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Biz Buzz: Lopez firms’ ‘unpaid obligations’

/ 05:14 AM September 01, 2017

President Duterte’s recent statement that Benpres Holdings—the flagship holding firm of the Lopez family—had unpaid debts with the state-owned Development Bank of the Philippines surprised many listeners who were caught off guard by the revelation.

But those who remember their history were not surprised. That’s because word about these unpaid obligations of the family firm to the government financial institution first surfaced in 2011.

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Specifically, this information surfaced at the height of the previous administration’s drive to pin down businessman Roberto Ongpin for his allegedly behest loans from DBP that were used to acquire shares in Philex Mining. The loans were, in fact, repaid ahead of schedule and the charges failed to prosper, with the government’s case being dismissed at the Sandiganbayan and the accused acquitted.

But a thorough examination of DBP’s books at that time did reveal certain obligations of Lopez firms that went unpaid, and were eventually written off.

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How much? A total of P1.67 billion at that time.

To be exact, DBP in 2006 wrote off P710 million in loans of Maynilad Water Services Inc. (which soured in 2003); P591 million in loans of Bayan Telecommunications (soured in 2001); P207 million of Central CATV Inc. (soured in 2001) and P157 million of Benpres Holdings Inc.—all Lopez-owned or -controlled firms at that time.

And the other borrowers mentioned by the President? We’re not sure, but at that time, other big borrowers also saw their bad debts written off.

Other firms with bad loans then included Bacnotan Steel Industries, which owed the bank P478 million in 2006; J.S. Gaisano Inc., P361 million; Steel Corporation of the Philippines, P342 million, and Negros Navigation Corp., P300 million. These were among 795 other delinquent borrowers at that time.

Documents about the deal obtained by the Inquirer from banking sources showed that the bank had, in fact, written off P9.56 billion worth of bad loans, with the controversial Lopez group loans accounting for 17 percent of that total.

A list of soured loans of the DBP at that time showed that the combined loans to the Lopez group accounted for a substantial portion of the portfolio, but that there were other corporate loans that were also put up for so-called special purpose vehicles— a move meant to free the government bank of bad loans that were weighing down its balance sheet.

The write-offs were made possible by the Special Purpose Asset Vehicle Law of 2002, which was enacted to help the Philippine banking system dispose of accumulated bad loans then estimated at P520 billion—equivalent to an alarming 12 percent of the size of the local economy.

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Of course, whether such a justification can cool the President’s temper against the Lopez group and its media unit ABS-CBN remains to be seen, but Biz Buzz won’t be holding its breath. In any case, abangan! —DAXIM L. LUCAS

Speaking of which …

Media giant ABS-CBN Corp. is pursuing several avenues in its expansion within the digital arena. One way involves an old trick: Rewarding with points.

Apparently, ABS-CBN launched a loyalty program called ““Kapamilya, Thank You.” It has done quite well since its July 2017 launch. We heard it recently hit a million members.

The program is pretty straightforward. Register online and earn points from watching its TV shows or iWant TV, payments to ABS-CBN’s SkyCable or using ABS-CBNmobile.

Doing any of these activities will, among others, earn users “thank you” points.

Those points allow users to gain discounts on ABS-CBN merchandise, mobile data freebies and premium access to certain content.

The more generous users can also donate points to ABS-CBN Lingkod Kapamilya Foundation. —MIGUEL R. CAMUS

If Jaza were president

What if the seventh-generation Zobel brothers ran the Philippines for six years? What would be their top three priorities?

This was an interesting hypothetical question asked by financial literacy advocate/writer Rose Fausto to Jaime Augusto Zobel de Ayala (Jaza) and his brother Fernando in a well-attended Shareholders Association of the Philippines (SharePHIL) forum yesterday, where the two were keynote speakers on corporate governance.

For Jaza, the first thing to do would be to build trust in domestic institutions, particularly the tripartite system of government. There is separation of powers among the three branches of the government—executive, legislative and judiciary.

Another priority for Jaza is to uphold the rule of law, noting this was a basic principle for society to operate in.

Likewise an important priority would be to “overweight” education. With a rapidly changing global environment, Jaza said a robust and progressive educational system was imperative.

Fernando Zobel de Ayala, for his part, said the government must have a long-term vision with projects (e.g. infrastructure) to scale. At the end of the day, he said continuing or increasing the momentum of economic growth would be necessary for the Philippines. Admittedly, he said there was a lot of impatience that growth wasn’t trickling down, adding that conventional wisdom (among economists) states that it would take 10-15 years of sustained 6-8 percent growth to really make a difference. As such, it’s imperative for him to identify and support new engines of growth.

Fernando also bats for greater trust between the government and the private sector and for the private sector to be given greater opportunity to do its share in growing the economy. —DORIS DUMLAO-ABADILLA

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TAGS: ABS-CBN Corp., Benpres Holdings, Development Bank of the Philippines, Jaime Augusto Zobel de Ayala (Jaza), Lopez firms
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