Second of three parts
THAT is, if we are to respect the Constitution, which bans the slightest foreign control or even a single dollar of investment in media enterprises.
The previous Duterte government was faithful to our Constitution, and bold enough that its Solicitor General Jose Calida filed a successful suit to close down Rappler for violating that ban, which the Court of Appeals upheld. I’m sure the Marcos government will be as faithful to the Constitution and as bold in closing down a company controlled by a foreigner.
The media empire controlled by the Indonesian tycoon Anthoni Salim through PLDT Inc. is a giant compared to Rappler. His holding firm, MediaQuest, includes mainly the TV5 network and its two dozen radio stations all over the country, the Philippine Star, (partly) the Philippine Daily Inquirer, and Businessworld ( all of which have internet editions) as well as Cignal TV, the country’s largest satellite direct-to-home television service. It is by far the biggest media firm in the country with platforms in print, broadcast and on the World Wide Web.
Do we have a different set of laws for a small firm violating the Constitution and another for a behemoth?
What makes the Indonesian tycoon’s creation of his media empire in the Philippines so scandalous is that he used mainly Filipino money since 2012 — the contributions of the 18,900 PLDT employees to their pension fund, called the PLDT Beneficial Trust Fund (BTF) — as capital for MediaQuest. (In 2009, the BTF was also used to purchase 10.2 percent of Meralco, which concealed from the market the fact that it was the Indonesian tycoon (through his holding company First Pacific that was making a move to capture the power distribution firm).
All other companies, to ensure that such funds are unimpaired so this could finance employees’ retirement, invest these in blue-chip stocks and risk-less government securities. In 2012 though, PLDT used P14.5 billion of the BTF’s money accumulated over two decades — 80 percent of its P18.4 billion assets — to set up through its corporate vehicle BTF Holdings MediaQuest which went on a binge to buy the media firms starting in 2012. Philstar was reportedly sold by the Belmonte family for a whooping P4 billion.
Based on PLDT’s 2020 report to the US Securities and Exchange Commission, MediaQuest and BTF Holdings account for 71 percent of BTF’s assets. This puts the pension fund at risk of being unable to fund its member employees’ retirement pensions since media enterprises in the country (except for GMA7 and the defunct ABS-CBN) are losing enterprises. I doubt if PLDT’s employees are aware of where their contributions to the fund (10 percent of their salaries) are going. PLDT and even Smart have even committed hundreds of millions of advertising placements in TV5 to keep it afloat.
Despite this help, MediaQuest’s investments, in fact, have not been generating profits in the tight, competitive media market, so PLDT had to report huge actuarial losses on these: P6.8 billion, P11 billion and P5.1 billion for 2012, 2013 and 2014, respectively. As a result, the value of the pension plan’s assets — which determines its capability to meet pension payments — was drastically reduced to P6 billion, or one-fourth of its P24 billion value in 2011.
Even if PLDT gets away with the argument that BTF is a Filipino entity since its beneficiaries are Filipinos, the Constitution and the Presidential Decree 1018 ban not just a single peso of foreign investments in a media firm, but foreign control in whatever form.
In the case of BTF, all of its five-man board are appointed by PLDT’s board of directors, dominated by First Pacific representatives because of its 25.6 percent share ownership of the firm and the Japanese NTT Docomo’s 10.6 percent.
Certainly a demonstration of the power of media, Salim’s chief executive officer for his conglomerate, Manuel V. Pangilinan — portrayed in media as the owner of the Indonesian’s conglomerate that it is often reported as the “MVP Group” — owns less than 1 percent of PLDT, a level unchanged for 22 years since it was bought by First Pacific in 1999, with the backing of then-president Joseph Estrada. I cannot fathom why Salim has refused to increase the shareholdings of an executive responsible for the growth of his conglomerate in the Philippines. For Salim it seems, Pangilinan is his employee and nothing else.
Bloomberg reports that it is former foreign affairs secretary Albert del Rosario (a longtime associate of Salim) who is the current chairman of BTF Holdings. He was also the chairman of BTF when it invested in MediaQuest in 2012. The two other current board members are Ray Espinosa, the Salim empire’s chief legal counsel, who is also board chairman of Philippine Star and BusinessWorld, and PLDT chief financial officer Anabelle Chua. PLDT hasn’t released the names of the two other BTF Holdings board members.
Salim is taking us Filipinos for fools if he claims MediaQuest is a Filipino corporation without any control by the PLDT, a foreign-controlled firm.
In fact, PLDT management back in 2014 admitted to the US SEC that PLDT exercises “significant influence” over two of MediaQuest’s wholly owned subsidiaries — implying of course such influence over MediaQuest, their mother firm.
In a letter responding to a query by an SEC investigator, PLDT Corporate Secretary Ma. Lourdes C. Rausa-Chan wrote:
“PLDT’s management determined based on the guidance in IAS 28 that PLDT exercised significant influence over Cignal TV and Satventures for purposes of the financial reports included in the 2014 report Form 20-F due to the following factors:
PLDT, through ePLDT’s ownership of PDRs, held an economic interest in Cignal TV and Satventures, which entitled ePLDT to cash and non-cash distributions on the shares underlying the PDRs.
There were common directors and officers between PLDT and its subsidiaries, on the one hand, and Cignal TV and Satventures, on the other hand. Certain managerial personnel and employees were seconded from PLDT and its subsidiaries to Cignal TV and Satventures.”
The PLDT executive was referring to the P13 billion that a PLDT unit, ePLDT, gave to MediaQuest in 2013 and 2014 for it to set up Cignal TV and Satventures, in the form of Philippine Depositary Receipts (PDRs). With such huge funds, Cignal TV was able to quickly overcome its competitors and is now the biggest cable TV enterprise.
In the Rappler case, SEC ruled — upheld by the Court of Appeals — that the PDRs merely concealed the capital infusion by a foreign firm, which is still a violation of the Constitution. How much did Rappler get in foreign funds, for which it was ordered closed down as this violated the Constitution? P50 million, a tiny fraction of the P13 billion that the majority foreign-owned PLDT gave to MediaQuest.
Do we have a different set of laws if a foreigner invests billions of pesos in a media firm, and another if it invests only millions?
But does it matter if a foreign firm controls a media empire? It certainly does, as I will narrate a specific case on Monday, which even involved our foreign relations with the biggest superpower in the region.
(The history of the Salim conglomerate in the Philippines is in my 2016 book Colossal Deception: How Foreigners Control our Telecoms Industry, available at rigobertotiglao.com/shop and amazon.com.)
To be continued on Monday, Sept. 12, 2022
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