Meralco controversy: Will it redound to consumer benefit?

The annual Meralco stockholders’ meeting ended with the Lopez family retaining control of the power utility firm for now, but the controversy is far from over with GSIS chief Winston Garcia planning to file a case in court and oust Manolo Lopez from the helm of Meralco. The two sides have been engaged in a bitter struggle with accusations flying from both sides. On one hand, you have Garcia alleging that inefficiency, bad management and “sweetheart deals” between Meralco and other Lopez-owned power generating companies should be blamed for the high cost of electricity in the country. On the other hand, Meralco maintains that the Value Added Tax and other taxes slapped on the consumer plus the high generation charges from Napocor have driven up the power rates. 

The consuming public however is less concerned about which side is what or who gets to control Meralco. At the end of the day, what really matters to them is for their electricity bills to become lower.  Of course, the suspicion is very strong that there’s more to this than meets the eye and that what’s really happening is a “power play” which ironically has something to do with power. Government is being accused of trying to grab control of the power firm from the Lopezes in order to neutralize the family’s media outfit, ABS-CBN, which is perceived to be critical of the Arroyo administration.

If one were to go by what happened during the 14-hour long corporate battle last Tuesday, it wouldn’t be too hard to guess that things are just starting to get heated up. The Lopez group may have won that round but the pugnacious Garcia is not ready to throw in the towel, decrying the proceedings as bogus and vowing to pursue his objective of changing the Meralco management.

Garcia’s attempt to stop the counting of proxy votes through a cease and desist order (CDO) from the Securities and Exchange Commission’s Compliance and Enforcement Division fizzled out when Meralco lawyers declared the CDO null and void, citing violations of due process plus a number of other reasons such as the lack of an official SEC seal, absence of a docket number to indicate the dates when it was filed and received, and the fact that it only had one signature – that of the officer-in-charge and not by the commission sitting en banc.

That Meralco’s corporate officers could question the validity of an SEC order also focuses attention on the Commission’s ability – or the lack of it – to enforce its orders. Sen. Juan Ponce Enrile even went as far as to dare the SEC to punish Meralco for defying its orders, twitting the Commission for being “inutile” and saying it should be abolished if it cannot make its orders stick.

While the Palace has joined the fray by warning Meralco that it was answerable for defying the SEC order, officials from the power utility firm insist there was no violation of the order since it was not valid and lawful. As it is, the proceedings were allowed to go on but with the caveat that it will be subject to an SEC review later on.

Obviously, the SEC should have more teeth especially when it concerns public utility companies where the welfare of the people are at stake, and if there’s a possibility that government funds – and therefore the people’s money – invested in a company could end up getting shafted. This could possibly happen considering that several billions have been lost due to the plummeting of Meralco stocks recently. 

A lot of people still remember the Enron scandal which shook the US financial world. Enron had been manipulating accounting procedures for five years to declare false profits and hide its losses, with executives using insider information to chuck their stocks before the share prices plummeted – resulting in the eventual collapse of the company and the ruin of many stockholders.

While the scandal resulted in new laws that strengthened the ability of the US Securities and Exchange Commission to investigate accounting fraud and allowed for more strict government oversight of financial reporting as well as the creation of the US Sarbanes-Oxley Act providing for stronger penalties, many felt that the US-SEC acted slowly on the investigations, failing to spot “red flags” in Enron’s dealings. As a matter of fact, a Senate report blasted the SEC for its “systemic and catastrophic failure” to properly discharge its responsibilities.

The bottom line in this whole Meralco controversy is for the issues to be resolved, and to see to it that the concern of the people – that is, for power rates to go down – is addressed. Otherwise, the people will dismiss this as just another power play between two giants – the government and the Lopez family – fighting over money and power.  As one exasperated Filipino put it, in the end it is the consuming public that will end up getting “consumido” over this whole brouhaha.

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