Biz Buzz: Indicted
He was once the toast of the town for boldly acquiring a moribund company and engineering one of the most jaw-dropping corporate turnarounds in recent corporate history.
But the last few months have been a challenging time—to put it mildly—for businessman Joseph Sigelman.
Late last week, the former chair of AG&P was indicted by a New Jersey court for alleged violations of the Foreign Corrupt Practices Act (FCPA) when he was CEO of a Colombia-based (but British Virgin Islands-registered) firm called PetroTiger Ltd.
As opposed to simply being charged (which he was last January, soon after his arrest upon returning to the Philippines after the Christmas holidays), being indicted means that the case will now go to trial in the US. No less that the US Federal Bureau of Investigation made the announcement last Friday.
Sigelman—a resident of Miami and the Philippines—was charged with “conspiracy to violate the FCPA and to commit wire fraud, conspiracy to launder money, and substantive FCPA and money laundering violations,” the FBI said.
An additional wrinkle for the 43-year-old business wunderkind is that his co-accused, PetroTiger counsel Gregory Weisman and co-CEO Knut Hammarskjold, have both pleaded guilty to related charges.
“According to court records, Sigelman and others allegedly paid bribes to an official in Colombia in exchange for the official’s assistance in securing approval for an oil services contract worth roughly $39 million,” the FBI explained. “To conceal the bribes, they first attempted to make the payments to a bank account in the name of the foreign official’s wife for purported consulting services she did not perform. Sigelman and Hammarskjold provided Weisman invoices, including her bank account information. The conspirators made the payments directly to the official’s bank account when attempts to transfer the money to his wife’s account failed. Sigelman and his conspirators then took steps to conceal the bribe payments from PetroTiger’s board members.”
Allegedly, some of the payments were coursed through a Philippine bank account under the codename “Manila split.”
Expect more revelations (including details from Sigelman’s defense) once the trial gets underway.
Meanwhile, everyone in the local business community is wondering: What will happen to the newly revived AG&P? Abangan.—Daxim L. Lucas
Duty Free consolidation
Two years after the infusion of S&R Membership Shopping into fast-growing Puregold Price Club, retail magnate Lucio Co plans to consolidate the operations of his two privately held Puregold Duty Free stores in Subic and Clark into Puregold as well.
This is seen to add P2.4 billion to group-wide annual turnover and help perk up margins because these stores—due to their duty-free import status—enjoy higher margins (around 10-percent net profit margin versus the 2013 Puregold average of 5.4 percent).
Although not part of the agenda at Tuesday’s stockholders’ meeting of Puregold, Co disclosed the proposed consolidation to shareholders. Later on, Puregold president Leonardo Dayao said the consolidation would have to go through the process of arms-length valuation but the group was optimistic that this could happen within the year.
The Co family opened the Subic Duty Free store in 1994 and another in 1998. Each has a net selling area of 3,000 to 5,000 square meters and growing at a compounded rate of 5-10 percent in the last two to three years. “Both are making money. We expect that it will be income accretive,” he said.
On the likely payment mode, Dayao said the assets could be consolidated through a share-swap or a combination of cash and share-swap.—Doris C. Dumlao
Seeking Da Vinci
The Lucio Co group is likewise behind dormant holding firm Da Vinci (Davin) Capital Holdings (formerly Mariwasa Siam), which it acquired last year but has yet to be revitalized. It was all ready but things did not turn out as expected, said Co’s lieutenant Leonardo Dayao.
“We don’t have concrete plans,” Dayao said, adding that there was a lot of potential use for a holding firm. Selling this was likewise an option, he said. For whatever play there is, Davin’s shares were up by 4.55 percent on Tuesday, matching the 4.55-percent increase in the share price of Puregold for the day.
The group has never confirmed it, but the long-running market expectation was that Davin could be the vehicle for renewable energy-related ventures under Co’s privately held Union Energy Corp. The recent play on Davin coincided with the expected completion by the end of this year of a P1-billion 12-megawatt biomass project in Nueva Ecija, which will produce electricity using rice husks. Dayao said the group had obtained approval to double its capacity to 24 MW, which he said could happen by the middle of next year.
Another renewable-energy project in the pipeline is the 8-MW mini-hydropower in Mindoro likewise estimated to cost P1 billion.
But just to be clear, Dayao said the group had no plans for now to infuse these renewable energy ventures into Da Vinci.—Doris C. Dumlao
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