Gov’t mulls control of SMC

The Presidential Commission on Good Government is looking for allies among "independent" shareholders in San Miguel Corp. (SMC) to help in a government bid to gain control of the food and beverage giant, PCGG Chairman Haydee Yorac said yesterday.

"We will see, although we are not in the business of really looking for shares, if we have kindred spirits among the independent shareholders," Yorac said in a press briefing yesterday.

The PCGG has five seats on the 15-member SMC board of directors by virtue of the sequestered shares it holds, equivalent to a 27 percent stake. Two more board seats are also held by the government — one by the Government Service Insurance System (GSIS), and one by the Social Security System (SSS).

"We are talking about one more," Yorac said.

She stressed that the PCGG’s move to gain control of SMC is neither because of any dissatisfaction with the way the corporation was being run nor due to any desire to run the corporation in the belief that the government can run it better.

"We do not make inferences like that. It’s just a question of who will have control of the corporation," Yorac said.

PCGG commissioner Ruben Carranza earlier said the SMC management has yet to respond to their request for the turnover of five percent in treasury shares, in compliance with a Supreme Court ruling that the shares rightfully belonged to the government.

The turnover of these shares may translate into one more government nominee to the SMC board.

Businessman Eduardo Cojuangco Jr. is currently SMC’s chairman and chief executive officer. He is a respondent in several civil and criminal cases filed against him by the PCGG and the government for alleged misuse of coconut levy funds collected during Marcos’ 20-year regime.

One of the charges filed by the PCGG against Cojuangco is that he used part of the coconut levy funds to buy a large chunk of SMC shares.

Yorac said it is only a matter of course that the government should gain control of SMC if it can get the necessary majority in the board of directors.

A two-year interim agreement was forged by PCGG and Cojuangco in February 2002 to show unity to Japanese brewer Kirin Brewery, which bought 15 percent of SMC, a major foreign investment into a Filipino conglomerate.

Kirin Brewery bought the 15 percent stake in SMC for $540 million in December 2001, and the sale was ratified in February the following year. The sale created the largest brewer in Asia and one of the five largest in the world.

The agreement, which lapsed last Feb. 21, bound the government not to oppose Cojuangco’s rule of SMC.

Banker Octavio Victor Espiritu and Egmidio de Silva Jose, said to be a director of power firm Meralco, are the "fresh faces" among Malacañang nominees to the SMC board.

President Arroyo, in a directive to Yorac last Jan. 19, said it was her desire that Gen. Leo Alvez, former Nueva Ecija congressman Pacifico Fajardo, Menardo Jimenez, Espiritu and Jose be elected to occupy the seats held by the PCGG on the SMC board.

Alvez, Fajardo and Jimenez were nominated to the SMC board by the government last year.

Espiritu and Jose will take the place of Nestle managing director Juan Santos and former appellate justice Hector Hofilena. Santos had given up his seat due to a conflict of interest with his position at Nestle while Hofilena was not renominated.

The five nominees will join GSIS chairman Winston Garcia, SSS chairwoman Corazon dela Paz, and Kirin Brewery representatives Naomichi Asano and Shigeki Ota.

Other members of the SMC board are Cojuangco, Iñigo Zobel, former solicitor general Estelito Mendoza, Manuel Cojuangco, retail tycoon Henry Sy Sr., and SMC president Ramon Ang.

SMC will have its general shareholders’ meeting in April.

According to earlier reports, the existing shareholders’ agreement with Kirin allows Cojuangco first right to purchase Kirin shares if the Japanese firm sells out after five years. There is also a provision in the agreement that Cojuangco and Kirin will vote as a bloc on management decisions.

Cojuangco votes on 20 percent of SMC shares, equivalent to three board seats, and reportedly has three management nominees under his control.