Biz Buzz: Diversified fights back

Businessman Ramon Garcia’s Diversified Securities Inc. has turned the tables against those who complained with the Philippine Stock Exchange that it had sold shares in Chemical Industries of the Philippines (CIP) and LMG Chemicals without authority.

In a letter dated March 6 submitted to the PSE, DSI’s legal counsel Perpetuo Lotilla Jr. counter-claimed that the complainants—3G Holdings, A2K Holdings, Chemholdings Corp. and CIP (which Ramon claims to be “minions” of his estranged brother Antonio Garcia)—were the ones that had committed fraud and perjury against DSI and the PSE itself.

These complainants made false representation when they assigned shares in CIP and LMG in favor of nominees Kho Cing Siong and Ricardo Carlos Gonzales and instructed DSI to cross the shares in favor of these people who afterwards failed to pay for the shares within three business days after the transaction was crossed last December 28, the letter said. “Complainants planned to make Chemphil Manufacturing Corp. (CMC) lend money to Kho and Gonzales so that the latter would be able to settle their accounts with DSI,” the letter said, adding that Ramon (also a CMC stockholder) objected because CMC was not authorized to engage in lending and no board resolution was passed authorizing the loan.

Meanwhile, the lawyer said these entities had committed perjury when they accused DSI of violating instruction, noting that the stock brokerage was only following orders meant to widen the public ownership of LMG and CIP to comply with PSE rules.

DSI thus said it must be the complainants along with the defaulting buyers (Kho and Gonzales) that must be penalized for “stock manipulation, fraud and misrepresentation committed against DSI and PSE.”—Doris C. Dumlao

Failing mark?

The success of the Philippines’ tourism campaign hinges partly on how successful the government is in convincing American authorities to restore the country to Category 1 status as far as the US Federal Aviation Administration is concerned (after having been downgraded a few years ago to Category 2 status).

If our sources are correct, however, it could be some time more before the local aviation industry experiences Category 1 treatment again.

This was after FAA officials, during a visit to the country a few weeks ago, supposedly noted continued shortcomings in the government’s aviation regulator, the Civil Aviation Administration of the Philippines, or CAAP. Mostly, their preliminary findings indicated that significant progress continued to be elusive as far as CAAP’s technical abilities to regulate the aviation industry was concerned (including the issue of having insufficient skilled technical personnel like employing so-called “check ride” pilots, whose wages tend to be at the top end of the range).

According to our sources, there was a good chance that the Philippines would remain a Category 2 nation when the full FAA review team visits the country in the middle of the year, barring a miracle.

This is worrisome news for Philippine Airlines, which is expecting delivery of its third Boeing 777-300ER around the same time, and a fourth one by year’s end. PAL officials said they could still assign the third B777 to the Manila-Sydney route, but a fourth B777 would be problematic—and completely underutilized—sans an upgrade to Category 1.

The government better get its act together.—Daxim L. Lucas

CDC rebuttal

Clark Development Corp. president Felipe Antonio Remollo wrote to say it was within his ministerial duty to sign contracts that have already passed board scrutiny and approval.

As such, he said the two recent lease agreements that were alluded to in an earlier item as “sweetheart deals” had already undergone long vetting processes culminated by a board approval before he affixed his signature on them. He also made the following clarifications:

The proposed hotel-casino project area is along C.M. Recto Ave. (bounded by Kalayaan Ave. and Creekside Road) and not the corner lot on M.A. Roxas (Clark’s main thoroughfare).

The effective lease rate would actually be $0.799 a square meter/month and not only $0.60/sqm because aside from the basic $0.60/sqm raw land rate (which he said was the highest in the area so far), there were other commitments, including spending for soil erosion and flood control/mitigation measures, which otherwise would cost CDC P24 million in 2012. Another is the cost of about P5 million for the beautification and landscaping of CDC-owned frontage area. He added that the new hotel-casino would bring more than 250 full-time jobs during regular operations and thousands more during construction with a project cost of at least P1.5 billion in four years. To show the financial capability of the proponent to pursue the project, it paid more than $2 million three days after the signing of the lease agreement.

On the item about a lease agreement for the gasoline station fixed at only $0.40/sqm a month, CDC said the area being alluded to was leased out not for a new gasoline station but just to provide an additional parking area for the customers of an adjacent shopping center. The subject property is on a piece of lot where nothing can be built on being on the flight path (and therefore subject to airport height restrictions). The current lessee, which has a commercial project (Northwalk Shopping Center) with an existing gasoline station as its sub-lessee, proposed to lease the 5,000 sqm of adjacent open space at a lease rate of $0.40/sqm.

Remollo added that it was unfair to ascribe political color to two “honest-to-goodness” projects proposed by reputable and capable proponents, noting that the proponent of the first ever five-star hotel-casino in Clark was a Taiwanese group with various investments in Taiwan and Macau while the open space proponent also has big investments in Metro Manila and Central Luzon. “There is absolutely nothing political in these investments in Clark,” Remollo said.—Doris C. Dumlao

CDO, Iligan on the mend

By most accounts, the situation in Cagayan de Oro City and Iligan City has improved a few weeks after the onslaught of Tropical Storm Sendong, which caused devastating flash floods and caused untold misery.

Of course, big conglomerates and corporations did their part in helping the local population get back on their feet, but a lot of help also came from people who did not toot their own horn.

Among them were former Sen. Migz Zubiri who—at the height of the calamity—sent all the firetrucks from Bukidnon with fresh water to be distributed in CDO and Iligan.

The much-criticized CDO Mayor Vicente Emano also did his part, organizing friends to put up relief centers and coordinating with Smart Communications for the setting up of free telephone calls. Father-and-son business tandem Reghis and Mikee Romero also contributed funds, while party list Rep. Ted Haresco, Simeon Datumanong and businessman Pepito Alvarez scooped up all the bread and bananas they could find from public markets and organized “lugaw” brigades for the hungry victims. The Rotary Club of Manila also distributed some 1,500 slippers to school children in the area. Unsung heroes, all of you.—Daxim L. Lucas

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