Court denies request for TRO against sale of ETPI shares to Ongpin group

The Makati Regional Trial Court has denied the request of AGN Philippines Inc., a wholly-owned subsidiary of Australian Gigahertz Network International Pty. Ltd., for the issuance of a temporary restraining order against the sale of Eastern Telecommunications Philippines Inc (ETPI) shares to ISM Communications Inc.

AGNP lawyer Andrew Inocencio, however, said the company would appeal the court’s decision. AGNP owns 40 percent of ETPI.

AGNP was contesting the agreement entered into by ISM with Aerocom Investors and Managers Inc. that would allow ISM, a company controlled by former Trade and Industry Minister Roberto Ongpin, to own 17.7 percent of ETPI.

It would be recalled that ETPI director and former chairman Roger Buckeridge filed a complaint before the Makati RTC seeking to restrain the transfer of ETPI shares to ISM, citing a government policy that "recovered ill-gotten wealth should not be offered to former (Marcos) associates."

Government has two seats in ETPI’s five-man board for overseeing the 20 percent sequestered shares of Polygon Investors and Managers Inc. in ETPI.

Another seat is held by a Filipino director, Pablo Lobregat, through Aerocom. The remaining shares are held by mobile phone company Smart Communications.

As of 2003, ETPI operates an international tecommunications gateway and had around 4,000 corporate clients and 12,000 residential customers, with more than 50 percent of the country’s local Internet traffic going through its network.

AGNP earlier threatened to file criminal charges against the representatives of the Presidential Commission on Good Government (PCGG) who voted to replace Buckeridge from the position of chairman in ETPI.

Buckeridge was replaced by Pablo Lobregat in a hastily called meeting of the board of directors of ETPI last May 10.

Inocencio said the two PCGG appointed directors are liable under Article 3 (e) of Republic Act 3019 which declares unlawful an act of any government official "giving any private party unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence."

According to Inocencio, Ongpin’s group has been trying to acquire ETPI since last year but its efforts have always been blocked by the group of Buckeridge. ISM even filed suit in June last year with the Makati RTC to compel ETPI to allow ISM to conduct a due diligence study on the company. The case, however, is still pending in court.

Inocencio, however, clarified that ETPI is in good financial standing and his group is now in the process of preparing documents listing the company’s assets.

Inocencio said this controversy sends the wrong signal to foreign investors who have invested or are planning to invest in high-growth industries in the Philippines, and could strain Philippine-Australian relations.

AGNI has even appealed to the Australian Government to request the Philippine government to immediately intervene in the case to restore good governance in ETPI.

AGNP bought its shares in ETPI from its long-time foreign shareholder, Cable & Wireless Plc. The two largest investors in the Australian syndicate, owning 70 percent, are publicly-listed company Union Resources Ltd. and a venture capital fund managed by Allen & Buckeridge Asset Management Ltd.