PCGG puzzled over new Palace nominee to SMC

The Presidential Commission on Good Government (PCGG) is clueless on Malacañang’s reason for nominating relatively unknown businessman Egmidio de Silva Jose to the board of directors of food and beverage giant San Miguel Corp. (SMC).

At the PCGG’s anniversary celebration Friday, Jose was the subject of speculation by officials and employees who were puzzled over President Arroyo’s Jan. 19 directive to include him among her nominees to the SMC board.

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).

Some PCGG insiders said people nominated to the SMC board were usually well-known or have contributed to the development of the business sector.

The PCGG maintains that such appointments are the prerogative of the President.

Jose, for his part, said he did not expect Malacañang to nominate him to the SMC board.

"I was just contacted by Malacañang and told of it," he told The STAR in a phone interview.

Jose said he is not a close friend of the President or her husband, First Gentleman Jose Miguel Arroyo.

According to the resume he submitted to the PCGG, Jose holds an AB Commerce degree from the University of the Philippines, where he graduated in 1967. He finished his elementary and high school education at the Ateneo de Manila University.

He is the president of six firms identified as Valerie Products Manufacturing Inc., Sanoh Fulton (Phils.) Inc., VA Components Inc., Optimum Securities Corp., Kyoei Kogyo Phils. Inc., and ESJ Properties.

Jose is also a director in six other firms: Integrated Logistics Phils. Inc., KPI Realty Inc., Hanano Philippines Inc., Asahi Cast Philippines Inc., Metal Press Assembly and Jupiter Logistics Phils. Inc.

He was cited as Entrepreneur of the Year by the Development Bank of the Philippines in 2003.

The President, in the directive addressed to PCGG Chairwoman Haydee Yorac, said it was her desire that Jose, former Presidential Security Group chief Gen. Leo Alvez, former Nueva Ecija congressman Pacifico Fajardo, GMA-7’s Menardo Jimenez, and banker Octavio Espiritu be elected to occupy the seats held by the PCGG on the SMC board.

Alvez, Jimenez and Fajardo were renominated to the SMC board while Jose and Espiritu will occupy the seats vacated by Nestlé managing director Juan Santos and former Court of Appeals justice Hector Hofilena.

The PCGG said Santos resigned from the SMC board due to a "conflict of interest" with his post at Nestlé and Hofilena was simply not re-nominated by Malacañang.

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

Kirin Brewery, Japan’s largest brewer, 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.

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

Late last week, Yorac said the PCGG is looking for allies among "independent" SMC shareholders to help in a government bid to gain control of the food and beverage giant.

"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.

The government has a total of seven seats on the SMC board and needs one more to gain control of the firm.

Yorac 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.

Cojuangco 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.

A two-year interim agreement was forged by PCGG and Cojuangco in February 2002 to show unity to Kirin Brewery, a major foreign investment into a Filipino conglomerate.

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

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.