SEC backs PSE’s Arroyo on prexy choice

The Securities and Exchange Commission (SEC) has come to the defense of Philippine Stock Exchange (PSE) chairman Alicia Arroyo who is being criticized by several PSE directors for rushing the process in the selection of the next bourse president.

An SEC official who requested not to be named said there was nothing wrong with Arroyo’s installation of a selection committee that will nominate potential candidates for the PSE presidency. "I guess she did it because of the urgency of filling up the position. I don’t think there was anything wrong with it," the source said.

The same source pointed out that the board would still have the final decision on who should replace outgoing PSE president Cayetano Paderanga. "The final say is with the board. Those that will be shortlisted by the committee will be subject to voting by the board. If they feel that the candidates are not qualified or the choices are limited, then the board can recommend other names whom they feel will be suitable for the position," the source added.

PSE directors Vivian Yuchengco, Francisco Villaroman and Ismael Cruz have questioned the arbitrary manner by which the selection committee was appointed and the haste in appointing a new president when the guidelines on the nominations committee have yet to be firmed up by the board. The committee had until yesterday to submit its nominees for the PSE post.

The Yuchengco-led group said the board would have to define first the rules for the nomination of candidates and selection of the next president, the membership of the committee, its duties and limits and the criteria for short-listing to avoid problems encountered in the past.

Arroyo said the selection committee, which she and Paderanga are part of, will review its composition and other matters raised by the Yuchengco group.

Completing the three-member selection committee is PSE independent director and PLDT treasurer Annabelle Chua.

Meanwhile, the Yuchengco group had sought the opinion of the SEC on whether Paderanga is qualified to sit as independent director of the exchange.

The SEC defines an independent director as someone who is independent of management, and free from any relationship which would materially interfere with his exercise of independent judgment in carrying out his responsibilities as director of a corporation.

"Based on that definition, I don’t think he qualifies as independent director of the PSE. He is sitting as chief executive of PNOC Development and Management Corp., a sister company of a listed company. So how can he be independent? Out of delicadeza, I think he should resign totally," Yuchengco said.

Paderanga is also president of CIBI, a credit information bureau that collates business information for the private sector and publishes the top 5,000 firms with the SEC.

The SEC official said the Commission has received the query on that matter and is now reviewing it. "We’re still studying it. We cannot comment until such time that we have reviewed it," the official said.

Arroyo first figured in a controversy with Yuchengco after the PSE sold 40 percent of its shares to private financial institutions. The transaction was widely criticized by Yuchengco and other brokers, Filomeno Francisco and Ismael Cruz saying it was done in undue haste and was disadvantageous to the exchange since the shares were sold at a very "low" price.