Lopezes keep Meralco
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http://business.inquirer.net/money/breakingnews/view/20080527-139188/UPDATE-4-Lopezes-keep-Meralco
Lopezes keep Meralco
Garcia of GSIS vows it's not over
By Abigail L. Ho
Reuters, Philippine Daily Inquirer
First Posted 22:16:00 05/27/2008
MANILA, Philippines --Winston Garcia had one card left, played it and lost. At least for now. Manuel Lopez did not blink and won. At least for now.
At the end of a dramatic, daylong corporate battle on Tuesday, Lopez remained in control of Manila Electric Co. which he heads as chairman.
Garcia, president and general manager of the Government Service Insurance System (GSIS), vowed during the rowdy annual meeting of Meralco stockholders to pursue his bid to oust Lopez in court.
Nearly 14 hours after the meeting began, results showed that Meralco retained its five seats and the government four. The two others were independent directors Artemio Panganiban and Vicente Panlilio.
Aside from Lopez, the Meralco directors elected were Meralco president Jesus Francisco, Felipe Alfonso, Christian Monsod and Cesar Virata.
The government board members elected aside from Garcia were Bernardino Abes, Daisy Arce and Jeremy Parulan.
There were 14 nominations for the 11-person board. Canvassing for the votes Ernst & Youngs local partner, SGV & Co., took around seven hours.
"I feel great because we won and that is how it should be," said Oscar Lopez, chairman of First Philippine Holdings Corp, a holding firm of the Lopez family, which owns 33 percent of Meralco.
"It was a diabolical plan of Winston," he told Reuters.
Armed with a "cease-and-desist order" from the Securities and Exchange Commission (SEC), Garcia had sought to stop the counting of proxy votes, accusing the Lopezes of "rigging" the process.
"They have a valid complaint lodged with the SEC challenging the proxies solicited by certain members," Hubert Guevara, a director of compliance and enforcement at the SEC, told reporters.
The move disrupted the meeting, but after an hour and a half of consultations by the Meralco board, assistant corporate secretary Anthony Rosete announced that the SEC order was "null and void."
He said the SEC order did not carry a docket number to show when it was filed and officially received, had no official seal and was only signed by an officer in charge and not by the entire commission sitting en banc.
"This is the last recourse to stop the election," said Oscar Lopez, chair of First Philippine Holdings Corp., flagship firm of the Lopez family, which owns 33 percent of Meralco and controls the utility.
The family patriarch said Garcia's move was a "low blow" because the GSIS chief even wanted to invalidate the Lopezes' ballots.
True to form, the atmosphere at Meralco Theater was charged with electricitynone of which came from any of the distribution utility's power lines.
Hours before the 9 a.m. meeting, the Meralco compound was already crawling with people, many of them employees who also held shares in the company.
In the hour leading to the start of the meeting, lines of stockholders snaked in front of designated registration tables in the Meralco main building lobby, eager to take part in what could be a battle royal between Garcia and the Meralco management.
Most of the members of the current Meralco board occupied the front row of the center aisle seats, with Lopez and Garcia conspicuously ignoring each other despite their adjacent seats.
An unexpected twist came immediately after the opening ceremonies when Guevara stepped up to one of the microphones and read the order seeking to prevent the counting of the votes of six Meralco shareholders plus those of the proxies solicited in their name.
During the recess that followed the announcement of the SEC order, Garcia told reporters that the Lopez family and its allies in Meralco were "trying to put in manufactured proxies."
"They never sent us the list of the validated proxies and the total number of votes. Management solicited proxies without regard to certain rules and regulations that should have been followed. They haven't been very transparent," he said.
"We're very apprehensive of what will happen here. They're trying to put in illegal proxies. These meetings usually have an attendance of just 70-75 percent (of shareholders), but now we have around 86 percent and an unusually high number of proxies," Garcia added.
He said Meralco management should have relinquished control of the stockholders meeting and let the SEC assume jurisdiction over it, including the election for the new board of directors.
Not to be deterred, Rosete and the incumbent board members came out of a conference with their lawyers armed with a statement that obviously shocked both Garcia and Guevara.
"After a review of the order, we deem such order null and void," Rosete said, pointing out 10 reasons for this conclusion.
He said the order did not have a docket number, date and the official seal of the SEC. It was also signed by just one commissioner, Jesus Martinez.
"Upon verification, we have received information that this order was issued without the benefit of a commission meeting, and that we are not aware of any complaint filed with the Compliance and Enforcement Division of the SEC," Rosete said.
He added that Martinez, although designated officer in charge in the absence of SEC Chair Fe Barin, had "no authority to issue this order on his own."
The fact that Martinez was the only signatory to the order, Rosete said, made it violative of due process as Martinez, in effect, "predetermined the validity of the GSIS proxies without proper investigation."
Rosete said neither Meralco nor any of its directors were not given notice of the order, denying them the opportunity to be heardanother violation of due process.
Also, since the matter between the GSIS and the Lopezes of Meralco was an intra-corporate matter, the regular courts and not the SEC had jurisdiction over it, he said.
He also said the GSIS was guilty of forum shopping as it also filed a similar complaint with the Pasay City Regional Trial Court. A GSIS lawyer later said that the move before the court was subsequently dropped.
Rosete then declared that Meralco would push through with the election despite the SEC order.
While the SEC noted Meralco's objections to its order, Guevara said the company's lawyers should look more closely at the Securities Regulation Code, particularly at the rules on proxy validation.
"You may proceed with the election, but subject to the decision of the SEC at a later date," he said.
Garcia stood up, grabbed a microphone and called the meeting "bogus," as it was held "in defiance of an SEC order."
In a press conference later, Meralco regulatory management head Monico Jacob said pushing through with the election was "the prudent thing to do so our stockholders will not be kept in limbo."
"It's only defiance (to the SEC order) if it's a valid, lawful order. But since it isn't valid and lawful, this is about protecting the right of the company and of the stockholders."
Asked if the results of Tuesday's election would end all the controversy over who should be at the helm of Meralco, he said: "We're hoping that people will come to their senses and this will settle things. But we're prepared for any eventuality."
Garcia has charged Meralco with inefficiency and a lack of transparency that allowed Meralco to forge "sweetheart deals" with Lopez-owned generating firms resulting in rates he described as the highest in Asia next to Japan.
President Gloria Macapagal-Arroyo's allies in the Senate and the House of Representatives followed suit, threatening to revoke and divide the Meralco franchise covering 60 percent of the nation's power consumers.
Some analysts and commentators say Ms Arroyo instigated the GSIS campaign to silence the Lopez-owned radio-television network ABS-CBN for its hard-hitting stand against government corruption. But Palace officials and Garcia have denied any government involvement in the fight with the Lopezes.
Philippine electricity rates are among the highest in Asia due to expensive deals with private power producers, the country's reliance on imported oil to generate electricity and widespread illegal tapping.
Meralco says it has to pay high prices for power bought from all generating firms, including those belonging to state-run National Power Corp., whose aging facilities mean it costs more to produce energy.
The Lopezes, one of the Philippines' most powerful dynasties, also own two power generation plants and geothermal firm Philippine National Oil Co.-Energy Development Corp.
Meralco shares were unchanged at P63 on Tuesday. The company's stock has dropped nearly 29 percent since late April when GSIS started its moves against management.
Lopezes keep Meralco
Garcia of GSIS vows it's not over
By Abigail L. Ho
Reuters, Philippine Daily Inquirer
First Posted 22:16:00 05/27/2008
MANILA, Philippines --Winston Garcia had one card left, played it and lost. At least for now. Manuel Lopez did not blink and won. At least for now.
At the end of a dramatic, daylong corporate battle on Tuesday, Lopez remained in control of Manila Electric Co. which he heads as chairman.
Garcia, president and general manager of the Government Service Insurance System (GSIS), vowed during the rowdy annual meeting of Meralco stockholders to pursue his bid to oust Lopez in court.
Nearly 14 hours after the meeting began, results showed that Meralco retained its five seats and the government four. The two others were independent directors Artemio Panganiban and Vicente Panlilio.
Aside from Lopez, the Meralco directors elected were Meralco president Jesus Francisco, Felipe Alfonso, Christian Monsod and Cesar Virata.
The government board members elected aside from Garcia were Bernardino Abes, Daisy Arce and Jeremy Parulan.
There were 14 nominations for the 11-person board. Canvassing for the votes Ernst & Youngs local partner, SGV & Co., took around seven hours.
"I feel great because we won and that is how it should be," said Oscar Lopez, chairman of First Philippine Holdings Corp, a holding firm of the Lopez family, which owns 33 percent of Meralco.
"It was a diabolical plan of Winston," he told Reuters.
Armed with a "cease-and-desist order" from the Securities and Exchange Commission (SEC), Garcia had sought to stop the counting of proxy votes, accusing the Lopezes of "rigging" the process.
"They have a valid complaint lodged with the SEC challenging the proxies solicited by certain members," Hubert Guevara, a director of compliance and enforcement at the SEC, told reporters.
The move disrupted the meeting, but after an hour and a half of consultations by the Meralco board, assistant corporate secretary Anthony Rosete announced that the SEC order was "null and void."
He said the SEC order did not carry a docket number to show when it was filed and officially received, had no official seal and was only signed by an officer in charge and not by the entire commission sitting en banc.
"This is the last recourse to stop the election," said Oscar Lopez, chair of First Philippine Holdings Corp., flagship firm of the Lopez family, which owns 33 percent of Meralco and controls the utility.
The family patriarch said Garcia's move was a "low blow" because the GSIS chief even wanted to invalidate the Lopezes' ballots.
True to form, the atmosphere at Meralco Theater was charged with electricitynone of which came from any of the distribution utility's power lines.
Hours before the 9 a.m. meeting, the Meralco compound was already crawling with people, many of them employees who also held shares in the company.
In the hour leading to the start of the meeting, lines of stockholders snaked in front of designated registration tables in the Meralco main building lobby, eager to take part in what could be a battle royal between Garcia and the Meralco management.
Most of the members of the current Meralco board occupied the front row of the center aisle seats, with Lopez and Garcia conspicuously ignoring each other despite their adjacent seats.
An unexpected twist came immediately after the opening ceremonies when Guevara stepped up to one of the microphones and read the order seeking to prevent the counting of the votes of six Meralco shareholders plus those of the proxies solicited in their name.
During the recess that followed the announcement of the SEC order, Garcia told reporters that the Lopez family and its allies in Meralco were "trying to put in manufactured proxies."
"They never sent us the list of the validated proxies and the total number of votes. Management solicited proxies without regard to certain rules and regulations that should have been followed. They haven't been very transparent," he said.
"We're very apprehensive of what will happen here. They're trying to put in illegal proxies. These meetings usually have an attendance of just 70-75 percent (of shareholders), but now we have around 86 percent and an unusually high number of proxies," Garcia added.
He said Meralco management should have relinquished control of the stockholders meeting and let the SEC assume jurisdiction over it, including the election for the new board of directors.
Not to be deterred, Rosete and the incumbent board members came out of a conference with their lawyers armed with a statement that obviously shocked both Garcia and Guevara.
"After a review of the order, we deem such order null and void," Rosete said, pointing out 10 reasons for this conclusion.
He said the order did not have a docket number, date and the official seal of the SEC. It was also signed by just one commissioner, Jesus Martinez.
"Upon verification, we have received information that this order was issued without the benefit of a commission meeting, and that we are not aware of any complaint filed with the Compliance and Enforcement Division of the SEC," Rosete said.
He added that Martinez, although designated officer in charge in the absence of SEC Chair Fe Barin, had "no authority to issue this order on his own."
The fact that Martinez was the only signatory to the order, Rosete said, made it violative of due process as Martinez, in effect, "predetermined the validity of the GSIS proxies without proper investigation."
Rosete said neither Meralco nor any of its directors were not given notice of the order, denying them the opportunity to be heardanother violation of due process.
Also, since the matter between the GSIS and the Lopezes of Meralco was an intra-corporate matter, the regular courts and not the SEC had jurisdiction over it, he said.
He also said the GSIS was guilty of forum shopping as it also filed a similar complaint with the Pasay City Regional Trial Court. A GSIS lawyer later said that the move before the court was subsequently dropped.
Rosete then declared that Meralco would push through with the election despite the SEC order.
While the SEC noted Meralco's objections to its order, Guevara said the company's lawyers should look more closely at the Securities Regulation Code, particularly at the rules on proxy validation.
"You may proceed with the election, but subject to the decision of the SEC at a later date," he said.
Garcia stood up, grabbed a microphone and called the meeting "bogus," as it was held "in defiance of an SEC order."
In a press conference later, Meralco regulatory management head Monico Jacob said pushing through with the election was "the prudent thing to do so our stockholders will not be kept in limbo."
"It's only defiance (to the SEC order) if it's a valid, lawful order. But since it isn't valid and lawful, this is about protecting the right of the company and of the stockholders."
Asked if the results of Tuesday's election would end all the controversy over who should be at the helm of Meralco, he said: "We're hoping that people will come to their senses and this will settle things. But we're prepared for any eventuality."
Garcia has charged Meralco with inefficiency and a lack of transparency that allowed Meralco to forge "sweetheart deals" with Lopez-owned generating firms resulting in rates he described as the highest in Asia next to Japan.
President Gloria Macapagal-Arroyo's allies in the Senate and the House of Representatives followed suit, threatening to revoke and divide the Meralco franchise covering 60 percent of the nation's power consumers.
Some analysts and commentators say Ms Arroyo instigated the GSIS campaign to silence the Lopez-owned radio-television network ABS-CBN for its hard-hitting stand against government corruption. But Palace officials and Garcia have denied any government involvement in the fight with the Lopezes.
Philippine electricity rates are among the highest in Asia due to expensive deals with private power producers, the country's reliance on imported oil to generate electricity and widespread illegal tapping.
Meralco says it has to pay high prices for power bought from all generating firms, including those belonging to state-run National Power Corp., whose aging facilities mean it costs more to produce energy.
The Lopezes, one of the Philippines' most powerful dynasties, also own two power generation plants and geothermal firm Philippine National Oil Co.-Energy Development Corp.
Meralco shares were unchanged at P63 on Tuesday. The company's stock has dropped nearly 29 percent since late April when GSIS started its moves against management.
Comments
When was the last MER dividend payout?
How can it have political color when the government simply wanted to give the people less burden because they are passing the buck to the consumers who should not be burdened with system inefficiencies of the company?
Well, I still wish that Meralco will now be fair with their electricity charges. But that's wishful thinking with the Lopez group holding the majority of the boards of directors of Meralco.
lower power rates? then do the following and not just persecute and do a hostile take over of meralco:
last div was P0.50/share record date as of april 16, 2008. phil stock market as a whole is not so much a dividend play.
Masyado silang matatakaw at garapal. Pahirap sila sa mamayang ng Pilipinas. Pati kuryenteng ginagamit nila gusto nila ang consumer ang magbayad.
Lopezes' OUT!