his Hong Kong-based, First Pacific Co. Ltd. The second biggest, with 20 percent, is Japan’s state-owned Nippon Telegraph and Telegraph (NTT), the world’s largest telecoms firm.* (PLDT Chairman Manuel Pangilinan only has .01% shares in the firm.)

First Pacific and NTT announce–boast—these figures to the world in their annual reports and websites. Yet PLDT reports to the Securities and Exchange Commission that its foreign ownership is just 17 percent.

Such dominant foreign ownership has allowed Smart, through PLDT, to siphon out of the country about $1 billion in profits so far, most of this to the Indonesian and Japanese owners.

Drastically changed

Isn’t the fact that Smart has drastically changed from being a Filipino company to a foreign one important in evaluating whether the Senate should give Smart a 25-year franchise, especially since this is really in violation of Constitution’s 40 percent limit on foreign capital in public utilities?

We are the only country in Asia whose telecom industry—a strategic sector that exploits our natural resources—is controlled by foreigners. Isn’t our Senate wondering why that is so, and how it has and will affect our economic development?

Isn’t it ironic that Congress probed Perfecto Yasay, Jr.’s citizenship to eventually reject his appointment by President Duterte as his foreign secretary, when it refuses to examine the “citizenship”—i.e. whether it is or is not a Filipino-controlled firm —of Smart, which controls half of the country’s mobile telephone system?

Never mind the House of Representatives, or such a congressman as Reynaldo Umali, a Liberal Party stalwart and a former Bureau of Customs commissioner who has been, for some reason, Smart’s champion in this Congress and the past. We understand the ways of the world. But the Senate, purportedly the Republic’s bastion of integrity, consisting, as they say, of 24 independent republics?

Yet our senators seem to be either so awed or afraid of Smart that they didn’t even summon its biggest stockholder, the Indonesian Salim (who has never even stepped on Philippine soil), to tell the Senate in person why it should give his firm a new franchise. Even his top executive Manuel V. Pangilinan didn’t bother to appear at the Senate. Instead, only minor executives, the highest being the chief financial officer, appeared before the Senate.

Aren’t the senators insulted by that? Did they even summon oppositors to giving Smart a 25-year franchises, or Supreme Court Senior Justice Antonio Carpio who has pointed out in court decisions that PLDT has made a mockery of our Constitution?

Are our senators so terrified of Smart to find out who really owns it?

Aren’t the senators even curious that PLDT, which owns Smart 100 percent, has such mysterious firms as shareholders such as Metro Pacific Investments Limited, Larouge B.V., Intalink B.V., and Semilion Enterprises – two of which are incorporated in offshore financial centers known for their very secretive corporate laws.

Not even curious?

Are the senators not even curious that at the top of the corporate layering ownership scheme that leads to PLDT is an obscure firm, Pilipinas Enterprise Management Corp. (PEMC) whose stockholders are Pangilinan, Meralco executive Alfred Panlilio, PLDT officers Rene Bañez and Lourdes Chan, and Maynilad president Victorico Vargas?

Aren’t the senators curious that the market value of these five Salim executives’ indirect shares in PLDT and in the other major Salim firm Metro Pacific Investment Corp., through their PEMC holdings amount to a P3 billion for Chan and Bañez, P7 billion for Panlilio and Vargas, and P9 billion for Pangilinan? Their dividends from PLDT and MPIC because of their shares in PEMC in the past ten years could amount to from P6 billion to P12 billion.** This would put them in any listing of the country’s billionaires, but strangely, they’re not, they are still working their butts off at Salim’s firms.

Senator Ralph Recto, a grandson of the great nationalist Claro M. Recto, appears to be even awed by the foreign-owned Smart, telling this writer and senators in Senate hearings that they have no choice but to give the company its franchise, since “it has 60 million subscribers.”

What? That is clearly a simplistic too-big-to-fail justification, one that borders on capitulation to economic blackmail. One doesn’t have to be too smart to see that what the Senate can do, is to allow the firm to operate, while government finally investigates why it, as well as PLDT, has been allowed, starting from Estrada’s time, to operate a public utility even if more than 40 percent of its common stocks are owned by foreigners, in violation of the Constitution. If it cannot comply with the constitutional provision, the State not only can, but also must order it to sell the necessary shares to Filipinos.

PLDT of course had resorted to an artifice, the issuance of cheap, ”voting preferred shares” to its pension fund worth just P150 million, in order for it to claim that Filipinos are its main stockholders. But this is microscopic amount when compared to foreigners’ holdings of common stocks worth P218 billion. The Senate is not bound to such artifice in granting a franchise, which is a privilege, and not a right of a foreign firm.


Recto even defended Smart’s lobbying that it be exempted from listing its shares by claiming that if the firm is required to do so, PLDT’s stock prices would possibly go down. This is absurd and Recto should just look at another firm in the telecoms industry, Globe Telecoms, a listed firm whose mother firm is Ayala Corp., another listed firm.

Why has Smart refused to list 30 percent of its shares? Obviously because this would dilute the 46 percent shares of the Indonesian and Japanese controlling owners of the company to just 32 percent, weakening its presently tight control of this member of the telecoms duopoly.

Recto as well as Senator Miguel Zubiri even try to appear to be champions of “the general public” which they claim own more than 50 percent of PLDT, through the stock market.

So misleading

This is so misleading, and perhaps even dishonest of them.While about 50 percent of PLDT’s stocks are technically registered for sale and purchase at the stock market, foreigners through mutual funds and investment firms have been holding 28 percent of the firm’s shares. Only 12 percent are held by Filipino investors in the stock market. Even the tycoon John Gokongwei’s shares—which he has kept as his permanent stake in PLDT—has his 8 percent classified as stock market investments. Only less than 1 percent really of PLDT’s stocks are actively traded daily in the stock market.

It was only Senator Risa Hontiveros who demonstrated nationalism—perhaps independence or intelligence—by requesting the committee on public utilities headed by ex-US citizen Senator Grace Poe to ask Smart to report on the ultimate ownership of several Salim-controlled firms that are the biggest controlling companies of Smart’s mother company PLDT.

Hontiveros though will be given the runaround by Smart, which will inform the Senate that those firms have nothing to do with Smart. This is accurate, but I don’t think Smart will volunteer to disclose that these firms control its mother firm PLDT through an intricate network of corporate layers intended to hide from the public the fact that it is foreign-owned.

The franchise the Senate will give Smart Communications will last for 25 years, until the year 2042! That’s for a generation for chrisakes, halfway through which all of the current senators will no longer be in the Senate.

The Senate will be scandalously derelict in its duty if does not look into Smart’s ownership, and blindly give away a 25-year franchise to a foreign-owned telecom firm that not only has near-monopoly power in our strategic telecom industry but exploits our natural resource, the country’s radio spectrum.

* Details of this are in my book Colossal Deception: How Foreigners Control Our Telecoms Sector, available in most bookstores and at Amazon.com.

* Details in my MT column “Closet billionaires… or corporate dummies?”, June 21, 2015.
 
Email: tiglao.manilatimes@gmail.com
Facebook: Rigoberto Tiglao and Bobi Tiglao
Twitter: @bobitiglao
Archives: rigobertotiglao@gmail.com

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28 Comments

  1. The committee on public utilities headed by ex-US citizen Senator Grace Poe
    —————————————————–
    Poe sells out the Philippines again.

    Poe’s coverup for Aquino during the SAF 44 hearings.
    Now allowing foreigners to own the the internet, the electric, water services and media companies of the Philippines.

    Wonder what she will sell out next, Is anything left she can allow to be taken from the country ?

  2. CLARO M. RECTO would be disowning Raplh if he is alive.

    wholesale na binenta ang PINAS!!!!

    anyway– tehse senatrtors willpay in some otehr way–

    but in teh emantime, we suffer —

    wala

    mga taga gawa ng batas ang lumabag sa batas!!!

    may kinabukasa pa ba ang Pinas

  3. by the way just to simplify, when the telco companies were required to be listed, it was the intent that the telco company DIRECTLY offer its shares in IPO. but the SALIM AND PANGILINAN TANDEM schemed a way to circumvent the requirement with the STUPID or maybe PAID politicians ACCEPTING it (both the money and smart’s excuse of not listing.) it’s all about the money. LOBBYING, did anybody mention that he he… maybe just maybe some pockets are getting filled. who knows… what can we expect from our leaders from aguinaldo up to duterte… B******T. i admit, duterte is a better bullsh*t than his predecessors he he

  4. what else is new in the philippines. the ruling class running and owning the show. and the political elite just marching to the tune. he he… more fun? no! it’s MORE B******T in the philippines now and ever since. where’s my popcorn. SCAM. everything is a SCAM. the transfer of wealth from the masses to the ruling class. it’s all about the money. for the businessman and the politician. while the masses live and die poor.

  5. Not really sure if there is one already, but if there is none, it is but high time to have an agency or organization who should track progress of issues such as this.

    As observed, issues upon issues crop up each day that we forgot to follow thru on resolutions. And, it appears that new issues are deliberately ‘manufactured’ to divert the people’s attention. Sadly, and I apologize, filipinos have very short attention span, or are simply numbed already.

    With great minds aplenty in the senate, and the government as a whole, I wonder where the Philippines is headed. Doesn’t want to sound very negative, but the future looks bleak.

  6. Kung TOTOO nga itong mga inilahad ni Mr. Tiglao, dapat managot sa taong bayan ang mga may pananagutan kung bakit nangyari ito.
    Nakakahiya kayo, traidor kayo sa ating Constitution at taong bayan.

  7. Senate today is replete, no longer with statesmen, but with status men, i.e. people who go with the status quo, ever willing to please what the administration wants.

  8. The case is similar to Secretary Gina Lopez, when they argue and twisted facts to hide the criminality involved as reported.
    In the case of DENR , lose of jobs and policies are the argument of the mining industries, while negating the issue of
    destruction to our environment, and the smuggling of our gold abroad which is criminal in nature.
    In Smart case, Senator Recto argue that there are now 60 million Filipinos that uses SMART, in order to hide a criminal act specifically in violation of the constitution but inimical to public interest, that majority shares must be own by Filipinos.
    In both cases, special interest are being favored by our corrupt politicians instead of protecting the Public interest.
    Certainly, both lobbyist from the Mining Industries and SMART Communication knows how to massage our politicians with all the gifts we can imagine.

  9. How bout those who say, they are defender of the constitution? What can they say about it? Are they not going to make noise the way they usually do it? Or is this some kind of double standard? Lets wait and see….

  10. Simply said, the management of SMART and its layer of company owners are smarter than the bureaucracy of the government. They have taken advantage of constitutional loopholes legally available for the benefit of an Indonesian. This is without mentioning that the Meralco is also owned and operated by MetroPacific Corp, who just declared 19billion pesos as income for the year 2016, all of these remitted to the benefit of Indonesia.

  11. Thank you Mr. Tiglao! I am sure you have lots of political connections which you can utilize to bring this issue to President Duterte. Only him can stop this madness!

  12. The writer should raise this matter directly to the President and his cabinet instead of only writing in the press. Is Duterte not a nationalist who will act for the rights of the people? Go for it, Mr. Tiglao, instead of complaining after Duterte has left the presidency (as you are wont to do in the case of the previous President).

    • Agree Mr. Tiglao, need to direct this issue to Pres. Duterte and I guess he will give you an audience. You still have buddies I suppose in Malacanang to connect. I believe this was one of his campaign promise to have better telecoms service.

    • Aphetsky Lasa on

      I don’t think he will do that, Gerard. He can’t stand the President. He does not even watch him on YouTube, what more talk to him personally. Perhaps he will wait until the President’s term ends and wait for somebody he is more comfortable with.

  13. Let’s share and share and share this column fellow kababayans….so that others may know and reach the ears of the President.

    Thank you Bobby Tiglao!

  14. Can we ezplain this in Tagalog so that majority of the citizens can be informed and be real vigilantes for the rights of the citizens and the duties of our elected actors, unworthy elected officials, and politicians without self-respect, thus without respect for their fellowmen and electors. Salamat po.

  15. The senate are nothing but garbage since the time of then benigno aquino…better abolish the senate just wasting tax payers money….good for nothing

  16. The senators are just being “Smart”!

    Think about the way TO the world!

    We are not born yesterday to think that no lobby is being made by “Smart” people around congress!

  17. G. L. Tanglao on

    The Senate is more interested in listening to the rants and drama of Trillanes and De Lima rather than perform their sworn duty to the republic.

  18. Thank you, Mr. Tiglao for your fine pieces, whether of observation or analysis, they are all coming from a high intellect and gives light to the reader.

  19. The Senate is full of traitors, masquerading as Senators. Former President Estrada is another traitor and a convict. Why is he still in the government?

    Filipinos wake up. Get these traitors out of government. Do not re-elect them!

  20. “We understand the ways of the world.” – there’s your answer, sir. are you surprised that the senators are NOT above ‘the ways of the world?” I am certain, though, that you are not surprised.

  21. The Senate will be scandalously derelict in its duty
    ————————————————-

    Ya that’s about right, The senate was composed of pork barrel thieves during Aquino’s administration and many of them were reelected.
    20 senators on the Napoles list and only 3 opposition senators arrested

    Many pork barrel thieves still bringing shame to the senate and a justice system that refuses to arrest them.

    Expecting the senate to be protectors of the people and constitution is insane.

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