MANILA, Philippines – The camp of presidential bet Manuel Villar found it ironic that former President Joseph Estrada has thrown a stock manipulation issue against the Nacionalista bet when the same issue had caused Estrada’s downfall.

On Thursday, Estrada, who is seeking the presidency for the second time this May 2010, joined Sen. Juan Ponce Enrile in blasting Villar for interfering in the fund raising efforts of Vista Land & Lifescapes Inc. through the stock market in 2007. (Read: The inside story of Villar's visit to PSE)

Enrile, who replaced Villar as Senate President in 2008, showed minutes of the June 29, 2007 meeting of the Philippine Stock Exchange (PSE) board members who were discussing an issue regarding escrowed shares of Vista Land.

Estrada went on to say during the press conference that Villar engaged in stock manipulation practice, which is illegal, and that overseas Filipino workers (OFW) lost money because of it.

Estrada bowed out of the presidency in 2001 after a televised impeachment trial at the Senate showed he engaged in illegal acts, including those related to stock manipulation.

BW scandal

Estrada was linked to the biggest scandal that rocked the Philippine stock market in 1999. At the heart of the scandal was gambling firm Best World Resources, also called BW Resources, which almost led to the collapse of the local stock market.

BW’s stock price zoomed from P0.80 in October 1998 to P145 in October 1999. The whoping 18,000% jump within a period of one year led the PSE and the Securities and Exchange Commission (SEC) to investigate the listed firm. They uncovered several stock manipulation strategies.

The PSE’s findings showed that BW owner Dante Tan and other brokers were manipulating BW stock through fraudulent "wash sales," a situation when the seller and buyer are the same. The aim was to create the illusion of an active market in a particular stock.

Tan was a friend of Estrada and was one of the biggest campaign contributors when Estrada first ran for president in 1998.

During the impeachment trial of Estrada, former Finance Secretary Edgardo Espiritu testified that Estrada profited from selling them when the share price ballooned.

The scandal had caused investors to shy away from the stock market, bringing trading volumes to record lows.

Yasay: Why Estrada?

Former SEC chairman Perfecto Yasay expressed surprise that Estrada would throw a stock manipulation issue on Villar.

Yasay took the witness stand during the impeachment trial and testified that Estrada called him to clear Dante Tan of any involvement in the BW scandal.

He told reporters on Friday that Estrada should be the last person to throw a stock market issue against someone else.

Villar’s chief counsel, Nalen Rosero Galang, also used the BW scandal to discredit Estrada’s claim that the businessman-turned-politician illegally profited from the stock exchange.

In a statement, Galang said Villar’s attendance in the 2007 PSE board meeting were “nothing compared to” Estrada’s own phone calls to Yasay in 1999.

She stressed that it was the BW scandal that “duped the Filipino investors.”

Yasay said officials of the PSE and SEC could refuse to be pressured by Villar—something he stressed he did during his term as SEC chairman.

Yasay is now the vice presidential bet of Bangon Pilipinas, the party of presidential aspirant Eddie Villanueva.

In February, when the official campaign period for the 2010 polls has just kicked off, Yasay apologized to Estrada for “hurting and offending his (Estrada’s) feelings” a decade ago.

Yasay said he wanted to “reconcile with my brother, not his sins, which I continue to reject.”

Estrada accepted his apology.

Villar: no stock manipulation

Villar has admitted on Friday that he was indeed present during a PSE board meeting in June 2007. But he said there was nothing irregular or illegal about it.

“PSE is a private company. What’s wrong with [my presence there]? It’s not a government agency. It’s not true that I twisted their arm,” he said.

Unlike investors in BW, which experienced wild swings in the stock price, public investors in Vista Land were not yet participating in the buying and selling of the stock in June 2007.

At the time, Vista Land has just listed its shares but has not yet offered these to the public. Listing the shares in the stock market is part of the procedures in officially documenting these shares as tradeable securities.

After listing, companies could then offer to sell these shares to the public. Proceeds of the initial share sales go to the coffers of the company. Succeeding trades on the shares—and the succeeding profits or losses—are between public investors.

When Villar visited the PSE board, Vista Land’s shares were not yet being traded in the stock market. There was no stock price to manipulate just yet.

Stock manipulation is an practice where owners of a listed company, brokerage firms or investment companies take illegal actions to increase or decrease the value of the stock. Stock manipulators buy sell these shares at a profit.

Lawyer: What OFW?

Galang also dispelled Estrada’s claim that OFWs lost money because of Vista Land and Villar’s role in its fund raising in the stock exchange.

She said 85% of the buyers of Vista Land’s shares in 2007 were foreigners.

Villar, the second most preferred presidential bet for the 2010 polls, had earned his wealth from real estate business. When he was still growing the business, he was one of the entrepreneurs to bet that OFWs are a viable market.

Sales of affordable homes to OFWs accounted for up to 60% of his flagship firm’s revenues in the 1990’s.

One of the advocacies of Villar when he was at the Senate were the OFWs and their concerns. Several of his political advertisements showed him taking a keen interest in the causes and plight of OFWs. - with reports from Apples Jalandoni, ABS-CBN News