Former 2GO Group Inc. CEO Sulficio Tagud Jr. doused more fuel into an accounting firestorm that erupted last week between auditing Goliath SyCip Gorres Velayo & Co. and its younger rival, KPMG-R.G. Manabat & Co.
Recall that it was an SGV & Co. special audit, ordered by the new owners, that led to the restatement of 2GO’s financials going back two years to 2015, or the period covered by KPMG-R.G. Manabat & Co.
It was a rare and controversial move since SGV’s findings unearthed understated debt apart from inflated noncash assets, and profits for the two years. KPMG-R.G. Manabat & Co. said it stood by its audit.
Tagud, who left 2GO in April 2017 following the entry of businessman Dennis Uy and the SM Group, told Biz Buzz this was no dispute between him and 2GO’s new owners but was in fact a battle between external auditors.
“I guess the auditing industry in this country has become so competitive that some people just want to put down the other audit entity if they have the opportunity,” Tagud said.
For Tagud, it was a personal issue with SGV. The 2GO board he led decided to replace SGV in 2014 over the treatment of a deferred tax asset (DTA), suggesting this was SGV’s way of getting back at him. (KPMG’s engagement as external auditor formally started in 2015).
Tagud said SGV wanted to write off an almost P400 million in DTAs in 2014, thereby lowering 2GO’s income that year.
Tagud instead wanted this done in 2015. He argued this was when it would expire and that 2GO was projecting even higher profits, continuing a turnaround story that started in 2013.
“SGV simply didn’t believe we would make more money the next year,” Tagud said.
Before then, 2GO was booking losses following an integration with Aboitiz Transport, which was acquired by Tagud’s group in 2010. He said losses were inevitable since Aboitiz Transport was five times bigger than Tagud’s Negros Navigation Co.
And while some auditors tend to err on the conservative side, Tagud said SGV’s actions were unacceptable. He even brought the matter up to the Securities and Exchange Commission.
“I said your role as accountant is to audit the past. My opinion on where the business is going should be respected,” he recounted telling SGV.
Flash-forward several years later and Tagud said the accounting giant got its payback.
“I don’t regret firing them, it’s about the principle,” Tagud said.
A fiery tale no doubt, and one we are certain will yield more twists once the SEC completes its investigation. Like we say here, abangan! —MIGUEL R. CAMUS
Tagud’s ‘nth’ act
Despite his laments about the accounting fiasco at 2GO Group Inc., its former CEO, Sulficio Tagud Jr., told Biz Buzz he had largely moved on from the issue.
How much has he moved on? Well, totally, when going by his stake in the firm, now at zero. He said he had completely sold out of 2GO early this year and even signed certain conditions.
“I was made to sign a non-compete agreement,” he said.
Perhaps more than other companies, 2GO has a rather complex multilayered ownership structure due to the fact that it was mainly held by foreign funds, one from Kuwait and another China. It was through those funds that businessman Dennis Uy and the SM Group got their shares.
Tagud, who used to control Negros Navigation Co., the main owner of 2GO via its 88- percent stake, eventually became a minority shareholder with the entry of the foreign funds since 2008.
Of course, the very nature of investment funds means they had to exit at some point. Tagud was counting on eventually buying them out. He needed to tap third parties, either strategic partners or more loans, since he lacked the money.
But for various reasons, none of those deals panned out, and Uy and the SM Group eventually gained control of 2GO in 2017 and Tagud retired in April.
We wouldn’t feel sorry for Tagud. He apparently bought his stake in Negros Navigation, then under corporate rehabilitation, for P5 million from Metro Pacific Investments Corp. back in 2006.
(Incidentally, MPIC chair Manny V. Pangilinan confirmed with Biz Buzz they were considering buying 2GO a year ago but found the funds’ asking price too high).
Tagud did not reveal his selling price but going by details found in the IPO prospectus of Uy’s Chelsea Logistics, we’d say it’s at least a multi-billion-peso sum.
The proceeds would likely go toward new resorts he is planning in Coron and El Nido, both in Palawan.
Why tourism, you might ask: “I’m not allowed to do anything,” Tagud quipped.
“I’m not supposed to engage in anything that moves people and goods from one place to another,” he said, adding competition was so stiff in other areas. “I will go somewhere where I still have a chance.”—MIGUEL R. CAMUS
Rebranding RCBC
After a challenging episode last year when it found itself at the epicenter of an $81-million cross border money laundering scandal, Yuchengco-led Rizal Commercial Banking Corp. has embarked on a rebranding program to reassert itself as a local banking force.
The rebranding started last weekend with the launch of a new logo via social media. The new logo adopts a sky blue backdrop with a leaner, simpler hexagon and the name RCBC in white font. This hexagon is the age-old symbol of the Yuchengco group of companies, each corner of which represents a major business under the conglomerate.
In the case of RCBC, now led by veteran banker Gil Buenaventura, the rebranding is a “thank you” gesture to loyal customers “for sticking with us through thick and thin,” a top bank official said. It’s telling the customers “we have their backs” and “we believe in you.”
The bank used a softer blue tone, as opposed to dark blue in the old logo, as this color is seen to appeal to millennials and the middle income segment.
Apart from the rebranding, RCBC also recently launched “RC,” deemed as the first-ever bank-based chatbot in the country. Using artificial intelligence to simulate conversation with human users via Facebook messenger, RC can help the user find the nearest RCBC ATM or branch, explain about the bank’s products or even offer sample computations for loans. —DORIS DUMLAO-ABADILLA
Early Christmas gift
Christmas came very early to the tight-knit Xavier community after the Ocier siblings gave a “modest” donation to the school, resulting in the renaming of the former Jesuit residence—built on the highest point of Xavier School Greenhills—into the Benito Tan Guat and Ng Siok Dee Ocier Student Leadership Center.
Leading the blessing and inauguration of the center on July 8 was Willy Ocier, vice chair of Belle Corp., on behalf of his siblings—Marian Leong y Peña, Nancy Ng Hui y Ocier, Henry Ng Ocier and Jerry Ng Ocier.
Ocier, 60, described his parents as Chinese immigrants from modest means who invested in the potential of the Philippines. They also believed strongly in providing top quality education to their children, thus the siblings did not hesitate to donate to the school where the Ocier boys studied.
“They were children of their times. During the tumultuous upheaval in the China of the 1930s, they sought to make their home in the Philippines. Despite not having the benefit of Western-style education, they steadfastly focused on and pursued together the dream of making a ‘better life’ for themselves and their brood of five children. Under their sage tutelage and counsel, they guided the family and weathered every challenge thrown at them until the dream came into fruition,” the dedication to the center read. “For Benito Tan Guat and Ng Siok Dee Ocier, education is of paramount importance. This is their enduring legacy. For this, we, their children, are eternally grateful.”
Tan Guat, or Go Pok in the Chinese community, is perhaps better known for having led from 1983 to 1986 the so-called Binondo Central Bank, which came up with precious dollars that the business community desperately needed during those times of scarce foreign exchange to keep operations afloat.
Ocier helped his father run the informal bank, and that was just one of the character-building experiences he shared with his father, who, like his mother, passed away last year. Tan Guat was 88 and Ocier was 86 and both passed within just two months of each other.
For Ocier, the naming of the leadership center is just another way for him to honor his parents and the school that helped mold him into the man he is today.—TINA ARCEO-DUMLAO
Unusual bidding questions
It must be tough being Energy Regulatory Commission (ERC) chair Jovy Salazar nowadays. Already under preventive suspension for multiple administrative cases—and with no less than President Duterte asking him to step down—more adverse information is emerging from the regulatory agency from the time the former was in power.
Of course, this adverse information comes from his critics but, if they are to be believed, the suspended ERC chief supposedly is entangled in all sorts of bidding “issues.”
There is, of course, that controversial audio-visual project awarded to a bidder that led to the suicide of ERC director Francisco Villa last year. From pest control services to software subscriptions—all for the use of the Office of the Chairman, we were told. There is new evidence that another procurement process for some office renovation was ordered under murky circumstances.
But the renovation job done on Salazar’s office (at a price tag of P 1.5 million, according to insiders) would not have stood out had the correct process been followed from the start, according to his critics in the agency.
Records from Salazar’s own office showed the agency paid more than P800,000 to a certain PrimeArt Builders in April 2016 for the renovation work but, curiously, it was only half a year later in October 2016 that the ERC posted the corresponding request for quotation on the government’s bidding website. By then, several hundred thousands of pesos more had been paid to three other suppliers for labor and construction materials beginning in September 2015.
What is more unusual for the conservative bureaucrats in the ERC is that part of the sum paid to PrimeArt Builders went to somewhat stylish shower partitions in the ERC head’s bathroom, as well as sound insulation paneling that shielded those outside the office from hearing whatever sound is coming from the loo.
Why the need for sound insulation for the bathroom? “Who knows?” replied our naughty agency source, with a wink.—DAXIM L. LUCAS