First of a series
The so-called “MVP” group of companies—dubbed after the initials of its public face and chief executive Manuel V. Pangilinan—has emerged as one of the biggest conglomerates in the country today, its newest and the most aggressive.
Yet the real ownership of this vast conglomerate has been kept hidden from the public eye.
The conglomerate is dominantly owned and controlled by Anthoni Salim, 66, heir to the fortune of his late father, Soedono, who was the biggest and closest crony of the late Indonesian strongman Suharto during his 33-year regime. “MVP” has miniscule shares in the conglomerate. That the group has strived to make it known by that name, as will be explained in this series, is for a specific purpose.
Forbes magazine ranked Salim as the third richest Indonesian in 2014, with his $5.9 billion net worth topping that of Philippine tycoon John Gokongwei’s $4.9 billion or Jaime Zobel de Ayala’s $3.9 billion, according to the same list.
The Forbes’ profile of Salim in 2014 is a revelation: “Salim’s Philippine Long Distance Telephone (PLDT) has invested $445 million [in] a 10% stake in Germany’s Rocket Internet. His father,Liem Sioe Liong founded the Salim Group; the clan was later criticized for ties to Suharto.” Salim’s PLDT, not MVP’s nor First Pacific’s.
(The Javanese name “Soedono Salim” which Liem, a Chinese immigrant from Fuzhou, adopted for him and his family to blend easier into Indonesian society was suggested by the dictator himself, with “Soedono” meaning “good-money”.)
The Forbes’ writer probably kept scratching his head in confusion. Salim is the only billionaire in the magazine’s list who is indisputably one of Indonesia’s richest tycoons. Yet a big chunk of his wealth is generated in another nation, the Philippines. That’s how broken our nation has become.
From 2000 to 2014, First Pacific Co., Ltd. – Salim’s holding company – generated $2.7 billion in profits from its Philippine operations, mostly from PLDT amounting to $2.2 billion. In comparison, Salim’s companies in his own country generated just about half of that, or $1.4 billion. That means his Philippine operations make up 66 percent of his empire’s profits.
Remember that Salim acquired PLDT in 1998 for $749 million, while Meralco was captured – as these series will explain – with the Indonesian bringing very little new capital into the country.
So much for the argument that foreign investments bring in much needed funds to a capital-deficit country. In the case of Salim’s operations, it has resulted in capital outflow – $2.7 billion in 14 years or $200 million yearly, or nearly fourth of the average foreign equity inflow over the same period.
And as this series will also explain, Salim’s companies have always used local borrowings for much of its operations and acquisitions, even managing to borrow billions of pesos from government banks such as the Development of the Philippines and the Land Bank.
Those huge revenues are possible because of Salim’s controlling 26-percent holding in PLDT, the biggest telecom firm in the Philippines, which owns mobile-phone behemoth Smart Telecoms as a subsidiary, and his 52-percent stake in Metro Pacific Investments Corp (MPIC), his holding company of 48 subsidiaries in the country. MPIC’s cash cows are the Manila Electric Co., the electricity-distribution monopoly in Metro Manila, and Manila Water Services, the monopoly for water distribution and sewerage for the western part of the metropolis, covering 17 cities.
It is a mockery of our Constitution, an indictment of the rule of law, and a scandalous demonstration of how weak our state has become by the fact that we have a foreign-owned conglomerate, masked as Filipino controlled, the “MVP Group of Companies.” It has skirted the Constitutional restrictions on foreign ownership in public utility firms and even the media.
The ignorance of our Congress has again been demonstrated when it passed last week on second reading a resolution calling for constitutional amendments to lift purported “restrictions” on foreign investments.
What restrictions are they talking about? An Indonesian tycoon, with the help of clever lawyers and a Filipino partner acting as front man, has craftily woven his way through the loopholes in our laws and captive regulatory systems to gain control of strategic public utility firms, and even media outfits in our country.
In the next few years, Salim’s revenues from his Philippine operations will breach the $1 billion level yearly, as his huge infrastructure and power projects start to yield virtually monopoly profits. That’s why to Salim, it is crucial for Congress to amend our constitution and legitimize foreign capital in restricted industries.
Through MPIC’s Metro Pacific Tollways Corp., the Indonesian is now the biggest toll and expressway operator in the country, managing the North Luzon Expressway (NLEX), Subic Clark Expressway and the Manila Cavite Expressway.
President Aquino’s Administration has turned over to the Salim conglomerate some of the country’s biggest infrastructure projects.
Among these are toll road expansion projects such as the NLEX Harbor Link (P11 billion project cost, NLEX Citi Link (P7 billion), Cavitex expansion (P8 billion), Connector Road/Metro Expressway Link (P124 billion).
The group has diversified into bridge construction with its P18 billion project to build the Cebu-Cordova Bridge. In partnership with the Ayala group, the Salim conglomerate has won the P1 billion projects to operate a computerized fare collection for the light-rail lines.
In 2013, its 55-percent controlled Salim consortium won the project to build the P65-billion Light Rail Transit Line Cavite Extension Project, the biggest infrastructure project awarded under the Aquino Administration.
Unexpectedly thrown in as part of the project was the award of the construction of the common station of LRT lines to the consortium, which moved its location close to the Trinoma mall of the Ayalas – Salim’s partners who hold a 35 percent stake – from its original SM North Mall site. Such government decision was so patently anomalous that the SM’s Sys have sued, even bringing the case to the Supreme Court.
Salim’s latest coup was winning the Cavite-Laguna Expressway (Calax) project with its bid of P27 billion, P5 billion more than the next highest bidder, a San Miguel Corp.-led consortium.
PLDT itself, which Salim’s firms control, together with Japanese companies, is a corporate empire with 49 subsidiaries, several in strategic public utilities, the largest of which are the mobile telephone firm Smart Telecommunications and Cignal TV, the direct-to-home satellite TV firm that has the biggest subscriber base.
Newest media mogul
Salim, in effect, has over the past several years become the newest media mogul in our country, despite the categorical constitutional ban on foreign ownership of even a single share in a local media outfit.
Through a PLDT unit his executives control, Salim’s group operates TV 5 with its more than two dozens radio stations and online news edition, interaksyon.com. PLDT’s power to prop up a media outfit with mediocre expertise in the field was, in fact, demonstrated when it threw nearly P1 billion a year into advertising to its start-up firm TV-5 from 2010 to 2014. According to PLDT’s latest report, that financial support will continue until 2021.
Salim indirectly holds, through PLDT’s 70 percent interest in BusinessWorld and a 22 percent stake in the Philippine Daily Inquirer. Soon – I was informed by highly reliable sources – the New Standard newspaper will join Salim’s media stable.
The Salim conglomerate last year bought the Philippine Star publications for P3.5 billion from the family of House Speaker Feliciano Belmonte.
Is it just a coincidence that Belmonte is the principal author of a resolution for the Constitution to be amended to lift all restrictions on foreign investments?
That amendment would render moot and academic a Supreme Court move to implement its 2012 ruling that Salim’s control of PLDT is unconstitutional — which would result in the Indonesian empire’s collapse like a house of cards.
Salim, of course, need not care whether the media outfits make money or not. If these flounder, the loser will be PLDT’s Beneficial Trust Fund, which financed the setting up and acquisition of these media enterprises.
After all, his media empire has a different purpose other than making money. Because of his empire’s tremendous clout in media, our press and press institutions — from the National Press Club to the Philippine Center for Investigative Journalism — have turned a blind eye to the capture by a foreign entity of a sizeable portion of the Fourth Estate. I have been told that both broadcast and print media dare not cross Pangilinan, because his firms such as Meralco, PLDT, Smart account for nearly a fifth of media advertising revenues.
The Salim group has even learned to make big money out of disease and old-age maladies. It now operates the country’s biggest hospital chain, which includes top-of-the-line hospitals such as the Makati Medical Center near Ayala Avenue and Asian Medical Center near the Ayala Alabang village. Its hospitals income from 2011 to 2014: P3 billion. Who would have thought the work of alleviating humanity’s ailments could be so profitable?
That the Salim conglomerate is the “MVP Group” has been a gargantuan hoax. Not even legendary American super-executives Jack Welch or Lee Iacocca, working in US capitalism’s most advanced state in which corporations are owned by tens of thousands of shareholders, had the gall to call their General Electric or Ford Co. as the “Welch” or “Iacocca” group of companies.
Based on its latest report to the Securities and Exchange Commission (SEC), Mr. Pangilinan owns only 1/10 of one percent of the conglomerate’s flagship firm PLDT.
Salim-controlled firms – details of which will be reported in these series – hold the controlling 26 percent of PLDT, while two firms of the Japanese NTT conglomerate have 20 percent. The rest of the shares are dispersed among thousands of Filipino and foreign investors through the Philippine and New York stock exchanges
A Salim-owned company, Metro Pacific Holdings, owns 52 percent of the capital stock of MPIC. The rest of the shares are dispersed among 1,335 passive stockholders as stock market investments, 34 percent of which are foreign-owned and 14 percent Filipino.
In its March 2015 filing with the SEC, Pangilinan is reported to have “nil” shares, stated only in order to qualify him to sit on the board.
How the heck could it be the “MVP Group of Companies”?
Perhaps “Salim-Del Rosario Group” would be a more accurate name. Metro Pacific’s annual report lists Foreign Affairs Secretary Alberto del Rosario, together with his wife Gretchen, as its biggest individual stockholder with 11.5 million shares – though only 0.04 percent of the total.
Del Rosario has been a key figure in the conglomerate’s expansion into the country since the early 1980s, and since 2003 until his appointment as foreign affairs secretary, he served as a board director of Salim’s international holding firm itself, First Pacific Co. Ltd., as well as of several Salim firms, including Indonesian companies.
It is certainly ironic that del Rosario has cried to the highest heavens over Chinese occupation of the uninhabited Scarborough shoal, when he has helped Indonesians control key industries at the heart of the metropolis.
But maybe Pangilinan’s huge shares will show up in that Hong Kong-based holding firm First Pacific?
Not at all.
While he owns 1.4 percent equity shares in First Pacific Co., Ltd — mostly the result of his stock options over 30 years — this isn’t really a significant shareholding, as Salim’s top strategist Edward Tortorici has 1 percent.
It is even surprising that Pangilinan owns only so few shares, despite his 34 years as Salim’s top executive and his crucial role as the Indonesian conglomerate’s face in the country. “MVP” really means Salim’s “Most Valuable Professional,” or maybe the “P” more accurately stands for an unflattering word.
Salim, through First Pacific and labyrinthine corporate layers, is the biggest single stockholder with unchallenged control of what is called in this country as the “MVP Group of Companies.”
The next biggest, but a poor second with much less shareholding of just 3 percent in First Pacific is Sutanto Djuhar and his son Tedy, ranked 39th in 2010 in Forbes’ richest billionaires list until 2010 with a net worth of $500 million.
Djuhar, 85, had been a close business partner of Anthoni’s father, who with two others, established First Pacific in 1981 as a venue for bringing out of Indonesia some of the wealth they generated as Suharto’s cukong — a term used in that era to mean Chinese businessman providing funds for Indonesia’s military and political leaders in exchange for patronage and protection.
“Yes, I was an antek, but I was not a bad one,” Soedono was quoted as saying in a recent book, which was fawning over both Anthoni and Pangilinan, using the stronger Javanese term for “crony” or “lackey.” During Suharto’s rule, the four were referred to in whispers in Jakarta as the “Gang of Four,” being the strongman’s tight-circle of cronies during his regime.
Or maybe Pangilinan’s shares have been deliberately concealed? But why would he, especially since the foreign-owned conglomerate isn’t supposed to be in public utility firms, if the Constitution is to be complied with?
But there is an obvious motive for portraying Salim’s conglomerate as the “MVP Group,” and the person who thought of the scheme must be a PR genius. It veils the reality that a foreign firm has come to dominate profitable public utility firms, even monopolies, which our Constitution — even in its earlier versions — categorically prohibits. These series will explain how Salim, with Pangilinan’s help, has managed that feat.
What kind of a country have we become?
Aquino will be giving away central Mindanao to the MILF, who will annex the area to a state of Malaysia in a few years. He wants the US to acquire pockets of territory here the Americans euphemistically will call “forward operating sites.” He has lost Bajo de Masinloc, which has been ours since the Spanish times, to China, and everyone is furious at that regional bully’s moves to claim everything in the West Philippine Sea.
Yet for more than 10 years now, we’ve given away strategic industries to … an Indonesian billionaire?
My requests for interviews or replies to e-mailed queries to Pangilinan and his officers, made through his companies’ press officers, his closest friends, and even a former media colleague now with him — the first of which was made several months ago — have all been ignored. This series is based on research for a book I am working on, titled “Philippine Hoaxes,” to include essays on the Bangsamoro, the Jabidah “Massacre,” DAP, and, of course, the biggest, President Aquino.