Sixth of a series on the Salim empire in the Philippines
“ The finest trick of the devil is to persuade you that he does not exist.”
—Charles Baudelaire, 1869 (popularized in the hit movie
The Usual Suspects, 1995).
What the hell has happened to our country?
In 1968, the General Telephone & Electronics Corporation, then the world’s largest telephone firm, had to give up its Philippine Long Distance Telephone Co., and sell it to a Filipino elite clan, because the treaty that represented US neo-colonial rule in our country, the Laurel-Langley Agreement that allowed American firms to own public utilities was to end in 1974.
Fast forward to the first decade of the 21st century: PLDT has become one of the biggest and most profitable corporations in the country—to a great extent because it is a public utility that dominates the telecommunications industry. Last year, its assets totaled P391 billion, revenues P125 billion, and net income after tax P29 billion.
But three decades after Americans were booted out of PLDT, it again got to be controlled by a foreigner: Indonesian tycoon Anthoni Salim who, through his companies, has the biggest controlling 26 percent of the firm’s stocks.
His partner: the Japanese Nippon Telecommunications and Telegraph (NTT) whose subsidiaries together own 21 percent of PLDT. NTT is the world’s largest telecommunications firm in terms of revenue. Its two subsidiaries with shares in PLDT are NTT Communications and NTT Docomo. (“Docomo”, the firm says, for “do communications over the mobile network”, and also for the Japanese word “dokomo”, meaning everywhere.) The two NTT firms provide all the technical expertise PLDT needs.
The next largest stockholder, and a Filipino, is tycoon John Gokongwei, whose shares through his various firms are a far third, 8 percent.
PLDT now is tightly controlled by Salim’s companies and Japanese NTT firms.
Can you believe that? We are the only country in the world, in which foreigners, an Indonesian tycoon and a Japanese conglomerate, control a strategic industry, one based on our sovereign power to extend a public utility franchise.
Cellular (or mobile) phones have become the game-changing device of the 21st century, and the Philippines is the 12th country with the largest number of mobile phones — 107 million, more than our population.
PLDT, through its subsidiaries Smart and Sun, account for 70 million of those phones. The Internet has become the tool of this knowledge-based era. PLDT accounts for about 35 percent of the 10 million Internet connections in the country. It also accounts for 80 percent of fixed lines in the Philippines.
And what have we done?
We’ve turned over that industry–which our government has absolute power over because it has sovereign rights over the use of such medium–to an Indonesian magnate, Salim, and to the world’s biggest telecoms firm, the Japanese NTT.
As I will detail in subsequent columns, company data would indicate that Salim’s First Pacific from 1999 (after it bought its PLDT shares) to last year has remitted to Hong Kong as its profits $2 billion. NTT most likely remitted $1 billion.
That means that Salim’s First Pacific already recovered by 2007 the $749 million it used to purchase its controlling stakes in 1998, during President Estrada’s watch, and all its profits from 2008 are pure income. PLDT has in fact been First Pacific’s cash cow; the $2 billion it generates is twice what it gets from its Indonesian operations.
First Pacific’s control of PLDT is the most enduring impact of the regime of President Estrada, who, by various accounts, arm-twisted Antonio Cojuangco’s clan in selling the shares to Salim, with his crony Mark Jimenez allegedly getting $50 million for his role in maneuvering the sale.
Salim even used PLDT’s resources for capturing another utility firm, the power monopoly Meralco. It was PLDT’s subsidiary Piltel (later renamed PLDT Communications and Energy Ventures) that bought in 2009 20 percent of Meralco. PLDT’s Beneficial Trust Fund acquired another 10 percent in the same year, in exchange for Salim’s Metro Pacific Investment stocks, later on sold in the stock market. (See my column Feb. 26, “Salim brought in zero funds to capture Meralco.”)
That quote above, from one of my favorite poets, the French Charles Baudelaire was popularized in the movie The Usual Suspects, in which the “Devil” was the Turkish global crime lord, Keyser Söze, as follows: “The greatest trick the Devil ever pulled was convincing the world he didn’t exist.”
Salim and his top executive in the Philippines, Mr. Pangilinan, certainly aren’t “Devils” in any way. They are in fact the demigods in the global and Philippine corporate universe.
But a paraphrase of that quote wouldn’t be inaccurate: “Salim’s greatest trick has been to hide from Filipinos and make them think he doesn’t control public utility firms in the country.”
One way for this was for Pangilinan to put into PLDT’s board of directors, and advisers, representatives of the country’s biggest conglomerates, even if they have only minor or even token shares in PLDT, to project an image — an artifice — that it is controlled by the crème de la crème of Philippine business.
In PLDT’s board of directors are Helen Dee of the Yuchengcos; Pedro Roxas of the old Spanish elite; Alfred Ty of the George Ty-Metrobank conglomerate, Jollibee hamburger magnate Tony Tan Caktiong, and SSS chairman, and apparently PLDT’s connection to President Aquino’s administration, Juan Santos. (John Gokongwei’s brother, James is also in the board, because of their group’s 8 percent holdings in PLDT.)
Not only that, placed in PLDT’s “advisory committee” are former Chief Justice (and Philippine Daily Inquirer columnist Artemio Panganiban), former foreign affairs secretary Roberto Romulo, and the “senior business leader,” the 92-year-old Washington SyCip.
Pangilinan even in effect got the Catholic Church — the Jesuits at least — to bless PLDT, when he appointed in 1998 as soon Salim got control of it, Fr. Bienvenido Nebres, the longest-serving Ateneo de Manila University President. Nebres resigned only in Sept. 2012, after Pangilinan publicly announced his “disengagement” with his alma mater that opposed his support for mining and the pro-contraceptives law.
Only a genius — but a bold one — could ever think of using the country’s top magnates and brains as fixtures to prettify a company’s image, and keep out of sight its foreign controlling owner,
There is not a single Indonesian or known Salim personality in the board of directors, although his close associate Benny Sentoso and Christopher Young (who sources claim really controls PLDT’s finances) are in PLDT’s board of advisors.
But of course what has been Salim’s main mechanism to, as it were, persuade you that he doesn’t exist, is his vast media empire, for which his firms have spent P27 billion to put up. (See my column March 10, “PLDT pension used for Salim’s PH media empire.”
This media empire, some say, may have another big, not impossible, mission to accomplish: To drum up support to amend our Constitution to lift all restrictions on foreign investments, which would make questions over Salim’s hold on utility industries moot and academic. That in a future installment of this series.