MANILA, Philippines—The administration’s all-out war to take over the Manila Electric Co. (Meralco), the country’s biggest electricity distributor, has struck fear in the business sector. Some business groups are apprehensive that they, too, could be victims of the government crackdown.

The fears were heightened following a rapid succession of punitive actions taken by the Arroyo administration over the past few weeks against Meralco over its high electricity rates in a bid to crush the economic power of the Lopez group which controls the utility’s management.

These actions include the deployment of the giant pension fund Government Service Insurance System (GSIS), which holds four seats in the 11-member Meralco board to the Lopez group’s five seats and which owns 23 percent of Meralco stock, in a takeover bid. Together with the 10-percent ownership of state financing institutions of Meralco shares, the government is within striking distance of wresting the utility from the hands of the Lopez group.

The second action that has sent chills down the spine of the business community, including the media sector, was the unleashing by the administration of its attack dogs to build a lynch mob atmosphere and crank out hostile public opinion against Meralco and its owners.

The lynch mob charge was led by Sen. Miriam Defensor-Santiago, a rabid Arroyo ally who, using the Senate as her pedestal, called for the “bombing” of Meralco, over its rates.

The Santiago attack came as the GSIS stepped up pressure on Meralco. On Saturday, Estrella Elamparo, GSIS senior vice president for legal affairs, at a press conference, opened a new front by pressing for the investigation of more than P140 billion worth of contracts entered into by Meralco and its sister companies, including Benpres Holding, Rockwell and Miascor.

Elamparo said these contracts involved conversion of debt to equity and procurement. “Although it’s not illegal for a company to enter into a contract with sister companies, or subsidiaries, it’s necessary to check if the terms are not disadvantageous to the mother company,” she said.

Elamparo’s intervention went further than the demand by GSIS Chair Winston Garcia for a change in Meralco management. Garcia had assailed Meralco for charging high rates and not being transparent about its financial affairs.

Setback to privatization

On Friday, the Makati Business Club (MBC), the Philippine Chamber of Commerce and Industry (PCCI), and Federation of Philippine Industries (FPI) gave notice that they would not join the gang-up on Meralco. Even so, they said they resented having to pay for Meralco’s systems losses passed on to electricity consumers, recovery of which was allowed by law.

MBC director Alberto Lim said his group supported efforts to bring down power costs but that government control of Meralco was not a solution to this. “Taking management control is a step back from the privatization program of the Electric Power Industry Reform Act,” Lim said.

Regarding the issues raised by Garcia, Lim said this was about transparency, which was a corporate issue and best addressed within the Meralco board in which Garcia holds a seat.

PCI chair emeritus Donald G. Dee said his group appreciated the need for government involvement in utilities but not through management control. FPI president Jesus Arranza said his group would not be involved in the question of Meralco’s management control, which was something internal to the firm.

Reminiscent of Marcos

The intervention by Santiago and the recruitment of the senior bureaucracy of the GSIS to reinforce Garcia raised concerns among business groups that the government was not sparing any of its punitive weapons to try to drive down Meralco and the Lopez family to their knees by threatening them with measures that smacked of confiscation of private sector assets at giveaway prices reminiscent of the sequestration/seizure at gunpoint by the Ferdinand Marcos dictatorship of Meralco and other Lopez assets and those of its political enemies.

In that round of sequestration, the dictatorship seized at no cost and for a song the assets and presses of the Manila Times publications and its radio-TV station, Channel 5; the Philippines Free Press, and ABS-CBN Broadcasting Corp, the chief public opinion weapon of defense and even retaliation of the Lopez family.

Marcos jailed Joaquin Chino Roces, publisher of the Times; Teodoro Locsin Sr., publisher of the Free Press, and Eugenio “Geny” Lopez Jr., namesake son of the Lopez patriarch, who was a hostage in the takeover negotiations. This scenario is not lost on the business community as the Arroyo administration flaunts overwhelming state powers to crush her political enemies.

This specter haunts the media as they note that it is not mere coincidence that whatever reasons were invoked for the Meralco seizure, the Arroyo crackdown has singled out her enemies in the media. These are signals that the media and the sectors of the business community have not ignored. Patterns of confiscation and cheap buyouts at virtually no cost, extracted with the application of the state punitive powers, have reemerged.

Media alarmed

Independent sectors of the media are alarmed by these punitive trends. Oscar Lopez, head of the Lopez group, is not taking these threats lightly and has dared the government to buy its interests out. He is not giving away the Lopez assets for a song, and what he is telling the government is something like “seize it over our dead bodies.”

Garcia of the GSIS arrogantly replied, “We have the money.” This response is ominous to Meralco but more so to hundreds of GSIS fund contributors who should be asking whether their money to be used for the takeover would lead to the reduction of electricity costs, to a more efficient management of the electricity system by the government, and at what cost.

Business not amused

Whether a government takeover would result in better services is a key issue in this controversy. But what’s more terrifying to the business community is the lynch mob hysteria generated by the unleashing of the amoks in the government’s stables.

The business community was no longer amused when Senator Santiago went on a rampage. She told reporters: “The EPIRA (Energy and Power Industry Reform Act) is a failure. The Senate is a failure. The executive branch is a failure. Why? Because of that Meralco. It should be bombed. It’s a haven for syndicates. It’s worse than the Bureau of Customs.” Hiding behind the cloak of parliamentary immunity, she did not identify who the syndicates were.

It was the same Santiago who, on April 30, 2001, ranted at the indignation rally at EDSA, protesting Joseph Estrada’s arrest following the filing of plunder charges against him. She incited outraged Estrada partisans to storm Malacañang.

No one picked up her incitement, but there was an immediate casualty. If there is anything that scuttled her nomination for a seat in the UN International Court of Justice in The Hague, that harangue was the supreme act of self-destruction.

Santiago has no takers in the business community to come on board the lynch mob stampede.