FPHC files anti-graft and investors protection violations against SEC, GSIS
Lala Rimando, abs-cbnNEWS.com/Newsbreak | 09/09/2008 6:28 PM
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First Philippine Holdings Corp. (FPHC) filed a complaint-affidavit against officials of the Securities and Exchange Commission (SEC) and Government Service Insurance Communication (GSIS) Tuesday at the Ombudsman for allegedly conspiring to prejudice the Lopez family-owned company during the contentious Meralco stockholders meeting last May 27.
FPHC’s complaint-affidavit cited violations of the Securities Regulations Code Section 73 against two SEC officials, namely Commissioner Jesus Enrique G. Martinez and Director of Compliance and Enforcement Division, Hubert B. Guevara.
It also cited GSIS’ president and general manager Winston F. Garcia, and chief legal counsel Estrella Elamparo-Tayag for violations against the Anti-Graft and Corrupt Practices Act.
Elpidio A. Ibanez, FPHC’s president and chief executive officer, signed the complaint.
Lopez-owned FPHC and government agencies led by pension fund GSIS are the two major blocs which respectively have 33.4 percent and 34 percent stakes in the biggest electricity distributor in the country
The two were engaged in a bitter corporate battle as each fought for control through a proxy war over the remaining shares during the contentious May meeting where FPHC’s and the Lopez family allies garnered majority, or five, seats in the 11-man board.
In the complaint, FPHC said SEC issued a cease-and-desist order that favored GSIS, which contested the validity of the authorized proxies that would determine who among the two warring blocs would get majority of the seats, thus control Meralco’s board.
Early into the stockholders meeting, SEC’s Guevara took the floor and informed the attendees about the order. The order directed Guevara to supervise the canvassing of the votes for board directors, including those cast in 4,433 proxies, of which 99.7 percent or 4,418 proxy forms were disputed.
The meeting proceeded with FPHC and the Lopez allies having no time to go to the courts to block the SEC order. FPHC said SEC did not conduct any investigation
FPHC noted that SEC’s order directed Guevara and two of his qualified lawyers to supervise the Stockholders' Meeting even if this was not prayed for in the Urgent Petition of GSIS.
The order did not stop or suspend the meeting, but it invalidated the proxies issued in favor of directors from the camp of FPHC and others sympathetic to the Lopezes and validated those issued in favor of the GSIS.
“All of the proxies validly solicited by FPHC were being systematically, maliciously and arbitrarily canceled by the CDO, solely on the basis of mere allegations of the GSIS,” the complaint noted.
FPHC said that the SEC’s order “violated FPHC's constitutional right to due process, already adjudicated the case on the merits without due process as evidenced by Respondent Martinez, having issued the CDO which contained explicit directives favoring GSIS, to the prejudice of FPHC and other Meralco shareholders similarly situated who were threatened with disenfranchisement."
It also noted that SEC’s Martinez “illegally allowed those same proxies to be counted for purposes of determining a quorum. After the quorum had been declared, the proxies of FPHC and Meralco were invalidated for purposes of voting.”
Meantime, FPHC’s complaint against GSIS’s Garcia and Tayag for GSIS revolved around the two being government officials. It said that the two violated Section 9 of the Anti-Graft Law when they conspired with SEC “to obtain more seats on the [Meralco] Board to the prejudice and damage of FPHC as a substantial shareholder of Meralco."
FPHC said that the action of the four unduly “injured” FPHC, which was publicly embarrassed by the purported issuance of the [SEC order] and in the manner it was sought to be enforced.”
It also said that this “significantly brought down the share price of Meralco in the Philippine Stock Exchange (damaging Meralco's stockholders, including FPHC).”
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