Biz Buzz: Superstar to falling star

Superstar to falling star

The highest echelons of the country’s tightly knit business elite were abuzz last week after AG&P chair … well, former chair … Joseph Sigelman was arrested in Manila just two days after the New Year and immediately sent to the United States for alleged violations of the Foreign Corrupt Practices Act (FCPA).

Prior to this, Sigelman was a rock star in the local business scene for having acquired a moribund AG&P (formerly Atlantic Gulf and Pacific) and turning it into a thriving company engaged in the modular fabrication of components for power plants, refineries and other industrial operations.

Lo and behold. The former Goldman Sachs investment banker was arrested a few days ago for allegedly being involved in an illegal scheme at his former company in Colombia called PetroTiger, where he was CEO. Under that operation, Sigelman and his co-defendants allegedly connived to increase the purchase price of their products and funneled the kickbacks to an official of the state-owned petroleum company. (We hear the amount involved is a “relatively small” $300,000, but we’re not sure if the small size is a mitigating factor in the case.)

In any case, we hear that this news has made the bosses in at least three Philippine banks very nervous. Why? That’s because AG&P issued $91 million in debt securities in mid-2013—exactly six months to the day before he was arrested—to fund its admittedly impressive operations. That’s about P4 billion in loans, and certainly no laughing matter.

The three banks that lent to AG&P through a combination of corporate notes and a committed working capital line were Bank of the Philippine Islands and the state-owned Development Bank of the Philippines and Land Bank of the Philippines. Given that AG&P was still in the process of being turned around, we’re told that these banks lent to the company primarily because they were impressed with Sigelman. It was, if you will, a character loan of sorts, based on Sigelman’s vision of where he wanted to take AG&P.

Sigelman has since been replaced by Cesar Buenaventura, who has an impeccable reputation and a spotless record in the local and international business scenes.

As such, AG&P’s local bankers are now praying that the wisdom of the 84-year-old Buenaventura can bring AG&P to where the energy of the 42-year-old Sigelman said he would. Fingers crossed. Daxim L. Lucas

And the banks fret

Speaking of worried banks, many of the country’s largest banks have been fretting about the expanded powers that the Bangko Sentral ng Pilipinas has been asking Congress to grant it.

Biz Buzz learned that several member-banks of the Bankers Association of the Philippines have submitted position papers expressing their “reservations”—to put it politely—on the proposed amendments to the BSP’s charter.

Under the proposed law, BSP officials and employees cannot be sued for their actions in the performance of their work. The bill will also give BSP the authority to require anyone to surrender financial data and information through a subpoena (punishable by contempt in the event of non-compliance).

Tabled as House Bill 3112, it also allows the BSP to pore over the transactions between banks and their parent firms, subsidiaries or affiliates—a power previously reserved only for the Securities and Exchange Commission.

The proposed law will then give BSP the power to look into bank accounts, effectively exempting it from the Bank Secrecy Law. (The BSP reasons that it isn’t asking for anything that isn’t already available to its counterparts abroad.)

So what worries are the bank whispering behind closed doors? Potential abuse of these “superpowers” in the future, they say.

“[Gov. Amando] Tetangco [Jr.] and [Deputy Gov.] Nesting [Espenilla] are excellent regulators,” said one bank chief. “But what happens after they step down or retire and people with less than pure intentions are appointed?” Daxim L. Lucas

RC Cola inheritance squabble

An inheritance squabble among the heirs of Richard Sandoval Sr., one of the incorporators of beverage firm Asiawide Refreshments Corp., has unfolded ahead of the intended backdoor-listing of the latter’s assets into Maybank ATR Kim Eng Financial Corp. (MAKE).

One of the children of the late Sandoval, Miguel Luis Buensuceso, has cried foul over the transfer of assets of Asiawide (which holds an exclusive license from RC Cola USA to manufacture and distribute RC Cola in the Philippines) into MAKE. He has asked corporate regulators to disallow the transfer of the shares, alleging the “fraudulent exclusion” of Sandoval’s stake in Asiawide (or proceeds from the sale of which) from the Sandoval estate, which is now the subject of court proceedings.

The backdoor-listing planned by the group of businessman Alfredo Yao, the complainant claimed, would place the shares “beyond the reach” of the estate court and “prejudice” his legal rights as one of the heirs. Yao and associates were accused of conspiring with the wife, Lilia Sandoval, to effect the shares transfer. Even assuming that the shares had been transferred way back in 2008, Buensuceso claimed that the proceeds should have been included as part of the Sandoval estate, but this was something that Lilia had allegedly omitted.

Asked about this matter, Yao told Biz Buzz that his group had “nothing to do” with the squabble among the heirs. Before Sandoval passed away a few years back, Yao said his shares in Asiawide had already been sold to one of his associates. “There isn’t any more Sandoval shares in Asiawide,” he clarified. But Yao said Sandoval, being one of the original incorporators, is the reason why he is still cited in Asiawide’s website (the same info being picked up in media reports) as a business partner along with Tony Panajon, Gerry Garcia and Butch Aves.

Yao said the complainant should run after the parties who had unloaded the shares in the first place.

On Friday, MAKE went on voluntary trading suspension for five more days pending completion of the agreements on the assets to be infused into the company. Yao said this extended suspension had nothing to do with the dispute on the Sandoval estate, adding his group has yet to receive any official notice on Buensuceso’s complaint. Doris C. Dumlao

Speaking of whom …

Alfredo Yao was recently elected president of the Philippine Chamber of Commerce and Industries (PCCI), taking over the post previously held by Miguel Varela.

Apart from his stake in the RC Cola business (through Asiawide), Yao is founder of the Zest-O group. Outside of food and beverage manufacturing, his group has interests in aviation (Zest Air) through a partnership with regional budget carrier Air Asia and in banking, Philippine Business Bank, which went public in February of last year.

In late 2013, PLDT SME Nation awarded him with the “Grand MVP Bossing” title. These “Bossing” Awards seek to recognize “exemplary” Filipino entrepreneurs across the country.  Doris C. Dumlao

More fashion brands coming

Retail giant SM has no desire to lift its foot off the accelerator anytime soon. On the contrary, it intends to keep up the blistering pace of its expansion.

The latest project is the launch on Jan. 28—in time for the Chinese New Year—of the Mega Fashion Hall, the newest wing of the sprawling SM Megamall that will house new global fashion brands and restaurants.

Among the brands that will have their first branch at the Mega Fashion Hall are Stockholm-based H&M, Vero Moda of the Danish Bestseller group, US-based Crate and Barrel that is into furniture and houseware, dimsum specialist Tim Ho Wan and UK-based Philosophy, which retails personal care products.

More names will soon be added to the list, thus giving fashion-conscious Filipinos more choices than ever. Tina Arceo-Dumlao

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