Poro Point takeover?

Many of our coffee shop friends trekked down from Baguio City last week with the latest buzz from the Summer Capital: an impending take over by the Bases Conversion Development Authority or BCDA of the Poro Point Port in La Union.

I asked my coffee pals to check their facts. For a while I thought they were mistaking Poro Point for Camp John Hay in Baguio City. It will be recalled that BCDA was poised to take over that resort from the group of Bob Sobrepena due to billions of pesos in unpaid back rentals. Somehow, that threatened take over by BCDA did not take place leaving all of us puzzled and in the dark. Was there a settlement, formal or informal? No one knows at this point.

But our coffee shop gang confirmed that the take over by BCDA will be made not at John Hay but at Poro Point Port. Northern Luzon businessmen are now reportedly closely watching a rumored take over of the Poro Point Port from the Poro Point Industrial Corporation or PPIC of which 70 percent is owned by Bulk Handlers, Inc.

The rumored take over, the business community there says, is expected to create a wide-scale furor because there does not seem to be any legal basis for a take over, much less a forcible one. The say there is a legal and binding contract between BCDA subsidiary Poro Point Management Corporation and Bulk Handlers Inc. Incidentally, BCDA and the subsidiary are both chaired by former RCBC employee Filadelfo Singson Rojas Jr.

The business community is reportedly puzzled as to why former AFP Chief of Staff and currently BCDA president Narciso Abaya appears hell-bent on taking over Poro Point from the Bulk Handlers group. The locals point out that there has been no breach of contract by the latter. Sources say the contract with the Bulk Handlers group guarantees BCDA annual revenues of P50 million plus 30 percent shareholdings in PPIC.

And it is a confirmed fact that the group has religiously paid BCDA that P50 million yearly very religiously.

In fact, the businessmen point out, if there is a breach of contract, it could be on the part of BCDA. It appears the deal was for BCDA to deliver 30 hectares of the San Fernando seaport to the Bulk Handlers group but it was never done. Nevertheless, the Bulk Handlers group reportedly never raised the issue but simply kept the P50 million pouring into Abaya’s coffers annually.

This is where the Bulk Handlers group differs from the Sobrepenas. Bob Sobrepena refused to pay billions in rental arrears for John Hay because BCDA allegedly failed to deliver its part of the deal, including some land. But Abaya, one year after that saber-rattling episode, is yet to kick out Bob and take over John Hay. Indeed, it appears to have been mere saber-rattling and Bob probably knew it.

But the Northern Luzon communities are reportedly worried that the planned forcible take over of Poro Point Port could be for real. In contrast to the John Hay misadventure, BCDA is quiet this time about its plan. Apparently, Abaya is banking on the element of surprise upon the advice of his closest lawyer. We hope Abaya has carefully weighed his lawyer’s counsel.

The business community is now abuzz with speculations regarding Abaya’s latest planned move. Rumors are that BCDA would turn over the seized port to another private operator. Some prominent political names are being mentioned as being behind the interested group. We will not, however, add fuel to this game of speculation.

What the business communities are waiting for is what the Office of the Government Corporate Counsel will do in this brewing controversy. Our in-the-know coffee pals recall that the OGCC has ruled some time ago that the BCDA contract is valid and binding. Rumors are the OGCC might reverse its decision triggering BCDA’s take over of the seaport from the Bulk Handlers group.

The reported planned take over by BCDA is sending shock waves not just to the Northern Luzon business community but to investors and businessmen nationwide. Understandably so. If the rumored take over is true, this would go down on record as one of the most bizarre moves ever done by the Arroyo government against a legitimate and highly-respected investor. The Bulk Handlers group are no Sobrepeñas, coffee shop habitués point out. The La Union investors do not operate any bankrupt business here or abroad, they underscored.

It is crucial and important that Abaya and Singson-Rojas clarify – and perhaps put an end – to this scary rumor of a take over. The sooner, the better. People have somehow established the BCDA pattern of doing things, at least under Abaya’s watch. They say when he saber-rattles, as in the billion-peso Sobrepena default, then BCDA won’t take over. But there is no saber-rattling here so the rumors could be true.

If there is one person who should push the BCDA to issue an immediate clarification, it should be Ilocos Sur Governor Luis "Chavit" Singson. The rumors are unfair to the Governor and the BCDA must move quickly to clear his name. This situation is unfair to the Governor. Already, people are linking him to the planned take over of Poro Point, all because some people, including Rojas himself, appear related to him. BCDA should do its part in clearing the governor’s name.

Our coffee shop gang thinks there are two ways to kill this rumor and help calm down the business community and restore the credibility of BCDA. The first is for Abaya to clarify or deny the planned forcible take over outright.

The second is for Abaya to make good his one-year old threat that he will boot out the Sobrepeña group and take over John Hay. Or at least tell the public what happened to Bob’s billion-peso arrears. Has there been a settlement ? If yes, with whom? How come the settlement was never made public? If none, then why is John Hay still in Sobrepeña’s hands?

A legal take over is a BCDA option. But we hope Abaya knows which businessman to kick out. The coffee shop pundits are unanimous in the view that it is better to kick out the one who owes billions than the investor who pours in P50 million to your coffers despite your failure to live up to your part of the deal.

In Adagio

Some accounting firms are like insecure, gullible boyfriends – they dump you at the first whiff of an awful rumor about you, no matter how absurd or unfounded it may be. Take Ernst & Young, for example.

Spooked by a white paper (and probably the ghosts of its own past misdeeds), this Anglo-American firm waylaid San Miguel Corp.’s $750-million hybrid bond offering.

Word has it that Ernst & Young armed-twisted its local partner, SGV, into withdrawing a "letter of comfort" that San Miguel needed for its bond offering.

It didn’t matter that the white paper, which alleged that one of San Miguel’s smaller subsidiaries had "overstated sales," was undated and unsigned. It also didn’t matter that SGV had already greenlighted San Miguel’s bond offering.

San Miguel set out on road shows in Hong Kong, Singapore, London and Geneva, spending millions along the way, precisely because SGV, even with the white paper in its possession, had already signed an opinion that San Miguel’s consolidated financial statements "present fairly, in all material respects, the financial position" of San Miguel and all its subsidiaries.

Yet, Ernst & Young gave weight to the white paper.

Frankly, I am not surprised by this firm’s callous disregard for good-old common sense and fair play.

Ernst & Young, one of the so-called Big 4 global accountancy firms, has had a history of foul-ups that cast doubt over its competency and integrity.

Five years ago, the United Kingdom’s accountancy watchdog investigated Ernst & Young for failing to identify accounting holes that led to the closure of the British assurance firm, Equitable Life.

Policyholders of the assurance firm criticized Ernst & Young for not identifying the possibility of a $2.1-billion shortfall from guaranteed annuities that caused Equitable Life’s problems.

Ernst & Young has already been fined some $750,000 by the South Korean government for tax evasion.

Here in the Philippines, the auditing firm ran into a similar tax-dodging problem. It has been accused of skipping taxes on at least P120 million worth of income.

The latest imbroglio it has gotten itself into involves a "factually erroneous report" (Ernst & Young’s own words) it issued regarding China’s level of bad debts.

The firm had suggested that China’s banks were facing a staggering $911 billion in bad loans. That report was flat-out wrong. Ernst & Young admitted its opinion was "factually erroneous" and "embarassing".

In its apology, Ernst & Young stated: "Upon further research, Ernst & Young finds that this number cannot be supported and believes it to be factually erroneous. We apologize that this erroneous report was issued. We sincerely regret any misleading views that the report conveyed."

The chief author of the report, Jack Rodman, has been quoted as saying, "I am deeply sorry that in our efforts to release this report, I was unable to detect (the) errors."

Seems to me that with its poor track record, people should be singing Ernst & Young a requiem – in adagio.

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