Wealthy businessman Eduardo “Danding” M. Cojuangco, Jr. won on 3 May against the Philippines government“s reported bid to oust him as chairman of food and beverage manufacturing giant San Miguel Corp…
Wealthy businessman Eduardo “Danding” M. Cojuangco, Jr. won on 3 May against the Philippines government“s reported bid to oust him as chairman of food and beverage manufacturing giant San Miguel Corp. (SMC). The majority of the company“s shareholders voted in his favour, as so did 14 other concurrent directors at the firm“s annual stockholders meeting on 3 May at the Edsa Shangrila Hotel in Mandaluyong City. This was despite last-minute efforts by the government to put at least three government nominees on the SMC board of directors as well as unseat five nominees to the board of ousted president Joseph Estrada. Re-elected to the SMC board were Mr. Cojuangco, Ramon S. Ang, Manuel M. Cojuangco, Francisco C. Eizmendi, Jr., Faustino F. Galang, Estelito P. Mendoza, Gabriel L. Villareal, Winston F. Garcia, Vitaliano N. Nanagas, II, Inigo Zobel, Allan L. Lee, Benjamin P. Paulino, Hermogenes L. Tantoco, Espiridion D. Laxa, and Raul P. de Guzman. The government is seeking to oust from the board the Estrada nominees De Guzman, Lee, Laxa, Paulino, and Tantoco. Mr. Cojuangco, his brother Manuel and Mr. Ang gathered the most number of votes, about 2.7 billion total, during the 3 May election. Meanwhile, a Presidential Commission on Good Government (PCGG) official said the government“s intent was to gain more representation on the SMC board, and not necessarily to gain control of the firm. “Our purpose is not to gain majority but to gain representation. So whether or not we get majority, doesn“t matter to me. What“s important is to be represented on the board not by Estrada cronies,” PCGG commissioner Ruben C. Carranza said during the meeting. He added that the government – through PCGG, Government Service Insurance System (GSIS) and Social Security System (SSS) – knew it was not going to get majority of the votes after the courts junked its earlier petitions to postpone the stockholders meeting. But he said the government could have unseated the current board members if the courts allowed it to nominate its representatives. The government nominees to the SMC board are Renato C. Valencia, Octavio V. Espiritu, Leo S. Alvez, Hector L. Hofilena and Franklin G. Fuentebella. And additional GSIS nominee is Roberto Malonzo. GSIS general manager Winston Garcia and SSS chief Vitaliano Nanagas are already on the board. Mr. Carranza said each of the PCGG nominees was able to obtain 1.8 billion votes. Mr. Malonzo was able to get 84.36 million votes. “We will fight them in court. It will be the solicitor general who will study all the legal options, but we will definitely bring this to court. What we did was to lay the basis for going to court,” he added. Lawyer Lorna Kapunan, an independent shareholder working with PCGG, said the government will file a “quo waranto” case at the Supreme Court. “Two things: there is a pending case in the question of nominees, the question of who will vote the CIIF (Coconut Industry Investment Fund) shares has already been settled by the Supreme Court. They“re probably in contempt of the Supreme Court. The “quo waranto” is with respect to the election already since they have proceeded. The case will be involving the legitimacy of the election, primarily our specific targets really, the five PCGG nominees,” Mr. Carranza said. For his part, Mr. Cojuangco said it“s the prerogative of PCGG to pursue the case at the Supreme Court. “But the Supreme Court has no decision yet on the CIIF. There“s a pending issue whether it“s the owner or the PCGG who will vote. The decision before was for the owner to vote because we were asking if the sequestration entails the right to exercise the right of an owner by voting the shares. That“s what we wanted to resolve. The Supreme Court finally allowed us to vote and said that it should be the owners to vote the shares,” he said. “But the problem is they did not make the deadline in submitting the names (of new government nominees), which is against the bylaws … If they could have complied with the bylaws there would have been no problem,” he added. Meanwhile, Mr. Cojuangco said the previous board“s plans for SMC will be continued by the new board. These include the acquisition of Coca-Cola Bottlers Phils., Inc. and Pure Foods Corp. Mr. Ang, who serves as SMC vice-chairman, said SMC and Purefoods owner Ayala Corp. will be signing a P 8 billion stock purchase agreement in the coming days. He also said SMC management is not considering new major deals and will concentrate instead on the core activities, including the new businesses of Coca-Cola and Purefoods. The SMC chairman, meanwhile, expressed confidence that the resolution of the management issue will provide “stability” to SMC, whose share price has suffered significantly in the local stock market. “In a way, it will, unless there are some other things that crop up again. I“m very happy … the stockholders and the directors from the other side have been very gentlemanly. The meeting was very cordial despite us having presented different sides,” he said. The SMC meeting drew thousands of shareholders, with most waiting to see fireworks. The wait took them four very long hours, with PCGG lawyers pushing until the end to put their nominees on the SMC board. “The main problem, it seems, is that not only are they (SMC management) determined to shut out government in the board, but those who control SMC want to deprive the government of the right to know what“s going on. If the shares can“t be voted, we can“t check the dissipation of assets,” Mr. Carranza told BusinessWorld at the sidelines of the meeting. “If SMC becomes a government corporation, no offense to anyone, but a lot of foreign investors would not want to put money in the shares,” Mr. Cojuangco said. The meeting almost resembled a basketball match, with shareholders cheering Mr. Cojuangco“s board for scoring against the government“s questioning of the closing of the board nominations. What further cheered shareholders on 3 May was the declaration by the company of a 10% stock dividend payable on 6 July. The Philippine Stock Exchange lifted a trading suspension on shares of San Miguel on 4 May, after the company confirmed the first-quarter financial report earlier disclosed by its chairman. Trading in San Miguel shares was suspended shortly before the market opened on 4 May, after the company failed to properly disclose its first-quarter earnings, which were announced by San Miguel Chairman Eduardo Cojuangco during the company“s annual meeting on 3 May.