Bangko Sentral surprised by RCBC move
THE ANNOUNCEMENT made last week by Rizal Commercial Banking Corp. (RCBC) that it had chosen a new president and CEO to replace Lorenzo Tan in the wake of the $81-million money laundering controversy was generally well received by the public.
After all, Gil Buenaventura is a soft spoken and amiable banker who is easy to get along with. He is someone who has a more reserved than flashy demeanor—something that is desirable in the reputation-sensitive banking industry.
But the news of his appointment was met with raised eyebrows by other bankers. More importantly, it was met with even more raised eyebrows among banking regulators at the Bangko Sentral ng Pilipinas.
According to some insiders, the central bank hierarchy was caught off guard by RCBC’s announcement because the choice of Buenaventura was not vetted with regulators, as is customary when a large bank is choosing a new head. The traditional process is that a bank, before announcing any appointment, will inform the BSP informally whether the banker in question would be acceptable to the central bank’s hierarchy. Once they receive the informal nod, the bank then proceeds to make an announcement, and the name of the new CEO (or ranking official) is then formally submitted to the Monetary Board for its approval.
Well, Biz Buzz learned the BSP brass was just as surprised as other private sector bankers with RCBC’s choice of Buenaventura as its new chief. You see, Buenaventura was brought out of retirement (having retired from Bank of the Philippine Islands) to head the state-owned Development Bank of the Philippines. He was at its helm when the government bank took a P717-million loss over a series of transactions (dubbed by its critics as a “wash sale” of more than P14 billion in money-losing bonds) that were flagged by the bank’s resident Commission of Audit official in 2014.
Of course, the Ombudsman cleared all DBP officials involved in the deal earlier this year, but at the height of the controversy last year, the BSP wasn’t too happy about the series of transactions especially since they were approved at the highest levels of DBP.
So it remains to be seen if the Monetary Board will give its imprimatur to Buenaventura’s appointment as RCBC chief once his papers are formally presented for clearance.
Biz Buzz learned that the Monetary Board did have an emergency meeting last Monday to exclusively discuss issues relating to RCBC, but the bank’s choice of a new president was not on the agenda. So what was so important as to have the Monetary Board convene a special session? It was about something else. Perhaps something even more important. Abangan! Daxim L. Lucas
Cusi at DOE
THE ANNOUNCEMENT that businessman Alfonso Cusi was appointed by presumptive President-elect Rodrigo Duterte as energy secretary drew some mixed reactions from the public last week, with some businessmen nodding their heads in approval, while some critics on social raised their eyebrows in surprise.
Wasn’t this the same Al Cusi who was a friend of former First Gentleman Jose Miguel Arroyo? Indeed, he was. But he does have his supporters who point out that Cusi has built a good management reputation, which is important if the energy department is to successfully oversee the country’s power requirements in the next six years.
Cusi has been described by his friends as a silent worker, a straight shooter and a no-nonsense team player. He is also a self-made entrepreneur and was an effective government functionary during his stints as head of the Manila International Airport Authority (MIAA) and the Civil Aviation Authority of the Philippines (CAAP). As MIAA general manager and later on as CAAP chief, Cusi presided over improvements in the country’s main airports that would eventually lead to the restoration of the Philippine aviation sector to Category 1 status from organizations like the International Civil Aviation Authority (ICAO).
Cusi quietly left the government during the Aquino administration when he sensed that he was not welcome. But before leaving, Cusi helped ensure that Naia Terminal 3 would be opened despite legal wrangling between its builder and the government.
So how did Cusi become the top choice for the job? He is the vice chair of the PDP-Laban, which has Duterte as its party chair. The new energy chief oversaw the Duterte campaign against long odds and the vaunted machinery of rival presidential candidates. Now, let’s see if he is as good as his friends say he is. Daxim L. Lucas
Cheap flights united
ONE OF the biggest, and more interesting, developments in aviation recently was last week’s announcement that Asia-Pacific budget carriers, including the Gokongwei group’s Cebu Pacific Air, were starting their own alliance. The is the first in the region and the largest of its kind as far as low-cost carriers are concerned. Apart from Cebu Pacific, the group, aptly called Value Alliance, has Jeju Air, Nok Air, NokScoot, Scoot, Tigerair Singapore, Tigerair Australia and Vanilla Air.
Unusually, Malaysia’s Air Asia Berhad, the region’s biggest budget airline, was not part of Value Alliance. Apparently, Air Asia wasn’t even invited to join, according to Alfredo Yao, a director in the company that runs its domestic affiliate, Air Asia Philippines. No hard feelings, too, he said.
“Air Asia is quite big in the region,” Yao told Biz Buzz. “They’re coming together to create more value.”
Yao said competition would remain tough, and they weren’t closing the door to joining if asked in the future.
Value Alliance makes sense, especially considering how difficult it is for budget carriers to gain entry in more exclusive global alliances, whose full-service airline members have vast international networks and are picky with their company.
Value Alliance airlines already cover a third of the earth and serve more than 160 destinations with a collective fleet of 176 aircraft across the Asia-Pacific region. The carriers can better use their networks while flyers can benefit from a “one-stop-shop experience.” For example, Value Alliance customers can see and book the “best-available airfares” on flights from any of the airlines in a single transaction, directly from each partner website.
Good news for everyone, if that stimulates new demand. Miguel R. Camus
‘Legal bullying’
HERE is another case of legal bullying. Twelve years ago, Hong Kong-based carrier Cathay Pacific was sued by its cargo-handling contractor People’s Air Cargo and Warehousing Inc. (Paircargo), which claimed that their existing contract prohibited the airline from engaging other contractors for cargo handling services.
Since this local contractor was well versed with the local legal system, it was able to get a writ of injunction from a trial court. In the 2004 lawsuit, Paircargo claimed its existing contract was due to expire in 2007. When that date arrived, Paircargo amended its first legal action and claimed that its contract must be extended for another 10 years. Again, the trial court extended the writ of injunction until 2017.
Cathay Pacific sought relief from the Court of Appeals, questioning the arbitrary extension of the injunction. The CA postponed action on the lawsuit until the resolution of related cases pending at the Supreme Court. When those cases at the high court were finally resolved in 2012, the CA called for mediation proceedings between the parties. The parties, after arbitration, executed a Settlement and Compromise Agreement on April 29, 2013. The agreement provided that Cathay continue using Paircargo’s warehouse facilities and services for its import and transit air cargo requirements at the Manila airport up to March 31, 2016. Prior to that date, Cathay Pacific would elicit competitive business proposals for the same services and notify Paircargo of the result of that tender not later than Jan. 29, 2016. Paircargo could participate in the tender.
As provided for in the deal, both parties moved for the dismissal of the RTC case, which was dismissed with finality in 2013. Cathay Pacific thought that that was the end of its legal battle.
But lo and behold, Paircargo filed another lawsuit with the same trial court seeking relief from the airline’s decision to partner with another service provider. This was after Cathay Pacific underwent a competitive bidding and assessment and determined that Paircargo’s offer was inferior. The warehousing and cargo handling service was awarded to a competitor.
It was a deja vu for Cathay Pacific as this same local company was seeking a forced agreement with its unsatisfied client. Cathay Pacific—considered among the most esteemed airline companies in the world—seems to now be a victim of legal harassment by its former partner. The problem is that this would send the wrong signal to the international business community about how business is conducted in the Philippines. Poor Cathay, poor Philippines. Daxim L. Lucas
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