Biz Buzz: Internal racket
This enterprising executive of an engineering firm, a subsidiary of a big property group, recently caused quite a stir as internal auditors uncovered a scheme by which the executive had enriched himself and his cohorts. It sounds like an internal syndicate involving collusion with some contractors, the kind that many would think only existed in public sector projects.
This official, with the rank of AVP, would go around pooling funds and offering loans to contractors, with strings attached, of course. The borrower must go along with an agreement to bloat the value of the contract. If the contractor would play along, he’d get a “favored” status and the executive would see to it that the former’s receivables would be processed ahead of other contractors. So apart from the interest he gets from money lending, the executive gets project kickbacks as well.
It’s uncertain how long this exec had propagated this racket or how much this has fattened his wallet but the worst part of it is that even charity projects undertaken by his employer were not spared. Messing around with a recent charity project that involved only a small amount proved to be his undoing as the executive was caught red-handed trying to turn a donor-funded project in a disaster-stricken area in the Visayas into a milking cow.
Note that while the executive had some “favored” contractors, not everyone was willing to go with his scheme. And when the executive was discovered to have issued fake purchase orders (POs) and/or PO numbers, there wasn’t a dearth of witnesses . But even some “favored” contractors were likewise willing to tell all. This triggered a massive internal audit and a crackdown on contractors and suppliers, affecting even those who had nothing to do with the executive’s racket.
The latest buzz is that a young engineer who was the executive’s operator and cohort was initially being set up to become the fall guy until evidence surfaced pointing to the executive as the bigger culprit. As a result, both the executive and his cohort received the pink slip and in the case of the AVP, who had been with the company for 27 years, he had to leave without retirement benefits. It remains to be seen whether lawsuits will be filed, as further investigation is ongoing. —DORIS DUMLAO-ABADILLA
If ever the Metrobank group is aching over the recently uncovered internal fraud incident that hit the country’s second largest financial institution, one would be hard pressed to find any trace of stress in the demeanor of Alfred Ty who, along with his brother Arthur, now run the day to day businesses of their family conglomerate.
Biz Buzz learned that Alfred (the younger brother of Arthur) is swamped with a different kind of “problem” on his side of the group’s portfolio: the good kind — too many projects on his plate that keep him very busy.
On top of Ty’s list is the looming launch of the Grand Hyatt hotel and residences which sit squarely in the center of a 10-hectare portion of Bonifacio Global City in Taguig.
The real estate development, which the Federal Land brass promise will be “unlike anything the country has ever seen,” is slated for launching in the fourth quarter of this year — a full decade after the concept was first presented to the public.
The delay, Ty explained, was due largely to outbreak of the 2008 global financial crisis, which forced the Metrobank group to slow down on the implementation of what was billed then as the country’s tallest hotel.
All that is behind them now, and the group’s Federal Land unit even upped the ante by constructing an adjoining tower that will operate under the Grand Hyatt Residences brand.
Aimed at the more affluent members of society, the largest units in this upscale project sell for as much as P100 million. One would be forgiven for thinking that selling condo units at this price range would be challenging, but Ty reveals that the project is, for all intents and purposes, already “fully sold.”
But would-be buyers who missed the boat on this one will have another chance when Federal Land constructs “tower 2” of the Grand Hyatt Residences soon. Pricing has yet to be decided on, but given how fast the first project sold, it would not be a surprise to see an upward adjustment going forward.
The group is also set to launch another project with Japan’s Mitsukoshi group soon, marking its first foray into the retail business (albeit not just any kind of retail, but the premium category) after a three-year courtship.
Apart from its BGC flagship project, Federal Land is also busy with its Manila Bay development, having recently sold out all the units of a new mid-rise condo in just a few hours, leaving Ty surprised at just how much wealth Filipinos really have.
“This is all local demand,” he said, as he marveled at the strength of the domestic economy.
And speaking of strong domestic demand, Ty also revealed that demand for new vehicles under the group’s Toyota unit had surprised everyone, including their partners back in Japan.
The demand for new cars in the country is so strong that the Philippines is now Toyota’s 9th largest market not just in the region, but in the whole world. In fact, demand continues to be strong to the point that the local market even rose to the No. 8 rank globally last month.
And it’s not just Toyota that is benefiting from the strong Philippine demand. So is its luxury unit, Lexus, which has doubled its sales this year as more affluent buyers snap up luxury cars and SUVs.
Why? “We have to thank Secretary [Carlos] Dominguez,” joked a company insider, attributing the surge in Lexus’ sales to the upcoming hike in excise taxes for luxury vehicles being pushed by the Department of Finance.
The challenge for Toyota and Lexus, of course, will be sustaining sales in 2018 when car buyers would have already satisfied their rushed demand for new vehicles ahead of the tax hike.
Nonetheless, Ty remains optimistic that the fortunes of the group will continue to be buoyed by the strong Philippine economy — at least that side of the Metrobank conglomerate under Alfred’s watch. However, his older brother Arthur, who is in charge of the bank being scrutinized by regulators, may have a more cautious outlook. —DAXIM L. LUCAS
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.