The so-called “MVP” group of
companies—dubbed after the initials of its public face and chief executive
Manuel V. Pangilinan—has emerged as one of the biggest conglomerates in the
country today, its newest and the most aggressive.
Yet the real ownership of this vast
conglomerate has been kept hidden from the public eye.
Until now.
The conglomerate is dominantly owned and controlled by
Anthoni Salim, 66, heir to the fortune of his late father, Soedono, who
was the biggest and closest crony of the late Indonesian strongman Suharto
during his 33-year regime. “MVP” has miniscule shares in the conglomerate. That
the group has strived to make it known by that name, as will be explained in
this series, is for a specific purpose.
Forbes magazine ranked Salim as the third richest
Indonesian in 2014, with his $5.9 billion net worth topping that of Philippine
tycoon John Gokongwei’s $4.9 billion or Jaime Zobel de Ayala’s $3.9 billion,
according to the same list.
The Forbes’ profile of Salim in 2014 is a revelation:
“Salim’s Philippine Long Distance
Telephone (PLDT) has invested $445 million [in] a 10% stake in Germany’s
Rocket Internet. His father,Liem Sioe Liong founded the Salim Group; the
clan was later criticized for ties to Suharto.” Salim’s PLDT, not MVP’s nor First Pacific’s.
(The Javanese name “Soedono Salim” which
Liem, a Chinese immigrant from Fuzhou, adopted for him and
his family to blend easier into Indonesian society was suggested by the
dictator himself, with “Soedono” meaning “good-money”.)
The Forbes’ writer probably kept scratching his head
in confusion. Salim is the only billionaire in the magazine’s list who is
indisputably one of Indonesia’s richest tycoons. Yet a big chunk of his wealth
is generated in another nation, the Philippines. That’s how broken our nation
has become.
From 2000 to 2014, First Pacific Co., Ltd. – Salim’s
holding company – generated $2.7 billion in profits from its Philippine
operations, mostly from PLDT amounting to $2.2 billion. In comparison, Salim’s
companies in his own country generated just about half of that, or $1.4
billion. That means his Philippine operations make up 66 percent of his
empire’s profits.
Remember that Salim acquired PLDT in 1998 for $749
million, while Meralco was captured – as these series will explain – with the
Indonesian bringing very little new capital into the country.
So much for the argument that foreign investments
bring in much needed funds to a capital-deficit country. In the case of Salim’s
operations, it has resulted in capital outflow – $2.7 billion in 14 years or
$200 million yearly, or nearly fourth of the average foreign equity inflow over
the same period.
And as this series will also explain, Salim’s
companies have always used local borrowings for much of its operations and
acquisitions, even managing to borrow billions of pesos from government banks
such as the Development of the Philippines and the Land Bank.
Those huge revenues are possible because of Salim’s
controlling 26-percent holding in PLDT, the biggest telecom firm in the
Philippines, which owns mobile-phone behemoth Smart Telecoms as a subsidiary,
and his 52-percent stake in Metro Pacific Investments Corp (MPIC), his holding
company of 48 subsidiaries in the country. MPIC’s cash cows are the Manila
Electric Co., the electricity-distribution monopoly in Metro Manila, and Manila
Water Services, the monopoly for water distribution and sewerage for the western
part of the metropolis, covering 17 cities.
It is a mockery of our Constitution, an indictment of
the rule of law, and a scandalous demonstration of how weak our state has
become by the fact that we have a foreign-owned conglomerate, masked as Filipino
controlled, the “MVP Group of Companies.” It has skirted the Constitutional
restrictions on foreign ownership in public utility firms and even the media.
The ignorance of our Congress has again been
demonstrated when it passed last week on second reading a resolution calling
for constitutional amendments to lift purported “restrictions” on foreign
investments.
What restrictions are they talking about? An
Indonesian tycoon, with the help of clever lawyers and a Filipino partner
acting as front man, has craftily woven his way through the loopholes in our
laws and captive regulatory systems to gain control of strategic public utility
firms, and even media outfits in our country.
In the next few years, Salim’s revenues from his
Philippine operations will breach the $1 billion level yearly, as his huge
infrastructure and power projects start to yield virtually monopoly profits.
That’s why to Salim, it is crucial for Congress to amend our constitution and
legitimize foreign capital in restricted industries.
Through MPIC’s Metro Pacific Tollways Corp., the
Indonesian is now the biggest toll and expressway operator in the country,
managing the North Luzon Expressway (NLEX), Subic Clark Expressway and the
Manila Cavite Expressway.
President Aquino’s Administration has turned over to
the Salim conglomerate some of the country’s biggest infrastructure projects.
Among these are toll road expansion projects such as
the NLEX Harbor Link (P11 billion project cost, NLEX Citi Link (P7 billion),
Cavitex expansion (P8 billion), Connector Road/Metro Expressway Link (P124
billion).
The group has diversified into bridge construction
with its P18 billion project to build the Cebu-Cordova Bridge. In partnership
with the Ayala group, the Salim conglomerate has won the P1 billion projects to
operate a computerized fare collection for the light-rail lines.
In 2013, its 55-percent controlled Salim consortium
won the project to build the P65-billion Light Rail Transit Line Cavite
Extension Project, the biggest infrastructure project awarded under the Aquino
Administration.
Unexpectedly thrown in as part of the project was the
award of the construction of the common station of LRT lines to the consortium,
which moved its location close to the Trinoma mall of the Ayalas – Salim’s
partners who hold a 35 percent stake – from its original SM North Mall site.
Such government decision was so patently anomalous that the SM’s Sys have sued,
even bringing the case to the Supreme Court.
Salim’s latest coup was winning the Cavite-Laguna
Expressway (Calax) project with its bid of P27 billion, P5 billion more than
the next highest bidder, a San Miguel Corp.-led consortium.
PLDT itself, which Salim’s firms control, together
with Japanese companies, is a corporate empire with 49 subsidiaries, several in
strategic public utilities, the largest of which are the mobile telephone firm
Smart Telecommunications and Cignal TV, the direct-to-home satellite TV firm
that has the biggest subscriber base.
Newest media mogul
Salim, in effect, has over the past several years
become the newest media mogul in our country, despite the categorical
constitutional ban on foreign ownership of even a single share in a local media
outfit.
Through a PLDT unit his executives control, Salim’s
group operates TV 5 with its more than two dozens radio stations and online
news edition, interaksyon.com. PLDT’s power to prop up a media outfit with
mediocre expertise in the field was, in fact, demonstrated when it threw nearly
P1 billion a year into advertising to its start-up firm TV-5 from 2010 to 2014.
According to PLDT’s latest report, that financial support will continue until
2021.
Salim indirectly holds, through PLDT’s 70 percent
interest in BusinessWorld and a 22 percent stake in the Philippine Daily
Inquirer. Soon – I was informed by highly reliable sources – the New Standard
newspaper will join Salim’s media stable.
The Salim conglomerate last year bought the Philippine
Star publications for P3.5 billion from the family of House Speaker Feliciano
Belmonte.
Is it just a coincidence that Belmonte is the
principal author of a resolution for the Constitution to be amended to lift all
restrictions on foreign investments?
That amendment would render moot and academic a
Supreme Court move to implement its 2012 ruling that Salim’s control of PLDT is
unconstitutional — which would result in the Indonesian empire’s collapse like
a house of cards.
Salim, of course, need not care whether the media
outfits make money or not. If these flounder, the loser will be PLDT’s
Beneficial Trust Fund, which financed the setting up and acquisition of these
media enterprises.
After all, his media empire has a different purpose
other than making money. Because of his empire’s tremendous clout in media, our
press and press institutions — from the National Press Club to the Philippine
Center for Investigative Journalism — have turned a blind eye to the capture by
a foreign entity of a sizeable portion of the Fourth Estate. I have been told
that both broadcast and print media dare not cross Pangilinan, because his
firms such as Meralco, PLDT, Smart account for nearly a fifth of media
advertising revenues.
The Salim group has even learned to make big money out
of disease and old-age maladies. It now operates the country’s biggest hospital
chain, which includes top-of-the-line hospitals such as the Makati Medical
Center near Ayala Avenue and Asian Medical Center near the Ayala Alabang
village. Its hospitals income from 2011 to 2014: P3 billion. Who would have
thought the work of alleviating humanity’s ailments could be so profitable?
Gargantuan hoax
That the Salim conglomerate is the “MVP Group” has
been a gargantuan hoax. Not even legendary American super-executives Jack Welch
or Lee Iacocca, working in US capitalism’s most advanced state in which
corporations are owned by tens of thousands of shareholders, had the gall to
call their General Electric or Ford Co. as the “Welch” or “Iacocca” group of
companies.
Based on its latest report to the Securities and
Exchange Commission (SEC), Mr. Pangilinan owns only 1/10 of one percent of the
conglomerate’s flagship firm PLDT.
Salim-controlled firms – details of which will be
reported in these series – hold the controlling 26 percent of PLDT, while two
firms of the Japanese NTT conglomerate have 20 percent. The rest of the shares
are dispersed among thousands of Filipino and foreign investors through the
Philippine and New York stock exchanges
A Salim-owned company, Metro Pacific Holdings, owns 52
percent of the capital stock of MPIC. The rest of the shares are dispersed
among 1,335 passive stockholders as stock market investments, 34 percent of
which are foreign-owned and 14 percent Filipino.
In its March 2015 filing with the SEC, Pangilinan is
reported to have “nil” shares, stated only in order to qualify him to sit on
the board.
How the heck could it be the “MVP Group of Companies”?
Perhaps “Salim-Del Rosario Group” would be a more
accurate name. Metro Pacific’s annual report lists Foreign Affairs Secretary
Alberto del Rosario, together with his wife Gretchen, as its biggest individual
stockholder with 11.5 million shares – though only 0.04 percent of the total.
Del Rosario has been a key figure in the
conglomerate’s expansion into the country since the early 1980s, and since 2003
until his appointment as foreign affairs secretary, he served as a board
director of Salim’s international holding firm itself, First Pacific Co. Ltd.,
as well as of several Salim firms, including Indonesian companies.
It is certainly ironic that del Rosario has cried to
the highest heavens over Chinese occupation of the uninhabited Scarborough
shoal, when he has helped Indonesians control key industries at the heart of
the metropolis.
But maybe Pangilinan’s huge shares will show up in
that Hong Kong-based holding firm First Pacific?
Not at all.
While he owns 1.4 percent equity shares in First
Pacific Co., Ltd — mostly the result of his stock options over 30 years — this
isn’t really a significant shareholding, as Salim’s top strategist Edward
Tortorici has 1 percent.
It is even surprising that Pangilinan owns only so few
shares, despite his 34 years as Salim’s top executive and his crucial role as
the Indonesian conglomerate’s face in the country. “MVP” really means Salim’s
“Most Valuable Professional,” or maybe the “P” more accurately stands for an
unflattering word.
Salim, through First Pacific and labyrinthine
corporate layers, is the biggest single stockholder with unchallenged control
of what is called in this country as the “MVP Group of Companies.”
The next biggest, but a poor second with much less
shareholding of just 3 percent in First Pacific is Sutanto Djuhar and his
son Tedy, ranked 39th in 2010 in Forbes’ richest billionaires list until 2010
with a net worth of $500 million.
Djuhar, 85, had been a close business partner of
Anthoni’s father, who with two others, established First Pacific in 1981 as a
venue for bringing out of Indonesia some of the wealth they generated as
Suharto’s cukong — a term used in that era to mean Chinese businessman
providing funds for Indonesia’s military and political leaders in exchange for
patronage and protection.
“Yes, I was an antek, but I was not a bad one,”
Soedono was quoted as saying in a recent book, which was fawning over both
Anthoni and Pangilinan, using the stronger Javanese term for “crony” or “lackey.”
During Suharto’s rule, the four were referred to in whispers in Jakarta
as the “Gang of Four,” being the strongman’s tight-circle of cronies
during his regime.
Or maybe Pangilinan’s shares have been deliberately
concealed? But why would he, especially since the foreign-owned conglomerate
isn’t supposed to be in public utility firms, if the Constitution is to be
complied with?
But there is an obvious motive for portraying Salim’s
conglomerate as the “MVP Group,” and the person who thought of the scheme must
be a PR genius. It veils the reality that a foreign firm has come to dominate
profitable public utility firms, even monopolies, which our Constitution — even
in its earlier versions — categorically prohibits. These series will explain
how Salim, with Pangilinan’s help, has managed that feat.
What kind of a country have we become?
Aquino will be giving away central Mindanao to the
MILF, who will annex the area to a state of Malaysia in a few years. He wants
the US to acquire pockets of territory here the Americans euphemistically will
call “forward operating sites.” He has lost Bajo de Masinloc, which has been
ours since the Spanish times, to China, and everyone is furious at that
regional bully’s moves to claim everything in the West Philippine Sea.
Yet for more than 10 years now, we’ve given away
strategic industries to … an Indonesian billionaire?
NOTE
My requests for interviews or replies to e-mailed
queries to Pangilinan and his officers, made through his companies’ press
officers, his closest friends, and even a former media colleague now with him —
the first of which was made several months ago — have all been ignored. This
series is based on research for a book I am working on, titled “Philippine
Hoaxes,” to include essays on the Bangsamoro, the Jabidah “Massacre,” DAP, and,
of course, the biggest, President Aquino. by RIGOBERTO D. TIGLAO
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