In a recent congressional hearing, a Republican congressman from New Jersey lectured former WorldCom chief executive Bernie Ebbers that "if you violate the public trust, if you flush down the toilet the life savings of individuals, you should go, and you will go, to federal prison."
The fact that Republican politicians, long known for their cozy ties with Corporate America, are going out of their way to project a strong image against white collar crime, suggests that corporate governance has assumed a more important role than we might have thought, for our future.
Indeed, the Post article quotes Lorraine Bywater, a single mother in Palm Springs, Calif., striking a representative tone. "They should make all of those executives sell their million-dollar homes to pay all of those people back, then they should be thrown in jail," she said. "They really hurt people."
These are words that could have been said by thousands of Filipino victims of corporate crime, from those cleaned out by mushrooming pyramid schemes to the religious schools and other institutions who lost hundreds of millions of pesos to the more sophisticated financial operations in Corporate Investments Philippines, Inc. (CIPI).
President Gloria Macapagal-Arroyo can win a lot of brownie points if she parades suspects dressed in Hugo Boss or Ermenegildo Zegna suits, for a change. This will also disprove charges that her "get tough" anti-crime program only targets the poor and powerless but lets the well connected get away with no fear of prosecution.
In fact, all that President Arroyo has to do is prod the Justice Department to reconsider its dismissal of a complaint filed by current officers of CIPI against past officers for possible white collar crimes that caused CIPI to file for voluntary insolvency. That left many people and even charitable institutions holding an empty bag. The evidence seems pretty solid in the complaint. How can the DOJ prosecutor say lack of evidence? It should get to court and be judged on the merits.
The added incentive for President Arroyo to act is that her alma mater, Assumption College may get a better chance of recovering close to P13 million it lost in CIPI money market transactions. White collar corporate crimes deliver better returns than armed robbery. That’s why it would be sheer hypocrisy for Ate Glo to target armed robbers and allow white collar criminals to go free.
Let me continue with the excerpt of the complaint filed with the Justice Department against past CIPI officers to illustrate what I mean by the need for President Arroyo to also get tough on corporate white collar crime. Here is that portion of the complaint.
"For instance the checks for the loan agreement dated Nov. 9, 1999 in the amount of P106,000,000.00 were issued to Lopzcom Realty Corporation but were never received by it. Instead, these checks ended back with CIPI and booked as investments of other entities. Clearly, the loan transactions between CIPI and Lopzcom Realty Corporation were simulated…"
The other big reason why CIPI was able to snare a lot of trusting investors is the commanding presence of San Miguel Corporation in CIPI’s board. Five of the 10-member board are from San Miguel. CIPI’s Chairman of the Board was in fact, the Chief Financial Officer of San Miguel, a certain Delfin Gonzalez Jr. He had since been purged from San Miguel by Danding Cojuangco after San Miguel also lost another bundle in Urban Bank where Gonzalez also sat in the board. If you had a clueless CFO like that, it is like having Andersen as an auditor. CIPI had both.
Apparently, Gonzalez and his band of equally clueless directors from San Miguel (also thrown out by Danding), merely allowed the CIPI management to use the good name of San Miguel in enticing investors. I have a copy of the Powerpoint presentation for potential investors used by CIPI management and it made a big deal of the presence of the retirement funds of San Miguel and Coca Cola Bottlers as well as the Archdiocese of Cebu. In their words, they were described as a "solid stockholder base."
Of course, Danding is right in disowning Gonzalez and his clueless band. Technically, CIPI is not a subsidiary of San Miguel, even if it was presented as virtually one in the past. San Miguel is as much a victim of the old CIPI management, having lost a significant amount of its retirement fund money.
The victims, however, are running after San Miguel because there seems to be no one else to run after. In a post-Enron environment, how about running after SGV? The auditor of CIPI from the start is SGV when it was part of Andersen. No wonder they didn’t detect anything was amiss. They didn’t in Victorias, remember? As in Enron. They never do.
Maybe, San Miguel should meet with the victims and work together to go after the culprits. And perhaps more as an act of benevolence than anything else, San Miguel should help the new management to get back on its feet so that the victims can eventually get their money back.
Actually, I am surprised why some of the victims fell for the scam. The fact that high interest rates were offered for less than prime corporate papers, should have been signal enough that such an investment is risky. They let their guards down, perhaps thinking that people who profess to be holy can do them no wrong.
As in similar tragedies, the lesson learned is simple: if it is too good to be true, it isn’t. Also, God didn’t warn us about greed being a deadly sin for no reason.
Chairman Bautista can be depended on to reply to such queries quickly. And I got my reply the following day or Thursday last week. "The Commission has approved the Amended Articles of Incorporation of PICOP extending the term of the corporation to another 50 years. Accordingly, the corporation continues its existence from and after original expiring date of its term or from March 31, 2002."
Why did President Arroyo have the impression that the reason Picop is getting nowhere with DENR is its inability to renew its corporate life with SEC? Is President Arroyo being kept in the dark on the real score? Or is she saying what DENR is saying in the hope that no one will check?
These two women were walking through the forest when they hear this voice from under a log. Investigating, the women discovered the voice was coming from a frog:
"Help me, ladies! I am an investment banker who, through an evil witch’s curse, has been transformed into a frog. If one of you will kiss me, I’ll be returned to my former state!"
The first woman grabbed the frog and stuffed it inside her handbag.
The second woman, aghast, screamed, "Didn’t you hear him? If you kiss him, he’ll turn into an investment banker?"
The first woman replied, "Sure, but these days a talking frog is worth more than an investment banker!"
Boo Chanco’s e-mail address is bchanco@bayantel.com.ph