HGL hits Semirara for failure to disclose court cases

HGL Development Corp. has called the attention of securities regulators to a possible violation of disclosure rules by Semirara Mining Corp., the country’s largest coal producer.

HGL, a company owned by businessman Henry Lim, accused Semirara of failing to disclose material information with respect to several court cases involving a 367-hectare pasture lease property which Semirara allegedly illegally occupied since 1999.

HGL is the holder of a forest land grazing lease agreement (FLGLA) entered into with the Department of Environment and Natural Resources on Aug. 28, 1984. The agreement allows HGL to occupy the 367-hectare property for a period of 25 years, or until Dec. 31, 2009.

Nestor Leynes III, HGL spokesperson, said Semirara failed to disclose a decision handed down by the Supreme Court which ruled with finality that HGL has a clear and unmistakable right to the possession of the property as a holder of a pasture lease agreement. The ruling was issued in December 2006.

Leynes said Semirara also failed to disclose a Court of Appeals’ decision dated June 18, 2007 reversing the cancellation by the DENR of HGL’s land lease, saying “a validly issued FLGLA can not be arbitrarily cancelled or whimsically withdrawn without violating procedural due process.”

“These are all material information that should have been disclosed to the public. It is Semirara’s duty as a listed corporation to make a full and complete disclosure of all material information that may unduly affect the investing public,” Leynes said.

Leynes said the Supreme Court’s ruling may have an adverse impact on Semirara which is using the property for its mining operations.

According to Leynes, Semirara was allowed to use the property under litigation for the mere purpose of constructing an access road to its mining site at Panaan, Semirara. However, Semirara expanded the concrete road, built several buildings including its own administrative offices and residences for its employees.

Leynes said Semirara even conducted excavation and blasting activities near the property and eventually barred HGL from going to the site.

“Semirara made selective disclosures on the outcome of its cases against HGL choosing only to disclose that are favorable to its business operations. This selective disclosure may effectively mislead the public as to the true state of the business operations of Semirara,” said HGL corporate secretary Ma. Lourdes Maduli.