Malakas at mahina
May 29, 2008 by mlq3
Filed under Daily Dose
Blogger Imperfect Hush makes a unique comparison: says Winston Garcia’s like cartoon supervillain The Red Skull! o_O
While the corporate drama that played out last Tuesday was quite riveting (leaving reporters like Iris Cecila Gonzalez exhausted; for reportage, see When smallest to biggest owners become electric), it was the following blog entries were responsible for my column for today, which is ‘Malakas pa si Lopez’. Blogger myclique, who works for a Lopez company, and LeNdl VicENciO’s UseLEss MuLtipLy , who features an extremely detailed rebuttal from his elder sister, a Meralco employee, got me thinking about how more than the big players are invested, emotionally and even financially, in the Meralco fight: there are the employees, each of which has a family, and most of whom constitutes part of our shrinking middle class; and there are also the stockholders.
Blogger Vicoyski’s Eye (a shareholder) gave an eyewitness account of the proxy battle at the Meralco Theater:
I saw firsthand, corporate drama in real life. Obvious, but savvy, corporate raiding moves, that some would interpret as an underhanded attempt to subvert the proxy nominations under the name of recognized Meralco management representatives. A director from the Securities Exchange Commission (SEC) coveniently coming out with an order to remove the Asst. Corporate Secretary, Atty. Tony Rosete, and invalidate all proxies under Meralco management supportive directors, at the exact moment that Mr. Garcia made a signal by pulling-out a manila envelope and flashing its content. An order that was subsequently junked by a majority of the board on the grounds that it was undated, was signed only by a SEC Officer-In-Charge, didn’t have the official seal of SEC, and doesn’t even have the necessary docket number to be considered a legal order.
What I believe is the funniest (others would say scariest) part of the whole proceeding was when Mr. Garcia began losing his composure due to the heckling of a number of Meralco employee-stockholders. He began stating, as I remember it, “…I have more shares than all the (Meralco) employees here combined!” It is indeed something that is true… However, his seemingly childish outburst showed great arrogance, considering that he doesn’t own, but only represent the shares of government employees who have very little say as to where he invests their GSIS retirement money.
Fernando G. Gagelonia in his blog At Midfield quantifies the cost of the government campaign and Garcia’s bravura performance as follows: for all shareholders in Meralco, the stock’s value has shrunk by 24 percent; and for the government itself, book losses for state institutions that “now exceed 6 billion pesos.â€
Returning to the Meralco stockholder’s impressions of the proxy battle, something New Philippine Revolution said in his postmortem of the proxy fight-
That scene showing Garcia standing up and shouting at all those stockholders show you how a member of Gloria’s mafia gang thinks about himself as an overlord of this country.
Suggests to me that something interesting is going on that hasn’t been widely commented on. And that is, the posturing wasn’t aimed at one specific audience, but many audiences. You would think the Lopezes, having encountered Garcia up close and personal in the boardroom, would have known his propensity to come across as a boor, and welcomed the opportunity to have him do their work for them.
But perhaps they knew as well as Garcia does, that his bluster wasn’t meant to impress serious stockholders, much less potential foreign investors, but rather, the broader public. And that is what separates the present management of Meralco from Garcia’s gang: the management had specific shareholders and investors to keep happy, while Garcia and the President are playing to the gallery (which is not to pass judgment on either side: businessmen will obsess over calming investor and shareholders’ nerves while politicians can and must play to the gallery). blog@AWBHoldings says that prior to the proxy showdown, other kinds of political proxies were being solicited by the government:
Last Sunday, I came from church, and my mother reported that a barangay kagawad (councilor) was making the rounds, asking people to sign a piece of paper. It was supposed to be a petition calling for lower electricity rates. But when my mom scanned the document, she found a list of reasons, and number one referred to the Lopez family. My mom refused to sign, knowing it was political in nature, most likely concocted by a local official allied with the current regime. My mom refused to be used by this regime for its political games.
Which brings me to one final extract from New Philippine Revolution’s entry:
This gambit of Gloria backfired. First, it showed how powerful the Lopezes are compared with the Garcias, the Aboitizes, the Alcantaras, and the Arroyos of this land. Second, it showed how teethless the SEC is. And third, it shows how inept and foolish government becomes when the people allow it to continually perpetuate its proto-dictatorial powers especially on businesses.
Pinoy Observer had a similar reaction:
At around 2 pm, GSIS President and “coup plotter†Winston Garcia went out of the Meralco building with his tail between his legs. He has been heckled and jeered at by Meralco employees. Last minute dilatory tactics by the government through the SEC has been rebuffed…
Garcia should blame his publicist for this image fiasco. He lost twice today. He lost his power because Meralco stockholders rebuffed him and he lost his dignity.
Or, as you might have heard from people following the news, “Ay, mahina pala si Garcia!”
This was the main theme of my column: the public posturing of both camps to prove to the public that one was more malakas than the other. This was a concept Filipino historian Mina Roces introduced in her book, Kinship Politics In Postwar Philippines: The Lopez Family 1946-2000.In many ways an effort that arose out of dissatisfaction with the anthology An Anarchy of Families: State and Family in the Philippines and Phoenix: The saga of the Lopez family, Roces puts forward two highly useful ideas for understanding politics and business:
One persistent theme in Philippine postwar political history had been the continuous charges of graft and corruption against an administration, foreshadowing its demise at the next election contest. Such fluctuations in Philippine politics have been an established pattern since independence was granted in 1946..How can one explain such “cycles” in Philippine postwar history?
This book proposes a framework for such an analysis. It argues that a contest between two competing discourses -traditional social idioms embedded in kinship politics or politica de famila and Western values (here interchangeably used with the term “modern”) inculcated in the colonial period- accounts for these political oscillations. Traditional, or pre-European, political organization is seen as being based on the politica de familia or kinship politics. This concept is used here to mean political process wherein kinship groups operate for their own interests interacting with other kinship groups as rivals or allies. Politica de famila thrives in a setting where elite family groups and their supporters compete with each other for political power. Once political power is gained by one family alliance, it is used relentlessly to accumulate family wealth and prominence, pragmatically bending the rules of the law to gain access to special privileges.
She then goes on to specify what these “Western idioms” are:
The colonial period introduced a number of Western idioms (the term Western idioms or Western institutions is used for lack of a better term to refer to non-indigenous influences introduced externally into the society from the West from the 16th century onwards) which were eventually incorporated into the cultural milieu and thus of political behavior. Some of these values were in direct conflict with the traditional elements of kinship politics. The set of Western idioms which penetrated and influenced Philippine political culture may be classified into three categories. First, a new set of ethics and morals, introduced in the Spanish period through the vehicle of Catholicism, provided a novel standard with which to conduct and judge behavior, often intruding into the established methods of comport. (This does not imply that there was no “morality” before the Spaniards arrived in the 16th century). Secondly, bureaucratic professionalism inculcated in the American colonial period emphasized a different method of participating in politics and business -that of utilizing impersonal norms, the assessment of people on the basis of achievement, and maintaining objectivity in major decisions involving personalities. Finally, the concept of loyalty to a nation-state, an entity far surpassing the specific confines of the family or village, began to emerge as nationalist ideas spread throughout the archipelago from about the second half of the 19th century to the movement for independence in the 20th century…
And then, how it comes together:
With independence, Filipinos assumed full political leadership and the tensions between these two opposing discursive practices surfaced. This unreconciled tension explains the peculiar behavior of postwar politics that saw the cyclical rise and fall of governments as each administration was voted out of office for graft and corruption. Families who operated in the traditional style found themselves exposed and criticized in the free press by rivals who used the rhetoric of Western values to attack those families in power. Having been shown to have neglected the national interest in favor of familial concerns, these families failed to retain their power beyond one administration. In this framework, the Marcos regime (1972-1986) represents the epitome of pure kinship politics as one family alliance alone had monopoly of political power and owning most of the country’s major corporations…
This book argues that this unresolved tension was responsible for the ambivalent behavior exhibited by Filipino families who have used political power for familial ends. On the one hand, these individuals families sincerely believe the rhetoric they imbibed from their education -that corruption is bad, that the modern discourses of professionalism, ethics, and morals, and the concern for the national interest should override the familial interests in the political sphere. While these families use the modern idioms to criticize other families who in their eyes use political power to build a business empire, at the same time they remain blind to the same faults in themselves -almost oblivious to their own practice of kinship politics. In this manner they continue to apply one set of values (Western/modern) to their rival families, and one set of discourses (kinship politics) to themselves.
Another concept Mina Roces puts forward as deserving of further exploration, is that of palakasan:
Another Tagalog concept also used as in idiom in the discourse of kinship politics yet unexplored by social scientists is palakasan. The word malakas literally means “strong” and the word mahina designates the opposite -”weak.” In a political sense, a person who is malakas is one who is in a position of power and uses that power unscrupulously to benefit his/her kinship group…
One who does not want to his/her position or power to help his/her kin group is “mahina.” And to be branded “mahina ka” (you are weak) is pejorative. In the cultural value system, “malakas” is a virtue. One who is malakas is looked at with awe and it would enhance once’s position to work for such a “malakas” person. Thus, one’s being malakas or mahina becomes a culturally-defined yardstick of a person’s prestige, power, or influence. If a family is malakas, many would want to work for it or desire an alliance with it. The unabashed ability to display how malakas one is by using one’s power to give one’s family special privileges and concessions in business is received with great admiration.
Palakasan is a system wherein those in power compete with each other in obtaining special privileges and exemptions from regulations and beding the rules of law for their kinship group. For the palakasan system to function, there must be various groups of family rivals all attempting to exercise power in the pursuit of family wealth and privilege. Each family then tries to outdo the other in being “malakas.”…
And the assumptions on which such a system is based? A fundamental inequality among the people:
Malakas implies special status, blatantly stressing the inequalities in the social structure between those in power and those out of power. But malakas status is not dependent on social or economic class (although one could argue it represents the current political class, a position far from being static, as family alliances constantly move in and out of political office). Since the criterion for malakas status is solely political power, a wealthy person can lose out to a relatively poor but more influential family alliance. A group of squatters in a Manila slum area may be malakas because they have close ties with the mayor and therefore feel no threat of eviction. The person who owns the land illegally occupied by the squatters though wealthy, has no hope of retrieving his/her land or of evicting the squatters as long as these squatters maintain their malakas status vis-a-vis the mayor…
It is true that, generally, wealthy families have more chances of attaining malakas status: politicians are willing to receive financial assistance from a wealthy family at election time in exchange for ties of utang na loob. Wealthy families are also financially capable of employing someone who is malakas in order to speak in their favor. For example, rich families can pay influential malakas lawyers, or malakas judges to favor them in court. A poor person who is mahina would not have the financial materiel to approach a malakas person for help. But it is important to note that even families from low social classes, the poor peasants, may be malakas if they are close to the powers that be. Don Aflonso may be wealthy but he could be mahina in the municipality of Pasay City, whereas, Mang Pedro who is the bodyguard of Mayor Pablo Cuneta of Pasay City could be malakas in that municipality.
Because of this, Roces argues that being malakas isn’t always about the wallop of one’s wallet:
Malakas highlights inequalities not along socio-economic class lines but distinguishes between those who are exempted from all laws and rules that govern the rest of society (malakas) and those who have to follow the rules (mahina)… Those that follow the rules disadvantage themselves by sublimating themselves in a lower status while those who blatantly bend or break the rules of law gain prestige because they reveal their special status (they can break the rules without punishment, or they do not have to follow the rules that everyone else has to follow). And it is usually those who are in political positions who can exercise the malakas prerogative. An interesting point is that in order to show malakas status, one has to break the rules deliberately; one has to exercise status to show status.
Which brings me to suggest that Roces’s book provides a keen insight into what took place at the Meralco proxy battle. She pointed out that when it comes to powerful blocs duking it out, Western notions of the “rule of law†become a benchmark of success when one bloc manages to prove itself better at legal manipulation, in other words, malakas.
At the start, both the Lopezes and Winston Garcia had a default malakas position, the Lopezes by being the incumbent controlling interests and Garcia by being backed by the chief executive and having access to a big warchest; Blogger The Write Stuff zeroes in on what the potential political benefits for the President (and Garcia) going into the battle, were:
As a political move, this is probably the best time for Gloria’s administration to take over a highly unpopular power utility firm, or at least take it away from the Lopez family and earn pogi points from the public. Mind you, any Presidentiable making a statement of support to the Meralco Group right now would be taking a political suicide.
The showdown was in many ways reminiscent of the way datus retained or lost their authority by means of challenges from contending datu-wannabees. It seemed as if the fight -highly political because of the nature of both rivals as keen players of the power game (literally and figuratively)- would be old fashioned (think “politics is addition”).
The Inquirer editorial today says Garcia gets points for personal courage but zeroes in on the SEC’s attempt to stop the voting:
Above all, it depended on a master stroke and the element of surprise: an order from the Securities and Exchange Commission to exclude certain proxy votes solicited by the Lopezes from being counted.
The order, read before a stunned assembly by Hubert Guevara, director of compliance and enforcement at the SEC, could have handed Garcia either a strategic or a tactical victory: Either the Lopez proxy votes would have been invalidated or excluded, negating the Lopez family’s advantage, or the stockholders’ meeting would have been postponed, allowing Garcia more time to get more proxies.
Instead, after the board recessed and Meralco management consulted its battery of lawyers, the Lopezes and their business allies decided to ignore the SEC order. They gave a total of 10 reasons why they considered the order legally infirm—only one of which, the charge that GSIS was merely forum-shopping, could be considered invalid. (The GSIS petition for a temporary restraining order had already been withdrawn before the start of the meeting.) Not least, Meralco officer Monico Jacob, a former chairman of the SEC, emerged to explain to the public that intra-corporate disputes were not in fact within the jurisdiction of the SEC.
Indeed, of the many events that transpired Tuesday, it is the SEC order that provokes the most curiosity.
Was the order only the latest confirmation that the Arroyo administration was behind the GSIS attempt to shake up Meralco management? The timing of the order is suspect; it seems part of a script directed by someone in control of government resources.
But why was the order transparently flawed? Only one commissioner’s signature, no official seal of the SEC, no notice given: The list of errors goes on. It is as if the document was designed to be ignored.
It was after the board’s decision to ignore the order and resume the meeting that Garcia, a controversial man at the best of times, objected loudly and confronted members of the pro-Lopez audience.
Ricky Carandang on TV mentioned that one issue was that GSIS had accepted the validity of a quorum and so questioning the validity of proxies made no sense (if they were valid for determining a quorum, why would they suddenly be invalidated for the purpose of voting? Yet the Lopezes too, said Carandang, had contemplated postponing the election early on; it seems perhaps both sides were engaged in a real nail-biter as far as the proxy war was concerned), but like many observers steeped in Western idioms perhaps missed the point (something the editorial came closer to pointing out). The SEC order had nothing to do with law, or the rule of it; it had to do with palakasan and it was meant to be a coup de theatre for Garcia. See GSIS plan to lie low, spring surprise fails:
The Plan†called for the GSIS to lie low and feign weakness in the days leading to the annual meeting, hoping that the Lopez family and its allies would lower their guard.
An official, who had knowledge of the plan to shake up the board of the country’s largest power distributor, said the “diversion†was important because the Lopez family was expecting a full frontal attack from the government led by the GSIS.
The plan coincided with recent pronouncements by Malacañang distancing itself from the boardroom brawl, and by leading industry observers that Garcia would back down without public Palace backing.
Also part of the plan was to float the idea that the GSIS would ask the courts to issue an injunction on Tuesday’s annual stockholders meeting, ostensibly because it had failed to gain access to “proxy votes†records…
The GSIS filed a motion to that effect on Friday in the Pasay City Regional Trial Court, but immediately withdrew it.
GSIS legal counsel Estrella Elamparo said the strategy was to divert the attention of the Lopezes away from guarding against requests for temporary restraining orders (TROs).
The Lopezes need not have looked far as the GSIS filed a complaint on Monday morning in the Securities and Exchange Commission (SEC)—only a few hundred meters from Meralco’s headquarters.
Despite filing the complaint earlier in the day, the GSIS called a press conference in the afternoon, where Elamparo denied having filed a petition for a TRO…
That very same day, SEC Commissioner Jesus Martinez signed the order favoring the GSIS motion to “set aside†the counting of all proxies gathered by the Lopez group. The order would be delivered by SEC representatives as a surprise during the Meralco stockholders’ meeting…
When SEC director Hubert Guevara read the “cease-and-desist order†on the floor, the entire assembly fell silent. The audience was clearly confused by its implications, and the Lopezes and their directors were stunned by Garcia’s deft maneuver.
“Without the Lopezes’ proxies, they would have only 33 percent [or Meralco’s total outstanding stock],†said another business ally of Garcia. “Winston has about 40 percent, including proxies. He will win.â€
The plan—had it been successful—called for the GSIS to elect five board members, plus nominate one independent director who would be sympathetic to their side…
As it turned out, however, the Lopezes’ lawyers saved the day for the influential family, finding “infirmities†in the SEC order, including several technicalities like the absence of a docket number, date and official seal on the written order.
What looked like the SEC’s technical errors gave the Lopez group the courage to disregard the order and proceed with the stockholders’ meeting.
And so, the coup de theatre that failed added to the malakas reputation of the Lopezes -and again, let’s recognize that neither side was operating from the basis of subordinating themselves to the rule of law, but rather, tried to outfox each other in applying the law in as wily a manner as possible. What Garcia had hoped would produce shock and awe -the SEC order, incidentally widely-understood as being something of an unprecedented development- was blunted when the Lopezes survived the initial bombardment and sallied forth from their bunker.
So, if there’s one sector that’s unquestionably benefited from this fight, it’s corporate lawyers.
On to the point I first raised and the final point in my column. The administration’s skating on thin ice in playing the populist card but going after big businesses that have a reputation for cultivating their employees.
Think of the middle class, which has felt besieged for some time: subjected to the predations of politicians, and hostile to the masses because they’re viewed as land-grabbers, etc. When a government whips up mass sentiments, the instinct of the middle class is to throw its support behind the upper class, on which its own status is intertwined. the President, after reformist elements proved themselves powerless during Edsa Tres, realized that a combination of military support (generals, often having a subtantial net worth, have no real incentive to throw caution to the winds if regime change introduces more, and not fewer, variables into the political equation, for examply by possibly putting in power a fragmented opposition), and consolidating middle and upper class support by reassuring them the might of the state would mobilized to protect property, peace and order, etc: anyway, they’re “prepared to sacrifice their freedoms to move the country forward”, economically, etc.
But the President can’t ignore the broader public, which meant they had to be reassured things were really trickling down (“Ramdam na ramdam ko ang asenso!”) and if they didn’t feel it, well, tough luck, they would be denied avenues to express their dissatisfaction while those with a gift for organizing the discontented would be liquidated one by one. Meanwhile, those from the middle and upper classes inclined to show common cause with the broader public would be portrayed as hopelessly naive, dangerous class traitors -or simply, and most effectively, as possibly sincere but on the whole, mahina.
Much as the middle and upper classes express themselves in Western terms, in their breasts beat hearts that still palpitate to traditional notions. Hence the admiration for the President’s survival instincts and cat-like-grip on power. Hence the derision that greets her critics when they fail to dislodge her (after, mind you, initiial posturing when it seems they might just pull it off!). Hence the satisfaction with the arrests of anybody but themselves. Hence the relative tranquility with which big business greeted the events of 2005.
This only began to change when the President showed signs of wanting to stay in power, and of sending her cabinet to gun after certain corporations (remember Favila and his threats to the Makati Business Club), and how she’s gone beyond the usual saber-rattling all presidents indulge in: the attack on Meralco and possibly Smart, Globe and Sun (Pangilinan gave some cryptic criticisms of the President; the Palace mistrusts the Zobels; administration allies the Gokongweis have to wonder how they’ll wriggle out of this one) inspires the sort of instinctive panic that gets businessmen to mobilize faster than you can say “People Power.” As I mentioned in my column, Garcia’s saber-rattling against SGV might also antagonize another powerful bloc. And all these blocs have a big chunk of the middle class working for them, and in a sense, identifying with their bosses.
Meanwhile, as the news stories keep coming out, see Meralco shares face protracted beating and SEC intervention may scare away foreign investors and Garcia discloses gameplan when he takes over utility, there have been postmortems in the blogosphere:
Pilipinas, you need to work says if things drag out in court, it won’t help consumers. blackshama’s blog makes an interesting comparison to the dissolution of the monasteries in England:
It is not the first time that the King or in our case the Queen has tried to take over a private enterprise. Like Henry VIII who dissolved the Monasteries, Gloria I tried to “dissolve” Meralco by bringing up the spectre of high energy costs. While Henry had his Cromwell, Gloria has her Winston. The only similarities between them is that both royal subalterns are in their faces! But her Winston is no Churchill.
In a globalized economy, doing a Ferdinand I on the Lopezes is nigh impossible unless Gloria I declares martial law (which requires Congressional assent). So she had to do it by proxy. The stockholders saw through this and trooped to the meeting. When Winston queried if the people in the theatre were employees,not a few responded “I’m not an employee!”
And Ricelander’s Blog takes a karmic approach to the whole thing:
GMA’s decision to pick a fight with the Lopezes to score points from the public reeling from high power rates would be popular, but for her own past sins, it calls attention to herself. Like a mirror, it reflects. Take the issue of transparency. When Malacañang seconded Winston Garcia’s call for the Meralco management to be transparent with its records and transactions, it got sneered at instead: “look who’s talking?â€. Look, indeed, who’s talking? The many scandals that have become her government’s trademark are known not just for their gravity but also for the groundbreaking lessons in naked cover ups and stonewalling that followed each. When Meralco management points its finger to ERC to justify corporate practices that at first glance appear unethical and immoral saying “hey guys, it’s legal says ERCâ€, you are at once reminded of the legalistic barrage popularized by Malacañang mostly by the frequency of their employment: “Respect the institutions!†“Go to the courts!†When the Lopez group went after proxy votes in a manner seemingly dubious, the Palace could have raised a howl in the name of fairness and goodness but how, without calling back to memory “Hello, Garci†and all the parallel backroom operations during the heat of her own series of crises.
She’s looking at a mirror; it’s herself she sees and it is ugly. Question is: is there any chance she’ll recognize the reflection?
As for the Lopezes, what’s the stuff this family made of exactly? Thanks to this ongoing power struggle, they’re out in the open finally for all to see, while being undressed. This family had successfully parlayed its “good guy†image as a victim of “bad guy†Marcos to earn sympathy and to get into the good side of society. It paid well; the Lopezes got their business empire back free, a compensation for the wrong done to the family by a “rapacious†dictator, supposedly. But now, it’s all coming back and people want to see documents to crosscheck with their claims of grieveous wrongs and if indeed sympathies were well-placed. Because if the Lopezes were/are indeed the “good guysâ€, some things here are in serious disconnect. Good guys don’t get this sneaky on people and their costumers. Good guys do not behave this way!
Review Roces’s book for a more detailed look at some of these allegations. But on a minor point, I don’t know that the younger are ever better than their elders, as Ricelander suggests; often the opposite; but the real point is, at a certain point one generation can’t be -or should be- held accountable for what their kids do. Parents, I think, should always get credit for whatever good things their kids do, but the blame, if they don’t do good, should stay with the kids, who are individuals and not clones.
And Pinoy Potter’s Chronicles reproduces a effort to trace back the Arroyo-Lopez konfrontasi to the 1920’s, but the real bad blood, if any, dates back to the Macapagal administration, but politicians on all sides are more pragmatic than to bear in mind old fights; it’s the new fights that interest them.
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cvj on Thu, 29th May 2008 1:38 pm
Excellent and accurate observations on the Filipino middle class behavior especially this passage…
The good thing about your blog is that i actually get to meet and interact with these kind of people.
Edge on Thu, 29th May 2008 2:59 pm
My regards for this comprehensive and decisive discourse.In acting out his ‘courageous’and vested arrogance before that meeting entailed so much meanings in asserting his stake, or rather GSIS members’ stake in the company. It seems to me, as beneficiary of GSIS and soon to be member, that his persistence was beyond the bounds of his intentions of investing GSIS money in Meralco and earning from it, when he is in the guise of promising Meralco consumers of lowering electric bills in the event that they are in control Meralco’s Board. Ironic to say, that the DOE led Energy Sector Forum (attended by Meralco, NAPOCOR, TRANSCO,Consumer groups, BIR, IPPs, distributors)ended in a deadlock, with no clear signal of arriving into a viable recourse. Giving false hopes to the public is tantamount to genocide, if only to serve ‘his’ vested interests and dictates from higher ups.
Abolish E-VAT! Nationalize the Electric Industry!
vic on Thu, 29th May 2008 3:37 pm
And also Modernize the Utility Facilities..Right now, between 10 PM to 7 Am the Energy Board Web site say that the kWh rate is only 2.7 cents and this time I’m doing my laundry and drying. That is with the installation of the New Smart Meter that will measure the time and the rate of Usage at the High and Low Rate..The highest Rate is 7AM and also Evening to 10 PM 9.3 cents delivered . so anything that can be postponed til “Cheap” time is a huge savings..
vic on Thu, 29th May 2008 3:40 pm
Also weekends and holidays is a “cheap” time…because most businesses, the volume users are closed..
Pinoy Patrol on Thu, 29th May 2008 4:34 pm
This entire “fiasco” of power rates and the political atmosphere merely highlight the very problems of the doing business in the Philippines. It shows the inability of the SEC to step in when matters of public interest are in the hands of a “private” company. Family grudges are brought out in the open that affect everyone else. Everyone who is not part of “that” society realize that only few families really control this country and not the people. I wonder what will happen next as we inch closer to 2010.
Jeg on Thu, 29th May 2008 4:39 pm
Nationalize the Electric Industry!
Edge, Im sure you realize that when you ‘nationalize the electric industry’ youre giving control of all of it over to you-know-who, right?
Taroogs on Thu, 29th May 2008 6:19 pm
what strikes me most in this corporate drama is the “intensely wince inducing” situation where a winston garcia is passing himself off as a crusading advocate for ethics and delicadeza in business and government. puhlease…
The Equalizer on Thu, 29th May 2008 9:55 pm
EQ POLL:”Pagkaraan ng pitong taon ramdam nila ang pag asenso!” Sabi ng mga TV ads ng Gloria Arroyo administration ay ramdam na ramdam daw ang pag-asenso ng ating mga kababayan. Agree or disagree? Kayo – ramdam ba ninyo ang pag-asenso?
Results to-date:
OO naman! 5%
Ano ‘yun? 9%
Pwede iyan sa joke of the day!84%
No comment na lang!2%
votes cast so far:279
john marzan on Thu, 29th May 2008 10:05 pm
what is it about this saying… if you’re in trouble on the domestic front, “start a war”?
this admin has no intention of taking over MERALCO. the recent power play by arroyo stooge winston garcia is an just attempt to shift the blame to another entity for the spiraling costs of electricity. and it is meant to show the public that that her admin “is doing something” and “fighting for us” the consumers.
whether her admin gets the MERALCO is not the point. The point is that her crooked admin is fighting the evil lopezes.
so winston garcia “lost” on his bid for MERALCO. big deal. for the admin, it was “mission accomplished” because the public has focused their attention on the LOPEZES instead of blaming the admin for an increasingly shaky economy and rising costs of living.
this is like the cha cha distraction. that too was a successful operation to confuse the public and allowed the CBCP admin loyalists “oppose the admin” and look good.
she won’t stay in power, manuel. she’s going to “cash out” in 2010. she’s appointed enough people at the SC and other institutions to guarantee her freedom from accountability. and i don’t think villar and roxas will go after her family (one of them will probably even seek her admin’s support discreetly in 2010.)
john marzan on Thu, 29th May 2008 10:08 pm
edit: this is like the cha cha distraction. that too was a successful operation to confuse and divert the public’s attention from GLORIAGATE while allowing CBCP loyalists to “oppose the admin” on cha cha and look good.
mlq3 on Thu, 29th May 2008 11:04 pm
john, i’ve heard the cashing in theory, but even if that were so, then meralco’s needed. if power remains the last frontier for fabled riches -pretty quickly gained and so complicated as to be basically impregnable- then it’s all part and parcel of an effort to sink their money into an ipp-transco-etc. combine. and they’re far from achieving that yet and they’re running out of time.
kg on Thu, 29th May 2008 11:52 pm
“and they’re far from achieving that yet and they’re running out of time.”
let us not forget Mikey Dato and even Luli.
somehow I think we will not just be out of the picture.
malaki na nainvest sa kanila mga chinese: one word…
transco
with that they can forget nbn cybered,north rail/southrail….for now.
kg on Thu, 29th May 2008 11:55 pm
edit:
somehow I think we will not just be out of the picture
to
somehow I think they would not just be out of the picture.
Schumey on Fri, 30th May 2008 12:52 am
First, I’d like to greet you a very Happy Birthday.
The GSIS now claims that it would lie to exhaust all venues (due process kuno) and would lodge a complaint at the SEC. We all know that Fe Barin, the wife of NAPOCOR’s Alejandro Barin is a relative of Gloria. The SEC is definitely a palace stooge.
On shifting the blame of the skyrocketing cost of living to that of someone else, Gloria has been doing this for years. Her incompetence and greed is what got us to were we are.
Schumey on Fri, 30th May 2008 12:53 am
Edit: where we are.
supremo on Fri, 30th May 2008 1:48 am
What is the role of Bunye in the Monetary Board in this cashing in theory?
TonGuE-tWisTeD on Fri, 30th May 2008 1:54 am
mlq3 :
“john, i’ve heard the cashing in theory, but even if that were so, then meralco’s needed. if power remains the last frontier for fabled riches -pretty quickly gained and so complicated as to be basically impregnable- then it’s all part and parcel of an effort to sink their money into an ipp-transco-etc. combine. and they’re far from achieving that yet and they’re running out of time”.
Select:
1. A compromise deal with the Lopezes takes them in quietly. Winston shuts his trap.
2. Meralco agrees to cooperate in a cartel with the “other” distributor. They will be Meralco’s friendly competitors.
3. Government throws its weight and displaces the Lopezes.
The drama may also have been lifted right off a “Quality-Control Testing Manual” to see how deep future regulators and investigators could actually penetrate into the company’s vaunted tight and secure systems in a worst-case scenario. I see impregnability as it refers specifically to Meralco, you may be looking at it as the industry as a whole.
Prospective investors used to practice extreme due diligence, but this group is known for its creativity nothing surprises me. Passing this test merits their investment.
They need all the power they could get to run the washing machines for this gi-mongous laundry job. I have also asked the same question : Can they do it in a year and a half?
TonGuE-tWisTeD on Fri, 30th May 2008 2:01 am
Is it true, what Schumey said? Then Happy Birthday!
The Ca t on Fri, 30th May 2008 2:16 am
cv of winston garcia.
http://www.philssa.org/officer-garcia.html
The Ca t on Fri, 30th May 2008 2:17 am
i forgot to write. duh.
hawaiianguy on Fri, 30th May 2008 2:21 am
“Without the Lopezes’ proxies, they would have only 33 percent [or Meralco’s total outstanding stock],†said another business ally of Garcia. “Winston has about 40 percent, including proxies. He will win.â€
That’s the long and short of it. If others use proxies, it’s illegal, but not my own proxies – so the the saying goes. Garcia is in for a long, drawn-out battle with the Lopezes.
How long can Malacanan say, “we have nothing to do with it?”
hawaiianguy on Fri, 30th May 2008 2:35 am
John, (re your post of May 29th, 2008 at 10:05 pm)
All this bugaboo is meant to distract public opinion away from the other, more critical issues that pull down GMA into deeper shit.
Question is: Why only now? They could have done it in 2001, or 2004. And Winston has been sitting in the Meralco board for so long. What the f***k did he do? He could not even straighten up GSIS, with all the stinking mess that makes its members complain about.
Yeah, he thinks he is “malakas” (using Roces’s conceptual scheme) up there, little realizing that he is causing more trouble for everybody. In the end, it’s all the fat that he has – not muscle – that rocks the boat.
Nick on Fri, 30th May 2008 4:03 am
HAPPY BIRTHDAY MANOLO!!!
Jeric on Fri, 30th May 2008 4:31 am
Happy Birthday, MLQ3!
cvj on Fri, 30th May 2008 5:24 am
Sad, right? What if there are really situations when nationalization is really the best alternative (for example because industry because of its structure is prone to market failures?) Just because we have a government that cannot be trusted to do right by the people, this policy option is no longer on the menu.
My guess is that a lot of the free market fundamentalism, pro-privatization/deregulation sentiments is driven by the complete loss of faith in what government can do, so the people have no choice but to adopt an ideology where government is accorded a minimal role.
None of our neighbors prospered without the active participation of their governments (yes, even in business). We, on the other hand, are rightly wary of putting business in the hands of our government so unlike our neighbors, we are unable to fire on all cylinders.
John Christian Canda on Fri, 30th May 2008 6:20 am
Hindi na po mahalaga kung mananatili pa sa kamay ng pamilya López o hindi ang Meralco. Ang mahalaga ay bumaba ang singil sa kuryente.
By the way, I strongly encourage you all to watch “Radyo Bandido sa TV” at NBN-4 every Tuesdays and Thursdays from 11 p.m. to 12 midnight. Hosted by Carmen Ignacio and Johnny Midnight and Attys. Roger “Waray” Evasco and Rolando SÃbal. Everybody, regardless of political affiliation, is invited to voice out their opinion.
kg on Fri, 30th May 2008 6:57 am
happy birthday, Manolo!!!
leytenian on Fri, 30th May 2008 7:19 am
“Mr. Garcia made a signal by pulling-out a manila envelope and flashing its content. An order that was subsequently junked by a majority of the board on the grounds that it was undated, was signed only by a SEC Officer-In-Charge, didn’t have the official seal of SEC, and doesn’t even have the necessary docket number to be considered a legal order.”
this is too funny… and he is lawyer. he should know better. taga cebu pa naman… hay naku.. i’m embarassed being a Visayans…LOL ( i cannot be serious anymore, I still love my people. sense of humor is always in the air).
“However, his seemingly childish outburst showed great arrogance, considering that he doesn’t own, but only represent the shares of government employees who have very little say as to where he invests their GSIS retirement money”
unacceptable and unprofessional manner. might be the end of his career..
Bencard on Fri, 30th May 2008 9:52 am
speaking of the “derision” that the oust-gloria mobs (of different hues and persuasions, and united only by one common obsession), are deservedly subjected to, how can one not be amused by the antics of these poor souls? the comedy is such that it isn’t even funny anymore. endlessly licking their chops in anticipation of a sumptuous banquet, these unholy crusaders get stymied again and again, not for lack of trying, but for sheer failure to capture the heart and mind of sufficient number of the population.
i suggest several reasons for such continuing failure: (a) lack of unity, (2) lack of trust and believability, (3) lack of a better alternative,i.e., same banana, more of the same or worst, (4) failure to articulate persuasive reason why the president should not be allowed to continue in office until the end of her constitutional tenure, and (5) “edsa”- fatigue, or the general feeling of having had enough of it.
The Equalizer on Fri, 30th May 2008 10:12 am
Dear Manolo,
Because time itself is like a spiral, something special happens on your birthday each year: The same energy that God invested in you at birth is present once again.
EQ
john marzan on Fri, 30th May 2008 10:48 am
manuel, I was refering to your statement below re arroyo staying in power
and btw, happy birthday.
Jeg on Fri, 30th May 2008 11:11 am
Haberdey, MLQ3.
cvj: None of our neighbors prospered without the active participation of their governments… We, on the other hand, are rightly wary of putting business in the hands of our government so unlike our neighbors, we are unable to fire on all cylinders.
What you said is so true. We tried ubiquitous government and it failed. What we havent tried is minimal government. We are in a good position to achieve an Asian balance between market and State, what Abe Margallo called bayanihan.
The example of our neighbors shows that a role for government is indeed an Asian thing, something we need to explore and embrace. The thing is we’re so enamored with western representative democracy and its emphasis on elections and electioneering. It might be a good idea to rethink this path and de-emphasize regular popular elections. Ive always maintained that the people’s power is not in choosing their leaders anyway; we are more likely to choose the wrong one. The power of the people is in kicking them out. Of course this idea of Asian balance isnt fully formed in my head yet. Maybe political thinkers smarter than I could give it a go.
BrianB on Fri, 30th May 2008 11:33 am
Test
BrianB on Fri, 30th May 2008 11:38 am
Jeq, don’t be such a libertarian. Minimal government? With all the insurgencies we have? Culturally, we need a government. A big government are better than having a “siga” in every kanto. Hm, I suppose if you were American, you’d vote Republican.
ricelander on Fri, 30th May 2008 11:40 am
Haha i think I might have oversimplified the matter I wanted to convey.
On a serious note, let us look at the implications of the discovery of present-day corporate practices prevailing in Meralco. I suppose it is safe to say, today is an improvement of the past. But if this is all one could see for improvement or progress, hey, how then were they running Meralco before, to include the pre-Martial Law years?
Now, if we say the present is not necessarily better, and that in fact it may have all deteriorated, what an adverse
commentary of the present-day management team? What a shame.
See, either way, it’s unflattering.
Thanks for the ping, btw, it spikes traffic.
Jeg on Fri, 30th May 2008 11:47 am
Brian: Hm, I suppose if you were American, you’d vote Republican.
Are you kidding? The Republicans are as much big government guys as the Democrats. If I were American, I wouldnt vote at all.
A big government are better than having a “siga” in every kanto.
Id prefer a siga in every kanto to one gigantic mega-siga with an armed force and a police force. I could deal with the siga. If we had minimal government, do you think we’d have all these insurgencies in the first place?
mlq3 on Fri, 30th May 2008 11:58 am
many thanks for the greetings!
The Equalizer on Fri, 30th May 2008 11:59 am
Youth has no age. – Pablo Picasso.Happy birthday Manolo!
Manolo is brilliant, measured, clear and thoughtful.
His political columns are crisp and incisive.”He can say the driest, most cutting things in the quietest of tones” Charlotte Brontë.
His sincere moderation and ability to put “steak commando”/ armchair critics in his blog in the corner lend him unmatched credibility among other political commentators in Pinoy blogsphere.
Manolo should have his own political talk show.His talents are underutilized. His current show, THE EXPLAINER, seems to be more like a “classroom- on-air” show for students.
I would rather watch Manolo rather than others who are just probably reading scripts written by Manolo himself.
Manolo is top shelf,no question there.
Great interviewer.Much more intelligible than some commentators now.
cvj on Fri, 30th May 2008 12:26 pm
What we haven’t tried is a government not controlled by the Oligarchs. (Marcos advertised himself as anti-Oligarch but that’s as far as it went.)
On the desirability of a minimal government, i agree with this comment over at Dani Rodrik’s blog:
rodrik.typepad.com/dani_rodriks_weblog/2007/06/markets_without.html
Besides, if not through government, what is the alternative to coordination on a national scale? A network of NGO’s?
By ‘Asian’, do you include India?
One model to consider is South Korea’s. After twenty years of public service, they shot Park Chung Hee once he started to outlive his usefulness. That way, they got the benefits of the economic miracle without the baggage of overstaying leaders and political dynasties. Bummer for him but as they say, the needs of the many outweigh the needs of the few.
vic on Fri, 30th May 2008 12:29 pm
Happy Bithday, Manolo and many, many more happy birthdays to come!!!
BrianB on Fri, 30th May 2008 12:49 pm
“many thanks for the greetings!”
Meh, I’ve stopped celebrating after I turned 25.
BrianB on Fri, 30th May 2008 12:58 pm
“Id prefer a siga in every kanto to one gigantic mega-siga”
I like this statement. It’s like listening to those late-night girls at 94.7.
JEQ, the little siga is a daily, even hourly problem. The tyrant will only be a problem if you are important enough to get in his way. US republicans are libertarians. That’s what you were arguing for, right? Libertarianism, a minimalist government that will keep its hands off our taxes alone – heck there probably won’t be any taxes, just cooperatives for infrastructure (with tolls for the public) and charity.
… and the closest we will come to a libertarian state is a Federalist state, which only minimizes the central government and ironically maximize the government as seen and felt by the people. Problem is, Filipinos are as far from Libertarianism (we’re closer in our native culture to communism) as the Vatican is to Carrie Bradshaw’s lifestyle.
BrianB on Fri, 30th May 2008 12:59 pm
“Bummer for him but as they say, the needs of the many outweigh the needs of the few.”
Some people (Manolo, perhaps?) would argue that with that kind of culture, it would be impossible to find good leaders.
BrianB on Fri, 30th May 2008 1:06 pm
CVJ, we are so like-minded, man!
BrianB on Fri, 30th May 2008 1:08 pm
shouldn’t have used like-minded as adjective. Learn from my mistakes, young ‘uns.
cvj on Fri, 30th May 2008 1:11 pm
Brianb, one way of modeling the behavior of a typical political leader is that of a drug addict turned hostage taker. I say drug addict because power has the same effects on the brain as a drug and it has been shown that Filipino leaders (except maybe for Cory) don’t have the self-discipline to resist the effects or wean themselves away from that drug. I consider them Hostage taker because as the example of Gloria has shown, a Filipino leader is willing to bring down the country [aka the the 'hostage'] along with him/her just to hang on to power. So the question is, how do we handle these drug addicts/hostage takers?
UP n student on Fri, 30th May 2008 1:22 pm
cvj: are you espousing the Park Chung Hee government model (Many Koreans look back with dismay at the Park Chung Hee rein —- widespread human rights abuses in South Korea during his rule; thousands arrested and imprisoned for many years merely for criticizing Park; culture of corruption; bribery was common, and often powerful figures in Park’s administration confiscated private businesses and other properties)? The Park Chung Hee government model included creation of the KCIA (Korea CIA) and big-government on steroids where Constitutional guarantees of freedom of speech and the press meant little. The Park Chung Hee at his peak was a Ferdinand Marcos and his government model also included a Cha-Cha/Con-con amendment to their Constitution (with assistance of the KCIA and Park’s allies in the legislature) for extra years in power for Park.
Or maybe “assasination” is your thing.
————
cvj: I know you write with passion about it, but somehow you also leave me the impression that care less about the government model (corrupt or not, human rights abuser or not, rule-of-law/Constitutional process or not) and more about the economics that results from the 8 or 12 or 20 years reign of that government. And sometimes, I do not know if you want people to rise (rising-economic-tide to include bottom-40%) or if your passion is more in seeing some people to fall (enemies that you label “oligarchs”).
BrianB on Fri, 30th May 2008 1:36 pm
Scape goating a leader is better than scape goating the entire race (what we’re doing now with all these anti-Filipino criticisms from the intellectuals). Agree.
But, then again, it is in our culture to give our leaders more freedom as opposed to less freedom (Koreans). Why our democracy is failing: Filipinos do not think they have a right to take control of their lives and leave others to take charge over their fates. Every time you hear a person in power complain about complainers think about this: complaining is the first step in taking over the fate of this nation.
Jeg on Fri, 30th May 2008 1:50 pm
cvj: What we haven’t tried is a government not controlled by the Oligarchs. (Marcos advertised himself as anti-Oligarch but that’s as far as it went.)
True. The State is just one of the enemies of the freedom. The monopoly-seeking oligarchs are the other, and they usually get their monopoly by partnering with the government. Meralco for instance. Im all for Abe Margallo’s bayanihan partnership but how to achieve this between the government and the oligarchs is the problem. We need a lucky break to break out of the circularity: a powerful state to enforce the bayanihan and then on its own decreases its own power afterwards. But as you have argued for the corrupting influence of power, this scenario doesnt look too good.
So, when one is trying to increase freedom, the first step is not to minimalize the power of the state, but to make sure the state itself is under control…
Looks circular to me, too: To increase freedom, you dont minimize the power of the state but make sure the state is under control. How? By minimizing the power of the state. Maybe you can untangle the circularity of the statement by proposing a way to make sure the state is under control without minimizing its power.
Besides, if not through government, what is the alternative to coordination on a national scale? A network of NGO’s?
Minimal government and a network of NGO’s might work.
By ‘Asian’, do you include India?
Im afraid Im not too familiar with India. Is it an exception to my Asian rule?
Brian: Problem is, Filipinos are as far from Libertarianism (we’re closer in our native culture to communism) as the Vatican is to Carrie Bradshaw’s lifestyle.
Yes. That’s what Ive observed too. That’s why I said it’s probably an Asian thing since our neighbors have ubiquitous ‘maxi’ states. The Asian balance then is bayanihan where State and private sector are partners. But good luck with that. We’ll need it.
The tyrant will only be a problem if you are important enough to get in his way.
Correct me if Im wrong, Brian, but are you honestly arguing, like Socrates, for tyrants? ‘We are willing to give up our rights to move this country forward’ sort of thing? And if Im an ordinary schmoe, the tyrant will not cause me problems? I dont think that’s what you mean. (And as for US republicans being libertarians, the US libertarians will probably disagree with you.)
cvj on Fri, 30th May 2008 1:52 pm
UPn, not sure if you are aware but eventually it was the head of the KCIA that shot Park. No, assasination is not ‘my thing’. I’m against the death penalty even for the Arroyo couple for the practical reason that it is better to study them in the lab to get an insight into their pathological mindsets. However, there is nothing to stop us from studying other countries’ experiences.
Another model we can study is that of Malaysia where after a similar two decades of exemplary public service, Mahathir was put to pasture and has now become a fellow blogger.
As ordinary citizens who are on the receiving end of their abuses, we should seriously think about how to manage our ‘leaders’.
As to my preference of government models, i’ve blogged about this before:
http://www.cvjugo.blogspot.com/2007/04/authoritarianism-what-is-it-good-for.html
cvj on Fri, 30th May 2008 2:11 pm
Either the oligarchs voluntarily share power (ala Taiwan or India) or it is forcefully taken out of their hands (ala China via Mao’s revolution) or a combination of both (ala Japan during the Meiji restoration where a new breed of Oligarchs exterminated the Samurai). I prefer the voluntary option.
Shades of Marx’s withering away of the State. That’s one of the most utopian aspects of his theory.
I agree.
Yes and no. They followed the democratic model, but like the other East Asian states, their government was also highly involved in economic activities (in cooperation with their Oligarchs).
Jove Francisco on Fri, 30th May 2008 2:41 pm
Happy birthday, Manolo!
inodoro ni emilie on Fri, 30th May 2008 7:08 pm
hey, benigs, here’s something you will not like: primitive people with no concept of “efficiency”.
http://news.yahoo.com/s/nm/20080529/sc_nm/brazil_tribe_dc
scary, these people still exist and worse, they do not fit getrealphilippine’s ism.
jude on Fri, 30th May 2008 7:13 pm
“if power remains the last frontier for fabled riches -pretty quickly gained and so complicated as to be basically impregnable- then it’s all part and parcel of an effort to sink their money into an ipp-transco-etc.” – mlq3
The energy and powers sector have recently been in vogue among investors because they are a hedge against high inflation, high oil prices and a possible downturn in the economy. They are not necessarily “the last frontier for fabled richesâ€, unless you strike oil, but they are a steady and safe investment in these very volatile times.
The stocks of companies in the power sector, along with companies that produce necessities like food, potable water and medicines, are precisely known as “defensive†stocks because they produce or distribute goods and services that will be needed even when the economic cycle is down. They are also known as “non-cyclical†stocks, since they are usually immune to economic cycles. Adding to the present seductiveness of the power sector is the fact that studies point to a shortage of power for the entire country by 2010. When a commodity is in short supply, its value is likely to rise.
Investor sentiment isn’t so upbeat about former darlings of the market. The banking sector is affected by the gloom emanating from the collateralized debt obligations (CDO) mess that has severely affected large multinational banks (even if I don’t think there is any cause to fear that Philippine banks will be dragged into the imbroglio). The real estate sector is spotty. While there are some bright spots, fears of an economic downturn dampen tendencies toward “irrational exuberanceâ€. The mining sector has its adherents, but metals prices could be affected by a downturn in the U.S. housing market and gold, which is seen as a hedge against inflation, is too volatile for most investors. The telecommunications sector still seems like a good bet, but that, too, can be affected by tougher economic times ahead.
By my standards, the “last frontier for fabled riches†lies in technology. But that’s very competitive, very risky. You really have to be brilliant and creative in order to succeed. It’s not for your average, everyday Joe.
leytenian on Fri, 30th May 2008 8:06 pm
brianb,
“Filipinos do not think they have a right to take control of their lives and leave others to take charge over their fates.”
might be pessimistic in your part about our people. i might have to disagree with you. filipinos are hardworking people if given opportunity. i will agree with you in terms of management that very few filipino leaders are capable. all of us here are very aware of all the problems but i am also optimistic that in every problem there’s always a solution. we should start talking about solution, let’s input values and share our positive accomplishment to our economy.
Jude:
” hedge against high inflation, high oil prices ”
how could the energy and power sector be the only hedge against inflation where it could no longer be in a position to hedge if oil price continue to rise. hedging is good for short term not for long term. but let’s use the word for the sake of our economy. hedging against inflation is investing into something more solid. the only solid hedge is EMPLOYMENT.
Is this Garcia’s strategy about hedging? then this term is not well understood.
Connecting employment to BrainB’s comment qouted above: when people are employed, they will feel a sense of pride and thus understand their value to their community, family and to the corporation they work for. employment will make our people capable of taking control of their lives.
benign0 on Fri, 30th May 2008 8:38 pm
There always has to be an “if” now, doesn’t there?
What then if this “opportunity” is not “given”?
jude on Fri, 30th May 2008 8:47 pm
“how could the energy and power sector be the only hedge against inflation where it could no longer be in a position to hedge if oil price continue to rise. hedging is good for short term not for long term. but let’s use the word for the sake of our economy. hedging against inflation is investing into something more solid. the only solid hedge is EMPLOYMENT.” – leytenian
Poor chap is way over his head. Energy and power aren’t the ONLY hedge. As mentioned, there are other ways to hedge. Metals, gold, real estate are there. But they aren’t the choice Is this bozo a Meralco employee? If he is, then OK. I respect that. After all, recession is commonly defined as when your neighbor loses his job. Depression is defined as when YOU lose your job.
nash on Fri, 30th May 2008 9:02 pm
HAPPY BIRTHDAY MLQ3
Bencard on Fri, 30th May 2008 10:53 pm
“Depression is defined as when YOU lose your job.” jude
maybe as applied to filipinos, in particular. but employment, i.e. working for an employer other than oneself, is not the only way to make a living. i have commented, time and again, in this blog about our penchant for working for somebody else as the be all and end all of economic existence. seldom, if ever, you hear a college graduate going into business for him/herself. the usual cop-out is “lack of capital” or “lack of connection” or “lack of government help” while an undocumented chinese or korean, who sneak into the country with barely a shirt on his back, soon becomes a successful entrepreneur (in many instances).
Bencard on Sat, 31st May 2008 12:38 am
mlq3, i’m not, by any means, a winston garcia apologist – i don’t know the man from adam, don’t know anything about him except his being a brother to that feisty, articulate and good-looking governor of cebu. i find your one-sided caricature of him – complete with a distorted photograph that shows a pockmarked, bloated face – and liberally sprinkled with a cacophony of acerbic commentaries and outright heckling from partisan bloggers and self-proclaimed “opinion-makers” kuno, a tad unfair. i know that you are somewhat connected to the lopezes but since when has fighting for principle (whether or not popular) been considered “arrogance”, boorishness, or evil? i don’t think by demonizing garcia, you make the lopez oligarchs a bunch of archangels.
what the hell were the meralco employees doing at the shareholder’s meeting unless they were shareholders or proxies on their own right? weren’t they supposed to be working at their own jobs? were they “allowed” to be there to give aid and comfort to the lopezes and drown out garcia and his supporters? was it the idea to make the corporate meeting a virtual street protest action?
if it’s true that meralco has been passing on to its customers it’s own losses and electric consumptions; that it is paying, and has paid in the past, to another lopez-owned entity, payments in billions of pesos for product it has not delivered or services it has not rendered or could not deliver/render promptly; if it is engaged in incestuous relationship with other lopez-owned or controlled enterprises resulting in unfair competition or combination in restraint of trade, then that’s where the focus of the discourse should be. for once, let’s not politicize these issues or sweep them under the rug, as we almost always do.
UP n student on Sat, 31st May 2008 12:50 am
to leytenian: One of the ways that companies hedge against inflation is with the power of the pen via a chapter of sentences in a legal contract. A sari-sari store owner can’t do this, nor an owner of twenty public utility/transport buses.
A “guaranteed-rate-of-return” contract denominated in dollars or in euros should do it. This can be a contract which stipulates that Company-XYZ gets reimbursed for all the costs (submitted as US-dollars) it has incurred, plus 20%. Or this can be 2%-above-dollar-inflation-rate using Wall Street Journal (so the nominal rate of return can vary).
A simpler version is cost-plus where a company gets reimbursed, say, USD$5Million after the company “performs a service”.
Bencard on Sat, 31st May 2008 3:56 am
collapse of giant corporations due to scandalous trade practices that bring untold grief to stockholders and consumers alike is nothing unusual in the business world. that goes with the territory and as long as greed thrives unchecked, every investor must learn to face the music. in the u.s., the self-inflicted destruction of several mammoth conglomerates, notably enron, worldcom, tyco and adelphia, among many others, come to mind. the story of enron is particularly striking considering the close similarity of the nature of its business and some of its ways of doing business with that of meralco. it was, arguably, a gigantic version of the latter.
a possible drastic devaluation of meralco’s stocks as a result of the alleged anomalies, or its potential destruction, maybe good for the country and the people in the long run. if it leads to discontinuance of unfair monopoly, it could usher in the birth of free competition and/or enlightened management. as for possible “brownouts” or reduced service, well…, ‘no pain, no gain’.
leytenian on Sat, 31st May 2008 6:10 am
jude:
I guess I have misunderstood you because you said Garcia and his bright boys are calculating that it’s ok to keep their share with meralco on your previous post. GSIS shares as well as Meralco is down 20%. I don’t work for meralco if you are trying to suggest that. Bozo does not need to be mentioned. It’s irrelevant and downgrading. In this case, Garcia only have few options for hedging. Agree with Up N student and as I also mentioned on previous blog, there are more solid stocks than meralco. Stocks in global market. This requires international experience and global sense.
Breakdown of Meralco bill: “SA KATUNAYAN, ANG MGA PASS-THROUGH CHARGES AY BUMUBUO NG 87% NA SIYANG PINAKAMALAKING BAHAGI NG ELECTRIC BILL.Ang Meralco charges ay 13% ng inyong kabuuang bill.”http://pbbchill.multiply.com/journal/item/19/Important_Truth_behind_Meralco_Current_Issues
even if meralco will charge 30% more than than its current 13% kono( might be bias) , still the government collects more.
“After all, recession is commonly defined as when your neighbor loses his job. Depression is defined as when YOU lose your job”
true, that’s why when majority of our people are unemployed, the whole country is depressed”.
Benigno:
glad you’re back: What then if this “opportunity†is not “givenâ€?”
then the “vacuous minds” of our leaders will drag our people for another 100 years. On the positive side, many of our people are now looking for options, like opportunities to go overseas.
John Christian Canda on Sat, 31st May 2008 6:24 am
Happy Birthday, Kuya Manolo!
leytenian on Sat, 31st May 2008 6:27 am
Up N student:
“companies hedge against inflation is with the power of the pen via a chapter of sentences in a legal contract”
you got that right.
leytenian on Sat, 31st May 2008 7:01 am
bencard,
“a possible drastic devaluation of meralco’s stocks as a result of the alleged anomalies, or its potential destruction, maybe good for the country and the people in the long run.”
but bad for GSIS shares which is now assumed to lose 6 billion pesos.
” Once the Lopezes are out of the picture, Malacañang’s allies can easily step in to fill their shoes,†said Tinio. “This is the real agenda behind the Meralco takeover bid.â€
Tinio added that this will not be the first time that Garcia used GSIS funds to promote the business interests of an Arroyo crony. In 2004, Garcia withdrew the GSIS’s multibillion peso accounts from the state-owned Land Bank of the Philippines
and designated Union Bank as its depository bank. Soon after, Garcia awarded the multimillion peso contract for the GSIS E-Card project to Union Bank as well. The Commission on Audit has declared the awarding of the E-Card contract to be “illegal and violative of law.†Union Bank is owned by the Aboitiz family. Aboitizes are not only Arroyo allies, but are close to Garcia’s own family, currently the reigning political clan in Cebu
hawaiianguy on Sat, 31st May 2008 7:23 am
leytenian,
This is one of the many sins of Garcia. Many GSIS members have complained about this, because Union Bank has very limited number of branches in the Philippines. They don’t understand why would GSIS subsidize this bank, when it was already in good working relations with Land Bank. Maybe, this is part of “crony capitalism” that refuses to die.
hawaiianguy on Sat, 31st May 2008 7:38 am
Cut and paste on eCard anomaly, according to GSIS Employees Association president Albert Velasco (2005):
GSIS employees staged repeated strikes in protest against Garcia and his “corrupt” deals in GSIS, but to no avail.
Right, Garcia is malakas to the powers that be. Like Abalos, Garci, Jocjoc, and the rest of the untouchables, they make this govt bleed and still get away with it.
KG on Sat, 31st May 2008 7:51 am
“They don’t understand why would GSIS subsidize this bank, when it was already in good working relations with Land Bank. Maybe, this is part of “crony capitalism†that refuses to die.”
Union Bank:
Aboitiz owned.
tried in vain to aquire PNB even with almost double it’s size.Akala makakauha ng pondo pantapat ke Taipan Lucio.
now interested in UCPB.
KG on Sat, 31st May 2008 8:02 am
pag me anomaly Garcia parang gusto palitan apelyido ko.
Gen Carlos Garcia.
Akala ng iba tatay ko, dahil meron me alam na general erpat ko , tinanong kung ako yung Carl Garcia na naipit sa customs na anak ni Garcia. sabi ko do the math (ka batch ko sa High school nagtanong e mas bata ng mahigit ten years yung anak ni Garcia)
Winston Garcia.
Nung me blog pa ako, paulit ulit nagpapadala ang mga GSIS employees (ata)ng spam tungkol ke Garcia(mga anomalya nya),kahit na sabihin ko
Garcia namin taga Mulanay Quezon, padala pa din.
KG on Sat, 31st May 2008 8:50 am
“we should seriously think about how to manage our ‘leaders’.”
Ano ito ,parang ang kasabihan na mahirap magpalaki ng magulang?
why not just remove the word leader in the dictionary.
Jeg,
Call me pessimistic,
But “no government ” and anarchy/chaos often go hand in hand.
Feel free to laugh at me when this no government succeeds in our country.
You did mention something like minimal government surrounded by a lot of ngos, siguro ito pwede pa macontrol ang chaos.
Sige tama na baka lumabas na naman ang pagka overly analytical ko(glorified version of slow at tanong ng tanong)
hvrds on Sat, 31st May 2008 9:47 am
So is GSIS moving on differing levels to short the shares of MERALCO to be able to get more shares of the corporation?
The GOCC’s who are receipients of entitlement taxes have deep pockets.
All this drumbeating about the mismanagment of MERALCO and their self dealing are all issues that are common in big corporations in the Philippines.
Even banks that are also highly regulated have their own version of self dealing in DOSRI’s loans. Directors availing of loans from their banks.
But this move on the part of GSIS is very clearly the Queen in waitng gambit. Armed with pension funds it looks legitimate. The form and character are different than during Marcos’s time but the substance is the same.
MERALCO has already outsourced a lot of its internal business processes out to other corporations probably under Lopez’s control. They make extra income from that. But that is clearly a sign of the times.
From Pedrosa’s column today she listed some of the companies that service MERALCO.
“He also claimed that management had created “unregulated subsidiaries†to do business with Meralco: Corporate Information Solutions (e-transactions), Meralco Energy, Inc. (energy systems management), E-Meralco Ventures, Inc. (e-business development), Miescor and subsidiaries (engineering, construction and consulting), General Electric Philippines Meter and Instrument Co. (metering products/services), Republic Security and Insurance (self-insurance), Lighthouse Overseas Insurance Ltd. (described as a “bogus†insurance firm), Meralco Financial Services (financial services), Clark Electric Distribution Corp., First Private Power Corp. and subsidiary, and Soluziana (a joint venture for management and information technology).”
Off course GSIS also has it’s won favorite companies that it deals with. Union Bank – Big Mike’s favorite bank.
One thing about MERALCO is this, if you want to get a treasure torve of information of income levels based on electrical consumption for residential consumers one could have a clear emprirical picture more accurate than even the BIR.
Bencard on Sat, 31st May 2008 10:07 am
so guys, assuming all the bad things you are saying about garcia are true, or that the stockholders of both meralco and gsis will suffer paper loss as a result of the garcia-lopez struggle, so what? do we have to look the other way and just grin and bear it while meralco is having its way with its suffering customers? whatever you have against garcia has no bearing on the charges against the lopez oligarchy concerning its questionable business practices, more particularly on its management of meralco, has it?
jude on Sat, 31st May 2008 10:31 am
“So is GSIS moving on differing levels to short the shares of MERALCO to be able to get more shares of the corporation?” – hvrds
In the words of Baron Rothschild, “buy when there’s blood in the streetsâ€. So now that Meralco shares are down and there’s a kind of panic in the market in relation to its shares, it would be the most logical move for GSIS to accumulate more Meralco shares and shore up its holdings.
Stock trading in the big leagues isn’t for the faint-hearted. It takes a well-crafted plan, access to lots of cash or credit, patience and foresight, a streak of opportunism and a lot of guts. If you have all those, chances are that, given a certain amount of time, you’ll walk away making a helluva lot of money. Unlike many talking airheads who babble on without any real grasp of the situation, Winston Garcia knows what he’s doing. And, as he has proven many times in the past, he’ll walk away with a windfall.
As for idle chatter about the GSIS electronic card, it would be worthwhile for people to consult facts before indulging in gossip.
It is true that, initially, there was much resistance to reforms instituted in GSIS. Anyone who is familiar with government institutions knows that these will always put up all kinds of objections about anything that may change the way they have been used to do things.
However, after seeing that the changes have brought about savings and improvements in service, the initial skepticism has been overcome and there is now more praise than criticism. Of course, there will never be 100% conformity to change and there will always be a few holdouts and ne’er do wells who will grumble for its own sake.
Here are some facts about the GSIS card:
• GSIS processes P30 billion in loan and pension remittances, and P520 million in payroll annually. In the past, benefit proceeds were disbursed to recipients mostly by check.
• This process was expensive for the government and was prone to fraud. In many cases, pensions for retired members who had died were still being paid because the GSIS database was not automated.
• Legitimate recipients often received their benefits 30 days late because of the challenges of mailing checks to outlying islands.
• Loan processing for present and former employees was extremely difficult because the process was paperbased. Loan approval could take up to three months, a delay that caused unnecessary difficulties for applicants who often needed the money for emergency assistance.
• By replacing checks with electronic cards, GSIS saves not less than P250 million per year.
GSIS embarked on a lengthy selection process, whereby proposals from several government and private banks were invited and reviewed. GSIS selected Union Bank of the Philippines in May 2004 because it offered a number of unique features:
• First, Union Bank offered the government an innovative Visa prepaid card program that would completely automate the benefits distribution process for GSIS through a dedicated website. The card can also be used in ATM’s all over the country.
• Second, Union Bank was able to use biometric technology to securely store the cardholder’s identity for future chip card use.
• Third, Union Bank was able to launch the program in less than three months.
• Fourth, Visa is the leading payments brand in the Philippines with 8 million cards and an annual sales volume of over P65 billion.
• Fifth, Union Bank’s proposal surpassed GSIS’ expectations and the capabilities offered by other banks, and that includes Land Bank or any government-affiliated bank (is that surprising?).
Other benefits of the Visa electronic card are:
• The GSIS Visa card can conveniently be used as a national ID.
• The card can be used to pay for purchases at over 60,000 Visa merchants all over the country.
• The card can be used to withdraw cash not only from Union Bank branches, but from any of the 5,700, Megalink, Bancnet and Expressnet ATMs in the Philippines.
• The card can also be used to access funds at millions of Visa merchants and Visa Plus ATMs internationally.
GSIS has also put up a website from where members can check personal records and apply for benefits online. Loans and claims applications are approved in a matter of hours, compared to 15-30 days with the previous system.
Today, the positive response to the improvements made in GSIS is overwhelming. Of course, there will always be a few who will resist change on any terms.
hvrds on Sat, 31st May 2008 11:16 am
One of the biggest challenges markets are facing in the world today is the emergence of sovereign wealth funds.
In the U.S. social security funds are not allowed to be invested in private corporations. By law only the Federal government has access to the trust funds.
The GSIS is a domestic fund manager of public funds. When it outsources part it’s functions or processes to private providers it has to be done in a manner to assure its members of transparency. The appointment of Union Bank would fall under that requirement.
I do not know for sure if there was an open transparent process in the appointment of Union Bank as depository bank of GSIS. That is the issue and not the digitizing of part of the business process of GSIS with its members through a private entity.
For publicly held private sector corporations it is a matter for their stockholders and regulators if the corporation is in a highly regulated enterprise.
However for domestic sovereign wealth fund corporations, who is their regulator????????
In a third world political/economic system it allows very wide opportunites for abuse and for private self dealing with public funds. (As has been the unfortunate experience of the Philippines.) NAPOCOR does not buy its fuel supplies through long term supply contracts but depends on short term spot markets exclusively. It should at a minimum buy long term for at least 60-80% of its requirements. leave a small part for the spot physcial market. (People should differentiate physical markets dealings in the spot market from speculative trades in the spot markets.)
During the Erap time the pruchase by Equitable of a larger bank PCI was made possible with these domestic sovereign wealth funds and both lost money on the deal. GSIS got back their original purchase price but no income for the intervening years between 1998-2007. SSS lost even a larger amount.
When you have large public funds it would be wise to be humble and effective. Not out there in the public eye acting like a savior of consumers when it is all a game for seizing power and wealth under the guise of state power.
Government is a big elephant in a China shop that are markets. The Philippines is a perfect example of government repeatedly privatizing gains and socializing loses.
You do not hear the Singaporean government beating their chest in the stockholders meeting of Citigroup to announce to the world that they were one of the institutions that saved Citi. They did it for their own self interest. They could not afford to have the U.S. financial system collapse as they have a lot of dollar reserves.
cvj on Sat, 31st May 2008 11:57 am
In a way, yes. In the Corporate world, the analogous practice would be called managing upwards. Two way communication is essential especially in an organization where you have a combination of specialists and generalists. There’s a saying that the worst subordinate is the one who does exactly as he(or she) is told (no more, no less).
I admit that the above analogy with the corporate world, is not exact because we the people are not supposed to be subordinates. On the contrary, our political leaders are supposed to public servants. So if you prefer, my point above can also be rephrased as we should seriously think about how to manage our public servants.
Kg on Sat, 31st May 2008 12:39 pm
CVJ,
Just asking, ty!
But Wait, There is more….
here am I again with my questions.
Can anyone tell me ,what is the significance of having the thumbs of of CALPERS,everytime their reps visit the Philippines?
Anthony Scalia on Sat, 31st May 2008 2:48 pm
Kg,
“Can anyone tell me ,what is the significance of having the thumbs of of CALPERS,everytime their reps visit the Philippines?”
One possible significance – the Philippines is a safe and great investment site. CALPERS is the biggest pension fund in the US
But from one view, a CALPERS investment isnt that exciting, because all the investment is on the stock market only! Not on foreign direct investments (FDIs) – the ones that create jobs! But for whatever reason, for the foreign investment community, a country that is good for stock investments is also good for FDIs
mlq3 on Sat, 31st May 2008 2:59 pm
this is what i’m curious about. do funds like calpers or temasek mount hostile takeovers, or help sink the value of shares to either buy more shares or swing management control? if not, why not? if so, when and how?
mlq3 on Sat, 31st May 2008 3:22 pm
nencard, this is something i’ll go into in another entry but let me just say that my assumption is that business is basically an amoral -as distinguished from moral or immoral- undertaking. its paramount goal is increasing value, how it does so is secondary to results.
anyway, the public in contrast to shareholder’s good is enforced from outside business, by the state, through legislation and institutions that regulate business.
so where are government’s resources best and most effectively utilized, if its efforts are meant to temper business’ natural inclinations so that the public will benefit or obtain relief?
where has meralco suffered reverses that actually led to consumers getting some of their money back or having electric rates go down? through the energy regulatory commission and the supreme court: this is where meralco’s battery of privately-funded lawyers can meet their waterloo in terms of government-funded lawyers and experts. another force that could be mobilized are consumers, operating as a lobbyist.
my contention is that winston garcia’s using the gsis pension fund to break down the doors of the boardroom is the wrong fight using the wrong means, because of the collateral damage it causes. even if we assume he’s as pure as driven snow as is the president who gave him her blessings, whether you like it or not, mobilizing state resources to pursue a boardroom battle -a hostile takeover- freaks out businessmen and gets them circling their wagons -and, as i’ve argued, has the same effect on the middle class, a large chunk of which has its future tied to the big bosses at companies like meralco.
what sort of strategy should garcia pursue? he’s a corporate raider at heart, and apparently, a gifted one. but is corporate raiding what a government pension fund should do? again, let me point you to temasek holdings, which has, as its goals, building value instead of the search-and-destroy style of garcia. if garcia were administering a private fund, his tactics would not only be perfectly fine, but widely applauded. but since he’s doing it with a public institution and with a captive source of funds, one has to ask whether this is responsible or wise (government employees have no choice but to contribute to the gsis but they have no say in whether they like how it’s administered, and if the fund is badly managed the government gets left holding the bag, and government will always bail it out, a situation private fund managers don’t enjoy).
if you had a government enjoying public support, this would be an easy fight. but since the government’s distrusted, it doesn’t matter what government says, its motives will be suspect. the president’s healthy legislative majority could have been marshaled to fine-tune the laws, after maneuvering meralco into a corner where what it claims are activities permitted by legislation have, by being discussed, convinced many in the public that those practices, while perhaps legal, aren’t moral. but the danger of fine tuning those laws is that it will affect other players in the industry and that includes players who have an interest in picking up meralco’s pieces, to enjoy the same benefits but perhaps more discreetly.
the resources of the state could also have been marshaled to pursue things in the erc and all the way up to the supreme court, both of which might take time and points to the fight being more for immediate political gain than long term consumer benefits. there won’t be a killing to make, either for a raider like Garcia or, as the President hoped, to boost her standing with the public.
i won’t even go into the irony of my having to discuss the idea of taking a fight to the proper venue after the Palace has insisted on it when it was to its benefit -and now, conveniently forgets its own mantra, or how, all of a sudden, Ermita now speaks of the bar of public opinion and the courts, a point I raised concerning the issues the Palace has refused to address.
As I tend to believe the public demonstrates wisdom even when its moods irritate partisans like you and me, it seems to make sense to me that while the public dislikes the president, for example, it drew the line when it came to the means to hold her accountable. it opposed military intervention, it preferred impeachment, it was skeptical of people power because of the types that tried to push it; but it also opposed wholesale liquidations, emergency rule and martial law, and charter change. the same can be seen in its reaction to the garcia gambit -no real objections to the intentions but skepticism and even hostility to the methods being pursued.
jude on Sat, 31st May 2008 4:26 pm
“During the Erap time the pruchase by Equitable of a larger bank PCI was made possible with these domestic sovereign wealth funds and both lost money on the deal.” – hvrds
• Fidel Ramos directed GSIS to invest money in controversial Centennial Expo project, which ended up losing a tremendous amount of money.
• Erap ordered GSIS, then under Federico Pascual, to put funds in gaming company Belle Corp. and in PCI Equitable Bank. Because of this, GSIS was burdened by tremendous white elephants in its portfolio.
• Under the Marcos, Aquino, Ramos and Estrada Administrations, a cabal of insurance brokers controlled the reinsurance business at GSIS, milking government of billions through insurance scams and overpricing of premiums.
GSIS was a big mess when Winston Garcia took over. To his credit, he took on several 800 pound fighting gorillas in order to clean house. Among the things Garcia has achieved in his relatively short stint in GSIS:
• Garcia took on the bureaucracy and made it more efficient and effective. He also streamlined operations and brought it into the electronic age. While there was tremendous resistance at first, Garcia won out, proving that change can be effected in government institutions. That is something many technocrats have tried to do, but failed.
• Garcia took on the gang of insurance brokers that had cornered the government reinsurance business for decades. These had been fleecing government of billions through bloated premiums and falsified claims. GSIS is mandated by law to insure over P1.5 TRILLION of government assets and properties. To ensure transparency, Garcia, along with Bank of the Philippine Islands and Malayan Insurance, put up the National Reinsurance Corporation of the Philippines (PhilNaRe), a company listed in the Philippine Stock Exchange, which now handles the bulk of GSIS’ insurance business. Prior to this, a well-funded media campaign was waged by the insurance brokers to destroy Garcia. Some well-known media people were employed to undertake the hatchet job. But in the end, Garcia came out victorious. Garcia is now chairman of the board of the PhilNaRe. And GSIS’ insurance transactions are much more transparent.
• Garcia made several winning investments in the stock market for GSIS. Besides coming out ahead on PCI Equitable and San Miguel Corp., Garcia began accumulating Meralco shares when they were below P15 per share, just a couple of years ago. Garcia’s average cost for GSIS’ Meralco shares is way below its last closing price of P61.50. Garcia can laugh all the way to the bank about all the ruckus being made about him causing Meralco share prices to nosedive. Even at these levels, HE IS STILL AHEAD.
The Lopezes know that they have only achieved a pyrrhic victory. The die is cast and Garcia will still eventually get his windfall. This guy is a gritty brawler. Getting bloodied only makes him more fierce and determined. He’s used to it, and he has notched several hard-fought wins to earn his spurs. The Lopezes know its only a matter of time before the “kanto boy” gets what he wants from the aloof and degenerate patricians.
As for the stock market, it’s a cyclical thing. Meralco is still a good buy. In these volatile times, a good defensive stock will always be attractive. Give it a few months, at most a couple of years. The stock will bounce back and everybody makes money. After all, as recently as January of 2006, the stock traded only at the P13 level.
As for that gibberish about Singapore’s Temasek Holdings, Temasek isn’t without its controversies. It has been hounded lately by allegations of underhanded dealings in Thailand and Indonesia which may result in several millions of dollars in penalties. I suppose that’s part of the risk one assumes. Oh, and on those multibillion-dollar investments in UBS and Citibank, Temasek wasn’t really beating its chest, was it? It was only coyly showing the world that it could put up $20 billion to acquire trophy companies wherein it would take several years for them to get their money back. Since Temasek acquired those shares, they have suffered even heavier losses. But the pride and recognition of being important shareholders of companies with brand recognition world-wide is well worth the price. Besides, the social-climbing may even pay off 10 or 20 years down the road, when these banks clean their balance sheets and work their way back into health. Temasek has the liquidity to afford the long wait.
nash on Sat, 31st May 2008 5:32 pm
“our penchant for working for somebody else as the be all and end all of economic existence…” – Bencard
I’m happy to work for somebody else. Call me lazy but I’m content with working 35 hours a week with my work life not interfering with my social life.
We can’t all be capitalists.
Some of us are happy to underachieve. Count me in, and a glass of cold beer please.
Life is too short to be a ‘workaholic’ like Winmoron Garcia.
frombelow on Sat, 31st May 2008 6:03 pm
I can’t help but think of “karma, poetic justice,” regarding this Lopez-GSIS war. (With GMA apparently behind Garcia).
Remember the staunchest TV network supporter of GMA during 2004 elections? ABS-CBN, right. The network have even announced an exit poll result a few hours after elections showing GMA winning in Metro Manila when in fact, she only barely won in one of the smaller localities which was Las Pinas. Anybody can check the COMELEC records.
Aside from that, the way the network treated the campaign of FPJ. ( No large crowd footage) causing Karen Davila to cry in nationwide television when Susan Roces reminded her of the unfair media treatment to his dead husband.
Tsk, my point is be careful in extending help to anyone if it means doing injustice to another. You will never know. Karma works in the most painful way.
He, he, he.
Kg on Sat, 31st May 2008 8:31 pm
Anthony,
Thank you very much!
Kg on Sat, 31st May 2008 9:11 pm
“this is what i’m curious about. do funds like calpers or temasek mount hostile takeovers, or help sink the value of shares to either buy more shares or swing management control? if not, why not? if so, when and how?” MLQ3
Unless Jude can find anything wrong with Calpers,like his revelations on Temasek Holdings; Calpers is the so called conscience of corporate boards.
http://www.thefreedictionary.com/corporate+raiders
But it wasn’t until 1984 – during the era of the corporate raiders – that the fund made its commitment to corporate governance.
CALPERS STATE’S PUBLIC PENSION FUND VIEWED AS LEADER IN CORPORATE … by Daily News (Los Angeles, CA)
http://www.thefreelibrary.com/CALPERS+STATE%27S+PUBLIC+PENSION+FUND+VIEWED+AS+LEADER+IN+CORPORATE+…-a0114953175
Byline: Jabulani Leffall Staff Writer
Enron, WorldCom, Adelphia, Tyco.
These are all words that bring corporate malfeasance to mind, words that have investors screaming out for reform in the markets.
What the largest business scandals have left in their wake is investors of all scales paying closer attention to how companies maintain their share prices and whether chief executives are pulling in more dough than they are worth.
These days the crusade for corporate governance almost always begins in California.
At the forefront of the call for corporate accountability is the California Public Employees Retirement System.
CalPERS, often thought of on Wall Street as the conscience of corporate boards, is the nation’s largest public pension fund, with more than roughly $164 billion in assets. The system manages pension benefits for more than 1.4 million state employees.
Sean Harrigan, president of CalPERS’ board, has said that good corporate governance leads to improved long-term performance of a company and that CalPERS cannot just be a passive holder of stock but an active share owner that takes its responsibilities seriously.
“The public pension funds have been more willing to take a public stance,” said Charles Elson, Director of the Center for Corporate Governance at the University of Delaware. “Board independence, board composition and executive pay are big issues right now and I think recent moves by CalPERS have illustrated an overall frustration with companies as well as a concern over responsiveness to shareholder interests.”
leytenian on Sat, 31st May 2008 9:12 pm
“But from one view, a CALPERS investment isnt that exciting, because all the investment is on the stock market only! Not on foreign direct investments (FDIs) – the ones that create jobs! But for whatever reason, for the foreign investment community, a country that is good for stock investments is also good for FDIs.”
FDI’s create employment…
” hedging against inflation is investing into something more solid. the only solid hedge is EMPLOYMENT. ( for our economy)
talking about FDI’s: “Now the key explanation for why our neighbors flourished in the period 1985-95 is that they were deluged with Japanese investment that was relocating from Japan to make up for the loss of competitiveness of Japan-based production owing to the drastic revaluation of the Japanese yen relative to the dollar under the famous Plaza Accord in 1985.”
http://www.focusweb.org/in-the-shadow-of-debt-the-sad-but-true-tale-behind-a-quarter-century-of-stagn.html?Itemid=1
leytenian on Sat, 31st May 2008 10:03 pm
Jude:
“Garcia’s average cost for GSIS’ Meralco shares is way below its last closing price of P61.50. Garcia can laugh all the way to the bank about all the ruckus being made about him causing Meralco share prices to nosedive. Even at these levels, HE IS STILL AHEAD. ”
you have a point there. that’s 15 divided by 61.50 is 24% appreciation.
but here’s what is current.
“Meralco stocks have risen to a high of P116 each in the past year. However, in the past month, the value of MER, a part of the bell weather Philippine Stock Exchange index, has fallen to P60 a piece levels”
http://www.gmanews.tv/story/97480/All-eyes-on-Meralco-stock-meet-but-shares-already-down-21
that’s almost 50% of losses. from 116 to 60.
“However, the analyst said that Tuesday is a lose-lose situation for Meralco stocks, which he sees approaching a low of P47.50 in the coming months”.
Of course Garcia’s accomplishment of improving business process should not be ignored but he should have fully consider FIRST the consequences of his actions.
leytenian on Sat, 31st May 2008 10:13 pm
correction: you have a point there. that’s 15 divided by 61.50 is 24% appreciation…
it’s 76% appreciation. LOL.
anthony scalia on Sat, 31st May 2008 11:51 pm
mlq3,
at best, CALPERS and Temasek force changes in the Board and top management, which hopefully can do something to boost the stock price.CALPERS and Temasek have no intentions of taking over active management of the companies they have shares in.
Winston Garcia is up to something. Is Maralco stock going up or down? If its going down, Garcia’s actions can be construed as an attempt to protect GSIS’ stake. But we dont hear from Garcia anything on GSIS’ holdings aside from ‘aiming to reduce power costs’!
magdiwang on Sun, 1st Jun 2008 12:28 am
It is a very big deal when CalPERS recommends a country or a company for investments. This shows that they pass their rigorous standards for corporate accountability. Institutional investors follow their lead leading to increase share prices.
On the other end of the spectrum, companies dont want to be included in their annual focus list to be targeted for viscious lobbying to shape up their corporate governance and transparency. There is positive correlation from their corporate activism in increasing profitability to the companies targeted. Its called the “CalPERS Effect.”
This is at the heart of Winston Garcia crusade against MERALCO where he believes that management are lining their own pockets at the expense of the shareholders and the consuming public. Good Luck to him, Our country is not ready for this type of bruising proxy fights because they take things personally.
Kg on Sun, 1st Jun 2008 1:21 am
“Can anyone tell me ,what is the significance of having the thumbs of of CALPERS,everytime their reps visit the Philippines?”
Three times ko na nakita so I could just laugh at my self.
What I meant was “Thumbs up” of Calpers.
Kg on Sun, 1st Jun 2008 1:24 am
TY for that info Magdiwang.
Bencard on Sun, 1st Jun 2008 8:08 am
mlq3, thank you for your response. i sense a little disconnect in your commentary concerning use of government resources to effect a takeover, and using them to “break down the boardroom door”. in the meralco case, the government is on record about its disinterest in wholly owning the company either directly or through a government agency such as the gsis. gsis already owns some 24% of the entire meralco stocks and with a decisive support from smaller investors, can change the board’s make-up and hence, the management. it appears that garcia’s immediate objective is just that – take away the firm’s control from the lopez block mainly because of specified charges of anomalies and mismanagement contributing to the spiraling cost of electricity.
as a major shareholder of meralco, gsis has an interest in its good management. and as the chief executive of gsis, garcia has the duty to ensure that its ownership rights are protected. as to the argument that the meralco stocks in the hands of gsis are actually “owned” by its members, the idea is demagogic, naive and simplistic. while government workers pay gsis membership dues to maintain membership, their payments constitute premiums for life insurance, disability and retirement pensions and other benefits. they no longer have a claim of ownership to those payments any more than i could claim ownership of my fica payments here in the u.s.
your mindset that every management decision of a government-controlled corporation is directed by an incumbent president is, i think, at the root of the problem that everything in the philippines is politicized.
jude on Sun, 1st Jun 2008 9:14 am
“However, the analyst said that Tuesday is a lose-lose situation for Meralco stocks, which he sees approaching a low of P47.50 in the coming monthsâ€
“Of course Garcia’s accomplishment of improving business process should not be ignored but he should have fully consider FIRST the consequences of his actions.†– leytenian
Analysts try to make their own predictions. Sometimes they’re on the mark. Sometimes they’re way off the mark. They usually have a set of assumptions from which they base their predictions, and that is where discrepancies often arise.
Big-league stock market players know that prices of stocks go up and down, depending on sentiment and business conditions. They usually have medium to long-term goals and they know better than to let market fluctuations bother them. If the market goes up, as it did when Meralco was at P116 (that was before the world-wide slump in stocks due to the U.S. housing market mess), they may sell some stocks to lock up some profits. GSIS did sell some stocks at the market highs. When the market drops, they buy to lower their average cost. Just as GSIS has been accumulating shares when the market has been down.
It’s not an all-or-nothing situation, its a constantly evolving one wherein one patiently waits for opportunities to either buy or sell. It is a very amoral situation, with no definite timelines, and the only arbiter is whether one makes or loses money.
And, as some have pointed out here and as leytenian acknowledges when he cites Garcia’s accomplishment in improving business processes, corporate raiders do play an important role in curbing management abuses. In the U.S., some corporate raiders have attained legendary status and respect because they safeguard and look after stockholders’ rights and welfare.
Management abuses (and corruption) have not been very much taken into account in the Philippines because most corporations are family affairs. “Management†is almost indistinguishable from “stockholder†because, in most cases, management is usually represented by the owners.
In the U.S., management is composed of hired professionals who do not usually own the majority of shares. In most cases, the interests of management and the stockholders are very different. Management tries to line their own pockets via scandalous pay and bonuses or via sweetheart deals with suppliers or service contractors wherein they have interests. The end result is that management makes a lot of money at the expense of the company’s bottom line. This results in less profits for the stockholders. That is why stockholders’ rights are an important issue in U.S. business.
The Meralco model somewhat resembles the U.S. one in the sense that management does not own majority of shares in the company. As the biggest single shareholder, GSIS is well-justified in asserting its rights as stockholder. A glaring problem with Meralco is that management does business with companies that are majority-owned by them. This incestuous arrangement makes accusations of sweetheart deals and lopsided transactions inevitable.
In the Philippine setting, Winston Garcia may be viewed as an iconoclast, even if, by U.S. standards, it would just be another exercise of stockholders asserting their rights. And we do have a tendency to politicize matters and to take them too personally.
cvj on Sun, 1st Jun 2008 9:35 am
Is iconoclast another word for asshole? If so, i agree.
hvrds on Sun, 1st Jun 2008 12:55 pm
“As for that gibberish about Singapore’s Temasek Holdings, Temasek isn’t without its controversies. It has been hounded lately by allegations of underhanded dealings in Thailand and Indonesia which may result in several millions of dollars in penalties. I suppose that’s part of the risk one assumes. Oh, and on those multibillion-dollar investments in UBS and Citibank, Temasek wasn’t really beating its chest, was it? It was only coyly showing the world that it could put up $20 billion to acquire trophy companies wherein it would take several years for them to get their money back. Since Temasek acquired those shares, they have suffered even heavier losses. But the pride and recognition of being important shareholders of companies with brand recognition world-wide is well worth the price. Besides, the social-climbing may even pay off 10 or 20 years down the road, when these banks clean their balance sheets and work their way back into health. Temasek has the liquidity to afford the long wait.” another pundit blogger
Whoops!!! Once again jumping to wrong conclusions based on myths.
Sinagapore’s Temasek Holdings is the fund manager for the provident fund of the government. This is the compulsory savings similar to social security.
GIC (Government of Singapore Investment Cortporation) is the entity that handles the management of investing Sinagapore’s dollar reserves. It was GIC who invested their dollar reserves with Citi and UBS.
Their (GIC) investment in UBS and Citi was not simply an infusion of equity for shares. They got a hybrid insturment that pays above market rates in interest of between 8-11%. The rates that junk bond pays with an option to convert into equity at a strike price in the medium term. Soverign investment funds are not there for social climbing most expecially when they have something an undercapitalized bank needs while they restructure and sell off assets to imporve their capital to asset and loan rations. Citi plans to seel off $500 billion in assets to raise their capital ratios.
So much for brand (CITI and UBS) but even when the mighty fall the have to pay through the nose to get back into the game.
The problem of protectionist pressures versus sovereign wealth funds exist not only in Thailand but all over the world.
These provident funds sourced from entitlement taxes are completely different from the investing of dollar reserves. For example GSIS invested in foreign markets and they had to buy dollars from the BSP.
Meanwhile a large bulk of the countries dollar reserves held by the BSP are invested with JP Morgan who normally invests these in low risk sovereigns.
Do not put the Philippine finacial system on par with Singapore since we are net importers of capital while Singapore are net exporters of capital. That is why they can get higher yields than the Philippines with their wholesale funds.
Globe’s partner in the cell phone business is none other than Singtel.
Their (Temasek) problems in Thailand and Indonesia is simply because those countries do not want the former Thai head of who sold off to the Singaporeans to control a major aspect of their cellphone business.
Here in the Phils. Salim and Singapore invested heavily in Globe and PLDT/Smart.
Pundits could ask themselves this question? Where in the world could you get to loan dollars at that level and receive that kind of yield from a A rated institution?
8-11%. Citi is paying more in interest due to its blunders than even countries with junk bond status.
But that is only for those with spare funds to lent out.
anthony scalia on Sun, 1st Jun 2008 2:10 pm
jude,
if the setting were the US, Winston Garcia would be doing what he is doing (a) if the Meralco stock price is way way down, and (b) if GSIS’ stake in Meralco lost 90% of its value from its highest stock price.
in short, Garcia would be protecting GSIS’ stake in Meralco and would do anything to restore the lofty stock price Meralco once had. if that means replacing the Lopezes, so be it
but the Meralco stock price is light years away from Garcia’s motives
So why on earth is he trying to shake up management? if Meralco is profitable for the Lopezes, it is just as profitable for GSIS!
Garcia may not be noticing it, but his actions are dragging down the Meralco stock price!
magdiwang on Sun, 1st Jun 2008 3:07 pm
The likes of Winston Garcia’s should be welcomed in Philippine business. Whatever the outcome in his tussle with the Lopezes have driven a maelstrom of opinions on corporate governace and transparency. The hostile war of words to shake things up have put Philippine companies on noticed that the era of impotent shareholders and ineffectual board of directors might be coming to an end. He might lose this battle but has will eventually win the war.
The current dip in price per share of MERALCO from the controversies wont even register a blip in the long run. When stakeholders are becoming more pro-active on how the companies they own is managed, the organization becomes more efficient and profitable. I am not surprised a bit that both GSIS, the lopezes and hedge funds ar quietly accumulating shares right now.
jude on Sun, 1st Jun 2008 7:17 pm
“They got a hybrid insturment that pays above market rates in interest of between 8-11%.”
“8-11%. Citi is paying more in interest due to its blunders than even countries with junk bond status.
But that is only for those with spare funds to lent out.”
- hvrds
The usual long-winded junk from the wordy Marxist. There’s an awfully large gap between 8 and 11 percent. Be specific what instruments Citi is using to pay 11%. I have myself bought Citigroup convertible preferred shares yielding 6½% p.a. After a certain period, these preferred shares can be converted to common shares at approximately $33 per share. I also have Citigroup preferred non-convertible shares that yield 8½%. I would most certainly invest in Citigroup or UBS at 11%. Show me where, or is it just a figment of your paranoid imagination?
leytenian on Sun, 1st Jun 2008 7:57 pm
magdiwang:
“The likes of Winston Garcia’s should be welcomed in Philippine business. ”
the business process improvement by Gracia’s management strategy can be compared to a US student interns ( bachelor’s degree). His strategy may be big deal for Philippine standard and sure the filipinos should welcome but it is below par according to even my standard.
I agree with Anthony.. when meralco’s share went up to 110, it could have been Garcia’s srategy to sell and cashing out before barking at the wrong tree. His action contradicts all the good things he has done to GSIS. He missed the big opportunity of gaining over 50% of profit just in one year. It was time to sell. Garcia is playing GSIS money like it”s his own money. His current action and out burst is not acceptable in a civilized world of management. It is below par and he needs JUDE to back him up.
jude on Sun, 1st Jun 2008 8:32 pm
“if Meralco is profitable for the Lopezes, it is just as profitable for GSIS!”
“Garcia may not be noticing it, but his actions are dragging down the Meralco stock price!” – anthony scalia
Garcia (through his traders) probably monitors Meralco’s stock price every trading day, if not every trading minute. So you can be sure he knows the stock price has recently come down. Is that a cause for concern? Not necessarily, especially if you have a longer-term objective. As magdiwang points out, in the long run, this recent decline in prices will just be a blip. Garcia knows that, in the long run, Meralco stock will recover, most especially if there is a housecleaning in management. As has been shown, the present management skims off much of Meralco’s profit through incestuous deals with Lopez-owned companies. Meralco can become even more profitable if there is a management shakeup.
As for Meralco being profitable both for the Lopezes and for GSIS, it is clearly much more profitable for the Lopezes under the present set-up than it is for its stockholders, which includes GSIS. While Meralco hasn’t been a bad investment for GSIS, why not try to make room for improvement?
Life could have been much easier for Garcia living with the status quo. It’s not easy taking on established oligarchs like the Lopezes. However, the die is cast and, in my opinion, it will prove to be a good thing for Philippine business. This brawl between Meralco management and its biggest stockholders gives the issue of shareholder value the attention it deserves.
We are just not used to these kind of intramurals between management and stockholders, perhaps that is why the Meralco case has elicited so much commotion. But that is quite common in the U.S., especially when stockholders feel that management is not maximizing the stock’s value. The likes of Kirk Kerkorian and Carl Icahn have threatened management and taken them to court for failure to initiate reforms. And, in most cases, they have been successful in getting improved management and increasing shareholder value. In Meralco’s case there is strong evidence to suggest that the present management is skimming profits from Meralco and passing it on to companies management owns. That, most definitely, does not improve shareholder value.
jude on Sun, 1st Jun 2008 9:39 pm
“Gracia’s management strategy can be compared to a US student interns ( bachelor’s degree). His strategy may be big deal for Philippine standard and sure the filipinos should welcome but it is below par according to even my standard.” – leytenian
- Where is the sense in that? On the one hand, it is said that the strategy is a “big deal for Philippine standard and sure the filipinos should welcome”. On the other hand “it is below par according to even my standard”. Self-contradicting, yata. And is this guy privy to Garcia’s strategy? Wow! Galing! He should offer his services to the Lopezes so that they can devise a counter-strategy.
As for acceptable behavior “in a civilized world”, big investors like Kirk Kerkorian are famous for dressing down and humiliating management at stockholders’ meetings. And demanding that management resign for not being good enough is no big deal, and it’s accepted. As a matter of fact, it’s seen as a good thing because it forces management to make improvements.
As for timing the sales of Meralco stocks, that is the prerogative of the fellow who has the mandate over those shares. When you become the head of GSIS, you can decide when to buy or sell. Until then, “miron†ka lang. Besides, are you sure that some of the stocks weren’t sold at their highs and later bought at lower values? I keep tabs of the market and talk to traders everyday. I know that GSIS has bought and sold Meralco stocks on a regular basis for the past few years. It’s a common practice to lock into some profits from time to time, then come back to the market when the pickings are good.
And, by the way . . . Ha! Ha! Ha!, I appreciate the sense of humor. But there isn’t any doubt that Garcia can take care of himself. He loves to ruffle feathers, but he always vindicates himself at the end.
magdiwang on Mon, 2nd Jun 2008 12:34 am
The move by Winston Garcia to unsettle the Lopezes on their tight hold on MERALCO is to make them more accountable in their management. The share price could easily double on its high if he succeeds, its inherent business model is excellent with virtual monopoly of power distribution in the capital region. When intitutional investors sees a more open management, they will pour in more capital to increase its market share by buying the disparate group of power distribution companies in the neighboring regions. More money to make its operations efficient to reduce system loss.
The way it stands right now is that MERALCO is grossly undervalued even at its 52 week high. Capital infusion wont come in handy when management plays on uneven ground against its shareholders and the consuming public. Big money investors dont want any part of that.
The temporary dip in share price will persist until the smoke has cleared from the current litigation pending in court. Savvy investors are now lining up to snap those shares as Garcia’s gambit win or lose will eventually triumph in the long run. Watch and learn leytenian.
leytenian on Mon, 2nd Jun 2008 12:44 am
been there done that magdiwang on your watch and learn suggestion. still winston could have sold the shares and went back to complain meralco after. this way, GSIS shares will not be affected. i do hope that GSIS funds can recover in the long term. for me, his action remains mahina.. he exposes himself first before understanding the consequences. anyway.. let’s move on.
leytenian on Mon, 2nd Jun 2008 12:50 am
jude and magdiwang you both have good points and I do understand where you coming from. it’s just a little late. the damage has been done. the credibility of one’s performance has already been compromised. that’s really the point of this topic. mahina or malakas ba? para sa akin… mahina nga.
jude on Mon, 2nd Jun 2008 8:33 am
“Their (Temasek) problems in Thailand and Indonesia is simply because those countries do not want the former Thai head of who sold off to the Singaporeans to control a major aspect of their cellphone business.”
“The problem of protectionist pressures versus sovereign wealth funds exist not only in Thailand but all over the world. “
– hvrds
• First of all, whether the investments in Citigroup and UBS were made by GIC or Temasek, the fact remains that the Singaporean government, through vehicles that it owns, made those investments. So any suggestions about “myths†are way off the mark because the basic facts remain true.
• It is also not a “myth†that newly-developed countries like Singapore are hungry for name-brand recognition and they, like oil-rich Gulf countries or nouveau riche Russian billionaires, will pay a premium just to get their names up in the marquee. Just like many wide-eyed social climbers, these countries would pay almost any amount to get their hands on trophy companies like Citigroup, UBS or the like. That is why, despite tremendous losses, Citibank and UBS can confidently weather any turmoil because there are many with very long pockets who want a piece of the trophy. Until proven otherwise, the myth that Citi and UBS issued debt instruments paying 11% remains a myth.
• As for the using the convenient smokescreen of economic nationalism for being responsible for Temasek’s controversies, the allegations mention corruption, deceit, violating anti-trust laws, “fencing†(purchase of tainted goods). These accusations certainly indicate something much deeper than the “myth” of enocomic nationalism being peddled by hvrds.
anthony scalia on Mon, 2nd Jun 2008 8:53 am
jude,
the ultimate motive of people like Kerkorian and Icahn is to boost the stock price, as it would inflate their stake (example – 1 million shares bought at US$30 will increase in value if the share rises to US$50)
lets take the situation of Yahoo now. it spurned Microsoft’s takeover offer. Icahn and many others bought a substantial number of Yahoo shares, and they are now attempting to force the Yahoo Board and shareholders to sell the whole company to Microsoft (at a price which is way higher than the price in which they bought the shares).
you mentioned shareholder value. is Meralco’s stock price on a downward trend because of the Lopezes’ management?
leytenian on Mon, 2nd Jun 2008 9:06 am
Meralco: What the issue really is?
For shareholders, the issue is clear; and the issue is not GSIS versus Lopez. It is only about having the best possible team run a profitable publicly owned company, which just happens to hold a government-regulated monopoly. However, if Meralco is now going to be operated principally in the “public interest†and not for “shareholder interest,†sell your stock as quickly as possible at any price. If any potential new management can run Meralco more effectively, efficiently and profitably, buy more shares.John Mangun.
http://www.abs-cbnnews.com/storypage.aspx?StoryId=119900
in the meantime.. competition is encouraged.
http://www.abs-cbnnews.com/topofthehour.aspx?StoryId=120265
anthony scalia on Mon, 2nd Jun 2008 9:07 am
magdiwang,
thats possible only if the institutional investors will buy the stock from unsubscribed shares. if these investors will buy the shares from the stock market, the money won’t go into meralco’s coffers.
again, it would depend from where the shares will come from. i doubt if the Lopezes will allow the purchase of unsubscribed shares because even though it means additional money for the company, it also means additional shareholders and more potential Winston Garcias
jude on Mon, 2nd Jun 2008 10:15 am
“you mentioned shareholder value. is Meralco’s stock price on a downward trend because of the Lopezes’ management?” – anthony scalia
Perhaps a look at the behavior of Meralco stock prices over the past year can be a useful tool in understanding the matter.
• Meralco stock peaked in July 3, 2007, almost a year ago, and has been on a downtrend (marked by tremendous volatility) ever since. This was a few months before the shit hit the fan, so to speak, on the U.S. housing market, which began to seriously affect stock markets world-wide later. I don’t want to speculate on whether that downward movement had anything to do with disenchantment over Lopez management, but I am prepared to give the Lopezes the benefit of the doubt.
• By mid-August, 2007, Meralco stock prices were drifting around the P70 level, but pulled up to the P90-100 level by the end of August, boosted by the exuberance of interest rate cuts both here and abroad.
• By mid-September, 2007, Meralco stock price was again around the P70’s level, trading at a slow, jagged downward range until it hit the P60’s levels around the end of November, 2007.
• By early December, the stock shot up to the P80’s, boosted by hopeful sentiment due to further interest rate cuts. But this rally was short-lived and, by January, 2008, the price traded around the P60-70 level and more-or-less remained around that range until the first week of May.
• I do think the present controversy between Garcia and the Lopezes has affected recent stock prices. But bear in mind that there was already high volatility even before the proxy wars. So from the P60-P70’s level, the price went down to the P50-P60’s level. While that is a clear downward movement, I don’t think it is significant enough to panic. And, given the ups and downs of the market, I clearly think that the price will bounce once again. It’s only a matter of patience and time. And for those who allege that GSIS is taking a hit because of what Garcia is doing, it ain’t over until you sell your holdings. So profits or losses can’t be counted until GSIS disposes of all of its holdings in Meralco. And that won’t be happening for a while. Given that Meralco is a defensive stock, it’s a safe bet during highly volatile and inflation-ridden times.
And by the way, I have no doubt that Garcia wants to boost Meralco’s stock price. In that respect, he is in the same boat as the Lopezes. Unfortunately (for the Lopezes), Garcia thinks that management is an impediment to shareholder value.
I admit, Garcia’s ways are too rough and confrontational by Philippine standards. But by U.S. standards, it would be par for the course. Kirk Kerkorian was so tough on Daimler Chrysler management that, in the end, he forced Daimler (Mercedes Benz) to sell out of Chrysler.
magdiwang on Mon, 2nd Jun 2008 10:39 am
yup, they have to go to the open market and issue new shares to finance any expansion. No shareholder dilution as the new capital will be deployed on new sources of revenues.
The current management dont have the incentive to do that right now as everything is all well and dandy, they made MERALCO their cash cow. They surely dont want a deep pocket investor scrutinizing their books for obvious reasons. Skeletons in the closet is bad for business and hopefully the current controversies will make them more transparent in their dealings attracting fresh capital to finance new projects.
mlq3 on Mon, 2nd Jun 2008 11:07 am
jude, would any state or the federal government allow garcia to do with a state workers’ pension fund monies, what garcia is doing, in support of a partisan political objective?
anthony scalia on Mon, 2nd Jun 2008 12:19 pm
jude,
the notion that GSIS (and virtually the government) controls the Meralco board scares both shareholders and investors! the government has a less than zero record in profitably and efficiently running a business!
yet, im still giving Garcia the benefit of the doubt that if GSIS controls the Board, he will implement the reforms he is trumpeting. but i seriously doubt this. if GSIS controls the board, Meralco will become like a PCGG-controlled company
jude on Mon, 2nd Jun 2008 4:42 pm
“would any state or the federal government allow garcia to do with a state workers’ pension fund monies, what garcia is doing, in support of a partisan political objective?” – mlq3
I am not in a position to state whether any state or federal government would allow pension fund monies to be utilized in a proxy war. If the reference is to the United States, I am not sure, although pension funds there are allowed a great deal of leeway. I don’t think, for example, that Calpers would be forbidden to give its proxies to corporate raiders whom it believes can increase share value.
The situation would be even more complicated if the question refers not only to the U.S., but to any country.
In Russia, for example, Yukos Oil Company, one of the world’s largest non-state oil companies which produced 20% of Russia’s oil, was charged by the Russian state for tax evasion and eventually pushed into bankruptcy. Yukos’ ownership was frozen and its officers and members of the board had to flee Russia and became fugitives from justice. There are accusations and counter-accusations as to what happened. Vladimir Putin’s government has credible evidence to show bad faith and double-dealing in Yukos, while Yukos’ former owners show evidence that they were singled out for taking advantage of tax loopholes under the corrupt administration of Boris Yeltsin (while not exactly the same, there are parallels with taking advantage of generous concessions given to IPP’s by a previous administration) .
Something similar happened to Gazprom, another Russian giant, which was assessed huge amounts in taxes and eventually fell into state hands. For an idea of how large a company Gazprom is, it presently provides 25% of Russia’s entire tax revenues and accounts for 8% of Russia’s GNP.
Vladimir Putin has taken heat for taking over these companies. Many of their owners still have considerable wealth and are using their resources to destabilize Putin’s government and to buy the foreign media. But Putin has shrugged it all off and he has enjoyed tremendous popularity in Russia. He is credited for creating the Russian economic miracle.
In Spain, during the first Socialist government of Felipe Gonzalez in 1983, there was the so-called “Rumasa scandalâ€, wherein Jose Maria Ruiz-Mateos, who was a well-connected and very successful entrepreneur during the previous Franco regime , was persecuted and had his holdings taken over by the state for alleged financial and fiscal irregularities. Ruiz-Mateos owned RUMASA, a huge conglomerate which owned 21 banks, large vineyards and was one of the world’s largest manufacturers and exporter of sherry and other spirits. Ruiz-Mateos challenged the Socialist government in court and alleged that he was being persecuted for his former associations. His on-court antics were well-publicized and he even had to flee the country after he pounced on, and gave a physical beating to, the Socialist Finance Minister, Miguel Boyer (who married Isabel Preysler). After several years of court hearings, Ruiz-Mateos did manage to get back enough assets to form a new conglomerate, Nueva Rumasa. Ruiz-Mateos now claims he was victimized by the socialists and that his hard-won battles in court have vindicated him.
As for “partisan political objectives” in the Meralco case, that is an assumption that must first be proven. The person at the middle of the controversy denies it. There is much by way of chatter and innuendo, but nothing by way of actual proof.
jude on Mon, 2nd Jun 2008 7:49 pm
“the government has a less than zero record in profitably and efficiently running a business!” – anthony scalia
Government’s dismal record speaks for itself, so there’s no argument about that. And, I thoroughly agree, PCGG-like situations should be avoided.
I don’t think, however, that GSIS intends to get involved in running Meralco. Garcia has said as much. I believe there will be a resolution with management when Garcia gets some of the things he is demanding, among them is more transparency regarding Meralco’s dealings with Lopez-owned companies and IPP’s.
grd on Tue, 3rd Jun 2008 3:20 am
cvj, if it’s not gloria who’s sitting now, i think you would be praising the man. that is, being consistent with what you’re trying to advocate here.
cvj on Tue, 3rd Jun 2008 7:23 am
grd, think again. Someone who envisions himself a corporate raider in the mold of Carl Icahn using the peoples’ retirement funds is an asshole no matter who is in Malacanang. Someone should tell him he’s just a government employee acting out a fantasy.
jude on Tue, 3rd Jun 2008 7:47 am
cvj is in love and obsessed with a fantasy. The fantasy of FPJ’s resurrection.