Justina F. Cailangan, director of the SEC’s Corporation Finance Department, ruled that "Mr. Romulo is not qualified to be even nominated as an independent director of EPCIB." She also directed the EPCIB to "show cause why it should not be sanctioned under Sections 20 and 54 of the Securities Regulation Code" for "incomplete disclosure of information in then information statement filed by EPCIB" relating to Romulo’s qualification.
GSIS president and general manager Winston Garcia earlier filed criminal charges against five officials of EPCIB for allegedly conspiring to have Romulo elected as an "independent director" of the bank, knowing his lack of qualifications, and withholding the information from the bank’s stockholders, other directors and the bank’s nomination committee.
Accused by Garcia in his complaint-affidavit dated July 1, 2005, were EPCIB board chairman Antonio Go, corporate secretary Nilo T. Divina and directors Anthony Conway, Peter Go Pailan and Romulo himself.
In a letter to Divina as corporate secretary, dated July 1, 1005, Callangan revealed that EPCIB did not disclose in its information statement for 2004 the "fact" that Romulo was the chairman and member of the board of directors of Equicom Systems Management Inc. (ESMI).
"ESMI is majority-owned by Equitable Computer Services Inc., a company that is majority-owned by Equitable Development Corp. (EDC), a substantial shareholder of EPCIB. EDC is wholly-owned by the Go family, including Antonio L. Go, the present chairman of EPCIB and Equity Development Corp. and K&L Holding Corp., also substantial shareholders of EPCIB," said Callangan.
The SEX official pointed out that under the Securities Regulation Code, an independent director must be "a person who is independent of management and free from any business or other relationship which could or could be reasonably perceived to, materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director." She added, "In view therefore, Mr. Romulo is not qualified to be even nominated as an independent director of EPCIB.
In his complaint against the EPCIB officials, Garcia said "Such scheme perpetuated by Atty. Romulo, Mr. Go, Mr. Conway and Atty. Divina was aimed at preserving the artificial majority that the Go family have in the board of directors of the bank to the prejudice of the minority stockholders, including the GSIS and the Social Security System (SSS), who were all deprived of their right to have a legitimate and qualified independent director in the board.
Garcia served notice that in the stockholders’ meeting of EPCIB on July 19, the GSIS would reclaim one of two board seats of GSIS in the bank. Last year, Garcia complained, the Go-controlled EPCIB board deprived the GSIS of one of its two representatives in the board, replacing one of them with an "independent" director beholden to the Go family.
Garcia said he was taking the move to protect the interests of the 1.5 million members of the GSIS, including those of the SSS. Together they hold more than 40 percent of the bank’s stockholdings.