Biz buzz: Skeletons in the closet
This appears to be the case at logistics giant 2GO Group Inc., recently taken over by the Sy family’s SM Investments Corp. and businessman Dennis Uy from a group led by the Tagud family. It wasn’t the smoothest of transactions, having faced a temporary legal hurdle, in fact, due to resistance from its previous owner. But it all worked out in the end as their entry pushed through earlier this year and Mr. Tagud retired from the company last April.
As we’ve now learned, the new owners quietly tapped SGV & Co. and audited 2GO’s recent balance sheet and income statement disclosures, previously audited by KPMG. Then came the results. 2GO’s new owners said in a late Friday disclosure that it now needed to restate previous financial filings going back to 2015 “to reflect fairly the state of the business.” Said another way, 2GO’s official disclosures to investors during those periods were untrue.
Based on the restated figures, 2GO had inflated several key figures in 2015 to 2016. From overstating its equity by more than half to revenues and profit results, it’s an unsettling set of revelations. Take 2GO’s disclosed profit of P1.3 billion in 2016. The restated figure post-audit: P330.3 million. The previous year (2015), it disclosed a profit of P1.1 billion, however, the restated figure was a miserly P97 million.
The results compared with the restated figures are dotted with such inconsistencies. This is not a small matter. The Philippine Stock Exchange (PSE) said trading of 2GO will be suspended starting Monday morning.
In all fairness to the new owners led by SM and Uy, it’s quite a bold step to come out with these findings when it might have been more convenient to keep it hidden. This is especially true for Mr. Uy, given that his 2GO stake is now part of another company, Chelsea Logistics, which is planning an initial public offering (IPO) this year. —MIGUEL R. CAMUS
Consul strikes again
Remember the Manila-based Spanish consul who was the subject of a complaint by a Filipino-Spanish tycoon not too long ago? The offense back then was the perceived inefficiency of this civil servant who would not give the time of day to this tycoon’s wife for them to fix some legal documents from the Motherland. Well, the consul is back to his usual ways.
This time, the complainant is not a Spanish mestizo, but a group of Chinese-Filipinos—a big group, to be sure.
Biz Buzz learned that a couple of Chinoy lovebirds recently got married and, though they had their traditional Chinese-style wedding in Manila, also wanted a more modern celebration with their friends in Barcelona, Spain, for the obvious reasons: Grand venues, excellent wine and the nice weather.
Then the plot twist: During her wedding speech, the bride thanked all their friends for having come so far despite how “shabbily” they were treated by the Spanish consul in Manila, the very same one who had a spat with the Filipino-Spanish tycoon just a few months earlier.
So it would seem that the consul not only dislikes “tisoys,” he dislikes “Chinoys” as well.
What puzzled many people in the wedding party was why this consul failed to weigh the benefits of 200 well-off Filipinos traveling to Barcelona and spending their money there. Why, had they had an unforgettable experience, they would surely have returned as ambassadors for Spanish tourism (which is a big part of the economy of Spain and the rest of Europe).
Said one of the civil servant’s unhappy customers, “if he keeps this up, the tourists will dry up and he will soon be issuing visas only for household help.”
Going forward, perhaps it is high time for embassies to be more careful about appointing consuls who have racist tendencies, given the mutual ties between Filipinos and Spaniards. After all, no less than King Juan Carlos of Spain spent his honeymoon in Manila, being a frequent visitor, and Queen Sophia came often and went to Greenhills to buy pearls.
By the way, Biz Buzz heard that the attention of no less than the Spanish ambassador has been called about the arrogant behavior of his consul. Apparently he comes to the consulate at 10:30 a.m. and leaves for lunch at 12 noon, not to return in the afternoon. Talk about a nice siesta huh? —DAXIM L. LUCAS
Shift to digital
Aboitiz-led Union Bank of the Philippines recently increased the minimum deposit requirement for interest-earning checking accounts to P100,000, which is much higher than what some other local banks require. Based on the bank’s website, the checking account product “Power Checking,” which allows the account holder to issue checks and make unlimited payments and earns higher interest rate than the regular savings account, the minimum balance requirement (MBR) to earn interest is P1 million.
Some depositors who were notified about the increase in MBR effective July 1 were also upset that a fee of P1,000 would be applied on the second consecutive month that the MBR wasn’t met, and every month thereafter.
Why is Union Bank taking what may appear as an elitist move even as many banks are fiercely competing for deposits? Union Bank president Edwin Bautista explained to Biz Buzz that the higher deposit requirement would apply only to interest-earning checking accounts. On the other hand, he noted that the bank actually has another product called EON savings account that does not require any minimum deposit requirement.
The EON Visa debit card is an internet-based deposit account that’s pitched as the country’s first electronic fund transfer facility. It’s banking without any passbook, checkbook or even deposit slips.
“We are encouraging smaller accounts to move to our digital channels,” Bautista explained. “We can’t afford to provide relationship management service to small accounts.”
Bautista explained that the requirements on Anti-Money Laundering Act (AMLA) monitoring had also raised the cost of checking accounts. The rationalization of deposit base is thus seen to improve the bank’s deposit cost structure in the current environment when there’s too much cash chasing yields. —DORIS DUMLAO-ABADILLA
Transport sector changes
It seems dramatic change is happening in the public transport sector.
The Department of Transportation recently signed its Omnibus Guidelines on Route Identification and Franchise issuance, upending long-standing rules on how the government assigns service areas to public transport operators.
Under the old practice, franchises were handed out on a private sector-initiated basis. For example, if a bus operator deems a route viable, it approaches the DOTr (then Department of Transportation and Communications) for approval and would then be granted a license.
It was an inefficient method to begin with, more so these days with road congestion issues considered by many to be a national crisis. A moratorium on the acceptance of new franchise applications has been in place for 13 years now.
Under the DOTr’s new guidelines, local government units will determine route planning within their respective areas from buses, jeepneys to UV Express units. Franchises will still be issued by the DOTr.
A three-year transition period has been set, after which existing franchises will be canceled—assuming there are no hiccups along the way.
The DOTr said the rules would also pave the way for the new bus rapid transit (BRT) systems planned in Metro Manila and Cebu.
So far, Biz Buzz sources said the bus group of former congressman Homer Mercado is getting ahead of the game, moving to consolidate about half of all Metro Manila bus operators into one mega consortium. This is to prepare for such changes.
Consolidation is part of the DOTr plan as this will allow the groups to pool resources and modernize their services. The DOTr also wants a more hi-tech way of dispatching buses, so dealing with less players is an advantage.
Overall, this is an interesting and welcome development, given its vision to include LGUs. But three years is either a long time or an eternity in an environment where things are far from certain. We imagine multiple fingers are crossed at the DOTr. —MIGUEL R. CAMUS
