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LandBank: No sale of Meralco shares

/ 04:28 AM September 28, 2015

Land Bank of the Philippines officials said the Office of the Ombudsman had no basis to investigate them for graft since a 2008 agreement to sell the bank’s shares in Manila Electric Co. (Meralco) to an investment firm led by businessman Roberto Ongpin for P4.9 billion fell through.

Executives of the state-run bank also held that the share purchase agreement (SPA) was not disadvantageous to the government and did not give undue benefits to the Ongpin-led Global 5000 Investment Inc., now SMC Global Power Holdings Corp., a wholly owned subsidiary of San Miguel Corp.

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LandBank “maintains that there was no violation of the antigraft law over the transaction of its Meralco shares because the sale between LandBank and Global 5000 did not materialize,” it said in a statement issued on Sunday.

“Hence there is no basis for a criminal indictment or administrative sanction against former members of the LandBank board of directors, including some incumbent bank officers,” it added.

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LandBank executives explained their side to the Office of the Ombudsman on Feb. 16 in reply to the complaint filed by its Field Investigation Office in November 2014.

The Office of the Ombudsman on Thursday said it was investigating former and incumbent officials of LandBank led by former Finance Secretary Margarito Teves and bank president Gilda Pico, Social Security System (SSS) officials, businessmen Ongpin, Iñigo Zobel, Joselito Campos Jr. and other executives of Global 5000 for possible multiple graft charges in connection with the P9-billion sale of Meralco shares by LandBank and SSS in 2008.

Former SSS Chair Thelmo Cunanan, who died in 2011, was included among those under investigation. Other former SSS officials under investigation are former Vice Chair Romulo Neri, Marianita Mendoza, Donald Dee, Sergio Ortiz-Luis Jr., Fe Tibayan Palileo, Victorino Balais and Sonny Matula.

Block sale

The Office of the Ombudsman said that in January 2009, SSS executives led by Cunanan approved the block sale of its Meralco shares to Global 5000 for P5.669 billion, or at P90 per share, for which Global made a down payment of P1.133 billion.

The Commission on Audit (COA) said the “block sale was not in accordance with sound business practice as it has the effect of giving a P4.535-billion loan to Global 5000,” which had an initial paid-up capital of only P62.5 million.

The reported sale of minority shares of SSS and LandBank in Meralco happened while control of the utility firm was contested by San Miguel Corp. led by Ramon S. Ang and a group headed by Manuel V. Pangilinan. The group of Pangilinan eventually edged out San Miguel for control of Meralco.

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Unwarranted benefits

An Ombudsman spokesperson said its Field Investigation Office held that LandBank executives “gave unwarranted benefits, advantage or preference to Global, a firm with doubtful financial capacity and no track record to undertake the sale.”

The announcement of the investigation came as the official start of the election season neared.

Teves is the treasurer of the United Nationalist Alliance (UNA), political party of Vice President Jejomar Binay who was the first to declare he would seek the presidency, while Ongpin is a supporter of Sen. Francis Escudero who is the running mate of Sen. Grace Poe, who was the third person to declare her run for the presidency.

Binay and Poe, along with Liberal Party standard-bearer Mar Roxas, are contenders in the presidential election in May 2016.

LandBank said the sale price of P90 a share was not disadvantageous to the government because Meralco shares were trading at P58 per share when it signed the SPA with Global 5000 on Dec. 2, 2008.

No down payment

The bank also said it did not surrender its voting rights to Global 5000 because the latter did not pay the down payment as agreed upon in the SPA.

LandBank also invoked a Department of Justice opinion dated Dec. 15, 2012, that found nothing anomalous in the deal with Global 5000.

LandBank said the sale did not push through because its 42 million shares in Meralco were transferred to an assignee of Federico Suntay as compensation for an agricultural land in San Jose, Occidental Mindoro province, to satisfy a 2001 decision of a Department of Agrarian Reform (DAR) adjudicator that awarded P147 million to Suntay.

Shares illegally garnished

“Although the judgment award in favor of Suntay was only P157 million, LandBank’s 42 million shares in Meralco, then valued at about P2.4 billion, were illegally garnished, canceled and transferred to (Suntay’s assignee, Josefina) Lubrica,” LandBank said.

The bank won back ownership of the shares through a Supreme Court decision.

LandBank said the Supreme Court restored its ownership over the Meralco shares in a decision dated Dec. 14, 2011, which said that the 2001 DAR decision was not yet final and that the 42 million Meralco shares could not be garnished to satisfy a judgment in a just compensation case.

LandBank said it had so far recovered 38.63 million shares out of the 42 million shares illegally transferred to Lubrica.

The bank said the complaint filed by Emilio Suntay III in the Office of the Ombudsman against officials of LandBank and Global 5000 “was obviously a reaction to the Supreme Court decision which paved the way for LandBank’s recovery of its lost shares, filed clearly with the intention to vex and harass LandBank officers.”—Dona Z. Pazzibugan

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TAGS: antigraft law, Global 5000 Investment, Land Bank of the Philippines, Landbank, Meralco shares, Ombudsman, Roberto Ongpin, SMC Global Power Holdings
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