As expected, the camp of newly elected Wack Wack Golf and Country Club president Benjamin Abalos Sr. did not take allegations of malfeasance sitting down.
Specifically, the former Mandaluyong City mayor and his allies on the board of one of the country’s most exclusive (and expensive) golf clubs sought Biz Buzz out to “clarify”—more like “belie,” actually—the statement made by former Wack Wack president Philip Ella Juico about the club’s supposed financial troubles during the nearly decade-long reign of Abalos as club president.
Abalos told Biz Buzz that one major expense the club incurred while he was at the helm was a P65-million deal with the William J. Shaw Foundation (representing the estate of the club’s founder, Bill Shaw) for the club to be able to exercise complete ownership rights over a 27.1-hectare portion of the golf course.
Prior to this, the property donation of the Shaw Foundation came with the condition that the land would revert to the Shaw estate if the club would ever use the property for commercial purposes. But for only P65 million, Wack Wack was able to acquire full ownership rights over the property (meaning it could do with it as it pleased).
Abalos explained that this transaction price meant acquiring the 27.1 hectares for only about P240 a square meter, compared to its estimated fair market value of about P100,000 a square meter.
“Where else can you find a deal like this? They should be giving us a medal,” Abalos said, adding that he kept silent about the 2003 deal because he was not in the habit of tooting his own horn.
This transaction was where a portion of the funds from an increase in membership dues were used, he explained.
Abalos’ board allies also turned the tables on Juico, saying that—contrary to the latter’s claims—he did not completely stop the practice of selling associate memberships in Wack Wack during his three-year reign that ended last month.
Contrary to his claims, Juico supposedly sold four associate memberships to the tune of P14.3 million. He also imposed a “special assessment” of P17,000 on each of the club’s 1,200 members in 2011. This brought in P20.4 million. Finally, the Abalos-imposed membership fee increase benefited the Juico administration to the tune of P3.6 million a month, or a total of P122.4 million during the latter’s 34-month administration.
“Mr. Juico claims he ended his term with P55 million in cash. Actually, the real amount was only P42 million. Out of total resources of P157.1 million (in total additional revenues), why was only P42 million left?” Abalos asked.
Abalos also went through a long laundry list of alleged sins of the Juico administration, including bloated club payrolls, among others.
“I didn’t want to reveal this, but I don’t want our members to be misled,” said the returning club president.
So there. Somehow we don’t think we’ve heard the last of the Wack Wack issue. Abangan. Daxim L. Lucas
Paterno in BPI
Bracing for cutthroat competition, Ayala-led Bank of the Philippine Islands has beefed up its senior management team by bringing onboard veteran investment banker Simon Paterno.
Based on an internal bank announcement, Paterno will assume the post of executive vice president effective mid-September, tasked with ensuring that the bank’s products are delivered to top clients.
Paterno is credited for pioneering work in restoring the country’s access to the international bond markets, when the local franchise of JP Morgan (where he worked for 18 years) dominated in the 1990s. Having moved to head Credit Suisse in the next decade (after a brief stint as president of Development Bank of the Philippines), Paterno focused on the domestic bond markets.
The domestic bond exchange deals he structured allowed holders of the country’s illiquid bond issues to swap these with the liquid benchmarks we have today, allowing the government to lengthen debt maturities.
Those initiatives contributed to two key developments in today’s markets: The hefty profits racked up by banks in their bond portfolios as interest rates declined and the active corporate bond market.
He would have been the country manager of Malaysian banking giant CIMB in the Philippines but a deal with San Miguel group to acquire Bank of Commerce collapsed.
Paterno is a Stanford MBA alumnus, an Atenean (graduated cum laude in AB Economics honors program in economics) and a 1999 TOYM (Ten Outstanding Young Men) Philippines awardee for investment banking.
This appointment is a reunion of sorts with Cezar Consing, who was also with JP Morgan before assuming the post of BPI president. Other ex-JP Morgan executives now populating BPI’s top management are chief finance officer Joseph Albert Gotuaco (who went on to become managing director at Merrill Lynch) and Reggie Cariaso (who was executive director at Nomura).
Let’s see what comes out of BPI next. Doris C. Dumlao
Capital flight
Major players in the financial industry are protesting the recent directive of the Bureau of Internal Revenue (BIR) requiring the submission of investors’ tax identification numbers (TIN) whenever these investors earn dividends or interest on their funds.
And it’s no laughing matter. According to our sources, billions of pesos—literally—have fled the local markets due to this BIR rule, which requires banks and stockbrokers, among others, to submit their so-called “alphalist” (a portmanteau of “alphabetical list”) of clients to the tax authority.
“We are seeing an exodus of investors,” said one banker. “Nobody wants to expose their investments portfolio to the BIR.”
(BIR chief Kim Henares insists that the alphalist requirement is not a new rule, and that she’s only implementing what is already required by law.)
No less than nine industry associations have voiced their opposition to the BIR rule, including the most affected groups like the Bankers Association of the Philippines and the Philippine Stock Exchange.
Surprisingly, however, this one banker we spoke to had a different take on the brouhaha.
“I’m pro-government on this issue,” he said. “My taxes are deducted upfront (in contrast with securities investors who apparently have many ways of dodging taxes). We all need to pay the right taxes.”
Well said. Somehow, we feel that the affected investors don’t feel the same way, though. Daxim L. Lucas
Europe-bound
PLDT chair Manuel V. Pangilinan is expected to fly to Spain at the end of August to personally support the Gilas Pilipinas team at the 2014 International Basketball Federation (Fiba) World Cup, but we hear this trip is going to be about a lot more than sports.
Apart from spending time in the heritage-rich city of Seville, where the games will be held, insiders told us the itinerary includes business stops across the continent. Spain itself is an important destination given the presence of infrastructure companies, which could become useful partners for future public-private partnership (PPP) deals the Philippines plans to rollout, our source said.
Another destination is the headquarters of Berlin, Germany-based Rocket Internet, where Pangilinan could get some of that famed German hospitality after PLDT recently decided to invest about P19.6 billion in Rocket for a 10-percent stake.
But it gets even more interesting as Pangilinan moves farther west, to the United Kingdom. Apparently, UK trade officials have approached Pangilinan for potential investments, ranging from agriculture to even power plants there.
“They are inviting and we are looking,” a source told Biz Buzz.
It appears that any investment is still exploratory in nature but we can’t say it is surprising. After all, the Pangilinan-led First Pacific Group has been casting its gaze toward more developed markets like Germany, Singapore for power and a food company in Australia apart from its traditional emerging markets portfolio.
Pangilinan has talked long about the difficulty in investing locally given regulatory constraints with the present administration. So it should be interesting to see if this diversification to more developed areas yields better results. Miguel R. Camus
Lucky streak
Lady luck is smiling down on patrons of Solaire Resort and Casino in the feared month of the hungry ghosts.
Five jackpot winners in the slot machines won some P100 million in the first eight days of August, the highest over the same period in the history of the casino run by the group headed by port magnate Enrique Razon Jr.
Management has welcomed the huge payout as it is expected to lead to the influx of more casino goers who hope to also hit the elusive jackpot. This should encourage Razon-led Bloomberry Resorts Corp. to go full steam ahead with the ambitious plan to expand operations, starting with the opening by the end of the year of non-gaming amenities such as an all-suite five-star hotel, a Broadway-style theater and a high-end retail area.
Bloomberry is on a positive path, having chalked up a profit of P2.3 billion at the end of the first half, a reversal from the loss of P1.03 billion recorded in the same period last year. Tina Arceo-Dumlao
E-mail us at bizbuzz@inquirer.com.ph. Get business alerts and a preview of Biz Buzz the evening before it comes out. Text ON INQ BUSINESS to 4467 (P2.50/alert).