Assets

There is good reason for the UCPB to lay claim to assets that rightfully belong to the institution.

Some controversy arose the past few days when pro-farmer groups slammed the predominantly government-owned UCPB for seeking judicial definition of which assets form part of the contentious coco levy fund and which assets truly belong to the bank. The present board of directors of the bank, consistent with their mandate to conserve the institution’s assets, are trying to secure UCPB’s investments in the 14 companies capitalized predominantly by the Coconut Industry Investment Fund (CIIF).

By the government-controlled bank’s calculation, it owns 11% of the assets of the CIIF companies. The bank owns the same proportion of the San Miguel preferred shares that was recently liquidated after a final court ruling defining these as belonging to the coconut farmers represented by government.

The coconut levy has been contentious from the day it was imposed by the Marcos government to help raise funding for modernizing the coconut industry. Today, groups representing the farmers claim the money ought to be returned to those who contributed it.

We are not talking of minor sums here. The coco levy fund, having been invested in companies, accumulated earnings over the years. The 11% UCPB claims to be representing the institution’s own investments distinct from the coco levy funds amounts to about P7.2 billion.

The idea of imposing a coco levy is not altogether unwise. In order to capture much more of the value chain, our coconut industry did need large amounts of capital. Much of that capital was invested in oil mills. Some of it ended up funding the controversial acquisition of the San Miguel Corporation from its original owners.

Having been aggregated into a critical mass of capital, it would be folly to break up this fund and distribute it back to its original contributors. There must be a way to award farmers proprietary benefits from investments made out of the large fund. The fund itself will be more profitable if kept whole.

At any rate, the UCPB made its own investments apart from the levy funds. The bank has rights to those investments. It is the court’s duty to delineate those funds and allow them to be properly credited to the institution.

The task of asking the court to do so is handled by one of its directors, Nilo T. Divina, who heads the faculty of civil law at the University of Sto. Tomas. After due deliberation, the bank chose to be represented by Divina’s law firm even as the lawyer offers his services for free. Since the case seeks to establish bank ownership over a portion of the coco levy-financed assets representing the institution’s own investments, there could be no conflict-of-interest situation here.

The accusation that conflict-of-interest has happened in this case is unwarranted. It is unfair to the patriotic effort put in by Divina in helping advance the interests of what is, after all, a public bank.

Attitudinal problem

The Singaporean minority partners of giant seafood processing firm Alliance Select International seem to be suffering from an attitudinal problem.

First they opposed the infusion of additional capital and the possibility of a profitable strategic partnership with Strongoak Inc. The global food distributorship acquired 28.7% of Alliance by way of a placement amounting to P563.7 million.

The Singaporeans, fearing their stake in the robust food company will be diluted by the entry of a strategic partner, filed for a temporary restraining order against the capital infusion. Fortunately, the Pasig regional trial court, seeing through the ploy, dismissed the TRO petition.

The dismissal of the petition now clears the way for the infusion of more capital that will enable Alliance Select to expand its business activities. Had the Singaporeans gotten their way, the natural growth of the company might have been stunted.

It appears that the objection of the Singaporeans in the Alliance board to the capital infusion is driven by selfish concerns. The Singaporean minority appear to be scheming to gain majority control of the promising company. The hefty capital infusion from Strongoak frustrates that goal.

It turns out the Singaporean minority in the company have been making selfish demands. They insisted on the company hiring a Singaporean auditor with pay amounting to P600,000 a month. One Singaporean director wanted a relative hired by the company at a pay rate higher than most senior officers of the corporation. All the while, they whined about the pay rates given Filipino officers of the company even if their pay conformed with prevailing industry rates.

Beyond inserting their own personnel, the Singaporean minority partners have complained about part of their pay withheld for taxes. They asked Alliance to set up an office in Singapore, paying a management fee of Singapore $20,000 a month, even if the company has no business in the city-state.

It seems clear that the Singaporeans, using two Hong Kong-based companies with a total paid-up capital of only 3 HK dollars, are maneuvering to grab control of a profitable Filipino company. I worked with Singaporeans in another company many years ago who attempted exactly the same ploy. The attitude problem seems to be chronic.

The decision of the Pasig regional trial court dismissing the Singaporean petition for a TRO on the deal with Strongoak is a victory for the majority Filipino partners in this corporation. Chair George E. Sycip and CEO Jonathan Y. Dee ably represented the majority Filipino stockholders in Alliance.

An important round was won.