First of Two Parts
What a pathetic country we’ve become.
Foreign companies have been able to dominate our strategic telecom industry despite the clear Constitutional restrictions against such control, only because of two Philippine presidents’ illegal interventions.
Such is our national shame, for two presidents of the Republic to violate our Constitution and help foreigners capture a strategic sector based on national and natural resources.
How can we ever strengthen our rule of law when we choose to forget or ignore such treasonous crimes committed by our leaders? No wonder that in sharp contrast to our situation, all our Asian neighbors with stronger states and more nationalist citizens have their telecom sectors dominated by their nationals, private or public.
First, Joseph Estrada in 1998 used – illegally – his powers as President to remove blocks to the acquisition by the dominantly Indonesian-owned First Pacific Co., Ltd. of the 17 percent controlling bloc shares of Philippine Long Distance Telephone Co. That was the beachhead for First Pacific’s expansion of its ownership of PLDT to the present 26 percent, making it the telcos’ undisputed controlling stockholder.
According to several accounts at that time, especially that of the Securities and Exchange Commission (SEC) chairman Perfecto Yasay, Jr., whom President-elect Duterte has appointed as his foreign affairs secretary, Estrada got a huge “commission” of P3 billion for his intervention.
Second, outgoing President Benigno Aquino 3rd in 2012 – believe it or not – in effect reversed, through a mere memorandum issued by the SEC which is under his office, a Supreme Court decision in 2011 which ruled that PLDT violated the 40 percent limit on foreign ownership of public utilities. The same ruling would have applied to Globe, if not for the SEC’s memorandum. That certainly would explain the all-out support for Aquino by big businesses, especially the elite Ayala clan.
In the case of Estrada, his intervention was done through, first, ordering the Social Security System to buy on the stock market about 6 percent PLDT shares, and then sell that stake to First Pacific’s Larouge BV to assist in the Indonesian-owned company’s accumulation of the telco’s shares for its takeover bid.
Second, Estrada’s operators removed Yasay as SEC chairman, a post that by law had a seven-year term of office and his appointment to this post was made by President Ramos in 1995. Yasay had questioned First Pacific’s takeover of PLDT on grounds that such major change of ownership of a listed firm required the clearance by the SEC, as well as the public tender offers to existing shareholders, and their waiving of rights of first refusal.
When Yasay got the Supreme Court to reinstate him, Estrada ordered the transfer of the SEC’s supervision from the Department of Finance to the Office of the President. Estrada also issued an order giving the Office of the President the oversight over SEC “matters not expressly appealable to the Court of Appeals.” That meant that any investigation for violations of securities laws – which the PLDT sale could have committed – had to be cleared with Estrada. Yasay didn’t bother to get such clearance.
Estrada coerced Yuchengco
Third, Estrada coerced PLDT stockholder and banking taipan Alfonso Yuchengco to sell his shares and waive his right of first refusal, or right to counter First Pacific’s bid.
“My PLDT common shares were taken from me in 1998 through sheer intimidation and serious threat to my business, myself and my family,” Yuchengco said in a 2009 statement through his lawyers. “Ten people came to my office with 10 rifles and Albert del Rosario (former Ambassador to the US and now former foreign affairs secretary) and another fellow forced me to sell my stake. So I had no choice,” Yuchengco was quoted in his biography To Leave a Good Name: the Legacy of Alfonso T. Yuchengco written by the late Nick Joaquin and Krip Yuson.
Estrada sued Yuchengco for libel in 2009 for his accusations, filed in the former President’s hometown San Juan, where he had been mayor for 17 years. The court, however, dismissed the case in 2010.
Yuchengco and his associates’ affidavits to the court disclosed details on how the coercion was made. PLDT Chairman Manuel Pangilinan and del Rosario themselves made the offer to buy his shares in PLDT when they were at the residence of his daughter, the Filipino-Chinese tycoon said. When he refused the offer, a police captain detailed at President Estrada’s office threatened the next day to arrest and jail his son Alfonso, Jr. on trumped-up charges of illegal drug possession.
Pangilinan, through PLDT chief counsel Ray Espinosa, denied Yuchengco’s allegations when it became news in 2012, and claimed that the taipan was generously compensated for the sale of his shares. Del Rosario, however, was ruthless in his reaction to Yuchengco’s claims, alluding that these were due to his “seniority and reported illness.” Yuchengco had been reported at that time to be suffering form the onset of Alzheimer’s disease.
Yasay alleged in November 2000 that Estrada received US$20 million (P1 billion) to help First Pacific’s buyout of PLDT. First Pacific at that time denied Yasay’s claim and categorically stated that neither the company nor Metro Pacific, its subsidiary, made payments to Estrada.
Yasay repeated his allegations under oath during Estrada’s impeachment trial that started November 2001. In his testimony, Yasay said that Estrada personally called him several times to give him instructions regarding the First Pacific’s capture of PLDT, one of which was to deny the application for a temporary restraining order filed by PLDT’s minority stockholders. Yasay told him that he already had a “commitment to foreign investors.”
The Senate was set to summon PLDT Chairman Pangilinan to respond to the allegations during Estrada’s impeachment trial that started November 2000. However, on Jan. 16, 2001 the trial was disrupted because the majority of the Senators refused to open a certain envelope that was supposed to prove Estrada’s corruption, and the prosecutors walked out. After four days of huge demonstrations called EDSA II, Estrada was forced out of office. Pangilinan avoided having to explain to the Senators under oath if Estrada did or did not help First Pacific take over PLDT.
In his 2005 book “Out of the Lion’s Den,” Yasay claimed that Estrada got not just P1 billion but P3 billion for his help in First Pacific’s acquisition of PLDT. Yasay wrote that Estrada, indeed, received P1 billion, initially. However, Yasay wrote, when Estrada learned that two of his associates who helped him in his project also got P1 billion each, he demanded they give him the P2 billion, scolding them: “Magpresidente muna kayo bago kayo makihati sa akin ng ganyan.” (“Get yourselves elected as President first, then you can split commissions with me that way.”).
One balikbayan businessman, Mario Crespo, who assumed the name Mark Jimenez, was Estrada’s negotiator in the PLDT takeover, helping in the packaging of the deal. A 1999 article written by Antonio Lopez for the regional magazine Asiaweek reported, “for his role in brokering the deal, Jimenez pocketed $50 million.” This amount, equivalent to P2 billion at the exchange rate that time, could be the P2 billion in “commissions,” which Yasay alleged in his book, Estrada wanted to be turned over to him by his associates.
Yasay affirmed these allegations when I interviewed him in December 2014. Estrada, however, in an interview last year denied getting anything from the PLDT deal, saying he merely helped Tonyboy (Cojuangco), in selling the clan’s controlling shares to First Pacific.
An article in the magazine of the prestigious Philippine Center for Investigative Journalism also claimed, citing different sources: “The sale, according to various other sources, generated a P3 billion in commissions—about 10 percent—from both sides of the transaction.”
If true, that would make it the country’s biggest bribe money ever paid to an official using government levers to facilitate a corporate takeover. It would also be the biggest case of state coercion in order for a private entity – worse, a foreign one – to acquire a private firm.
But how could First Pacific, which now owns 26 percent of PLDT, keep hold of the telco since 1998, and how could other foreign investors now own a separate 50 percent stake in the firm, when our Constitution categorically limits foreign ownership of a public utility to just 40 percent?
That has become possible because of President Aquino’s intervention, through his SEC, which defied the Supreme Court’s ruling on the issue. That on Wednesday.
This Post Has 32 Comments
ABNOY and ERAP KORUP deserves to be executed to death! They’re too greedy and selfish!
The newly approved/created DICT should come up with a plan on how to standardize our telco rates and performance by benchmarking with our neighboring countries. I don’t see any reason why would our telcos not be amenable to be at par with them.
This once again this revealing article reinforces my understanding on why Duterte is so terror against criminials, against crooked public officials and a crusher of corruptions. The incoming president even pronounced in the past that he’d killed some of these criminals by himself. Now I fully understand why Duterte is like that…
These two should hang high and dry! We should not tolerate this heinous crime.
I’m anxious to know how much Pnoy got when he brokered the foreign ownership to 50% or more.
I would say 99.99% of all companies operating in the Phil don’t have Compliance & Integrity (C&I) policies–if others do, they don’t simply follow those policies. Topping the non-followers of C&I are those in the government (some are even under the payrolls of private enterprise).
What a pity! God, pls save our country.
Funny that you mention ‘all our Asian neighbors with stronger states and more nationalist citizens’, because those same states have more liberal foreign ownership laws than ours, which is the reason we’re dragging behind in this region.
How very convenient that EDSA II is cited as the reason Pangilinan never got questioned, and very crafty indeed to use this to plant the notion that he has something to hide even though it has yet to unbdergo proper investigation.
That our Asian neighbors have more “liberal foreign ownership” laws is not true at all. Except for Thailand (which is a special case as Thaksin sold his telco to Singtel to put it beyond the authorities’ reach, before he stepped down from power) ALL Asian countries’ telecom sectors are owned by their nationals, mostly by state firms. Read my column on this: http://www.manilatimes.net/japan-china-skorea-others-restrict-foreign-capital-in-their-telecom-industries/217421/. EDSA Dos WAS the reason Senate no longer needed to hear Pangilinan’s side as it became moot with Estrada’s fall. Prosecutors in fact found in Erap’s bank account P20 million proceeds of a check from Pangilinan. He claimed though that this was a donation for Estrada’s party.
So, this is the leverage of becoming a President of the Philippines. Power is the name of the game. Getting billions of money without the knowledge of public seems an ordinary and easy thing to do. This confirms why politicians do whatever it takes to re-gain their position. A dangerous game that only dangerous guys can play.
Drill, baby Drill….. We can use oil or gas for leverage to bring back our companies to local ownership. Lets not forget what the US did to Bell Telephone company in creating
the many local Baby Bells….. Service went up, prices went down.
Great article Tiglao, can’t wait to read the second part of the series.
So what shall we do with them?
Jail is too good for them.
akala nyo tatanga tanga si ERAP kasi di marunong magsalta ng derechong english ganun pala mas magulang pa sa patolang pwede na gawing LUFA.
pinakamaling ginawa ni GMA ay palabasin sa kalaboso ang magnanakaw na ito.
in the final analysis ang pag pepresidente ay para sa. pera pera lang pala , ang pagmamahal at serbisyo sa bayan ay tinapon na sa kumunoy.
ako pa si digong, ibabalik ko sa kalaboso ang Erap na ito kasama ang mga nanduro sa matandang Yuchengco
Kay Dali mong humusga, paratang at balira PA lang yan,
Narinig ko ang PUBLICLY ammounced PAGHINGI NG TAWAD NI YASAY KAY ERAP.
amg gulo NINYO!?
Yasay did not retract his testimony vs Erap. Read this: http://www.gmanetwork.com/news/story/185884/news/nation/yasay-stands-by-testimony-vs-erap-despite-apology-for-role-in-edsa-dos
Is there a statute of limitations on prosecuting these kinds of high crimes? They should not be allowed to get away with it.
## 24 more days until the end of Yellow Hypocrisy, Arrogance, Plunder and Incompetence ##
Tatlo ANG kandidato NG liberal party at ni AQUINO
1 ROXAS. 2. DUTERTE. 3. Poe
2 lang ANG opposisyon si MIRRIAM at BINAY
The foreign ownership of Globe and or PLDT is not the reason why our telco infrastructure is such a stinking pile of dingos doo. It is because there is a duopoly and it is not effectively regulated. We need to ensure that the telco market is open to fair competition and that the regulatory body is fit for purpose. If Globe and PLDT were “locally” owned, they would still be utter rubbish because there is no competition and the NTC is as effective as a chocolate fire-guard.
TELSTRA Australia tried to partner San Miguel and enter into the Philippine Telecommunication Industry. They were prepared to invest 1.2 Billion Australian Dollars and provide some 1500 jobs. But after Globe and Smart approached Aquino the project was scrapped.
Where is this Mark Jimenez aka Mario Crespo now.
Last time I’ve heard he is snugged up there in tony Essensa towers.
Revealing of the kind of leaders we had and will continue to have as the names seem being recycled. God bless the Philippines. God save the Philippines.
Kaya pala ang mahal ng cel load natin pinakamahal na yata sa Asia tapos ninanakaw pa load, wala signal etc. Hindi kaya binabawi ung commissions?
I frequent Indonesia and they seem to know this control of the Salim’s in the Phil telcos and many other businesses. Sad story for Pilipinos.
Nobody should be above the law or untouchable.If these corrupt government officials did this,they should be prosecuted…and hanged by the balls!
Good idea. Drug lords hang by the neck, economic, saboteurs hang by the balls, traitors, rapist serial killers, hang by the neck and the balls ….
THESE are serious “allegations” that cannot be let pass. For whatever merit that may be accorded to the veracity of such reports, it is imperative that the Duterte Administration take a second or even a third closer look on the matter. If indeed, that constitutional provisions had been flagrantly violated, President Elect Rody Duterte who is a lawyer by profession should undo such illegal acts perpetrated by past national stewardships.
The incoming Administration can have a direct knowledge on what and how these transactions transpired since no less than a knowledgeable source in the person of incoming Foreign Secretary Yasay will be serving in the President’ Cabinet.
Incredible. Wonder of wonders. This might be the mother lobe of corruption. Only in the Philippines that Presidents do not have to follow the laws of the country and be corrupted to the highest order. We should crave a Rushmore mountain of the most corrupt leaders like the head of Marcos, Estrada, Binay and future corrupted Presidents. No wonder, we will always be the sick man of Asia despite Aquino’s effort. Sad, sad. What a rotten legacies these leaders leave to future generations of Filipinos. There is a special place for these ugly leaders in hell.
paano naman si penoy the abnoy
sinadya mo bang di sinali sa gagawing mt rushmore
Aquino is the most corrupt. His DAF was an instrument to syphon the Country’s wealth. The supreme court ruled that it was unconstitutional but still, with Abad’s help he accumulated so much fund for his own interest.
PLDT pension fund was used by salim group to filipinize their acquisition of meralco…. i suppose/hope that will come out in future/next installments.
I’ve written about that already. GOOGLE TIGLAO Salim media
Thank you Mr. Tiglao for bringing these out in the open.
These BEASTS who committed these anomalies in the government should be facing the FIRING SQUAD!!!
How come these events were not widely reported in the press? Where was the media? Can these people still be prosecuted? Has the Statute of Limitations been reached?
I would like to see these people, both in government and in business GO TO JAIL.
First it was Estrada.
Secondly, Pres Aquino.
‘Sophisticated’ unconstitutional transactions in high places should not be swept under the rug. Keep it ‘alive’ and keep the people informed. It’s admirable that you have researched on this and the Filipino people should be grateful. It’s a shame that transactions such as these, are the makings of Presidents who are supposed to defend and protect the Philippine Constitution. If at all, these leaders should go down (literally) in history as the most corrupt leaders who really didn’t care for their country and people, but for their greed and personal aggrandizement.
I hope there should be NO let-up on these issues. Thank you Mr. Tiglao and hold your head high.
These 2 ex-presidents are guilty of treason to the Filipino people. And if there is really a Death Squad they deserve to die in the hands of Death Squad.
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