Ducky Paredes

Malaya (07.26.05)

“Nilo Divina made it clear to the majority that the Go family was not relinquishing control to the majority and would not play fair.”

The Mess at Equitable

by Ducky Paredes

In a corporation, as in a democracy, the rule is supposed to be that the Majority rules.
Thus, it is difficult to understand how a mere corporate secretary can, during a stockholders’ meeting, cut off someone representing 54.6 percent of the bank, who had made a motion.
The motion was to declare the positions of President and corporate secretary vacant and the movant was Winston Garcia of GSIS. The shares of the Social Security System, GSIS and the Trans-Middle East Equities, Inc. were voting as one and Garcia was speaking for them.

Yet, corporate secretary Nilo Divina arrogantly dismissed Winston by saying: “What I say here goes!”
At that point, the majority realized that here was no way that the majority could get anywhere at a meeting run by the Go family, who controlled only 39.3 percent of the shares but have been running the bank for years. This is the reason they walked out of the stockholders’ meeting and held their own. Nilo Divina made it clear to the majority that the Go family was not relinquishing control to the majority and would not play fair.
This was the reason that the stockholders representing the majority walked out and held their own meeting.
Even now, the Go clan stays on and will not relinquish control. They have had too good a life running the bank.
When Equitable Bank and PCI Bank merged in 1999, both GSIS and SSS invested P16 billion. This represents the hard-earned money of 1.5 million GSIS members who are government employees and 25 million SSS members from the private sector. The money came from deductions from their salaries, as well as contributions from their offices and employers. The GSIS and SSS investment coats the bank with public interest.
Some businessmen welcome the government’s investing with them. They sense that the government has no real interest in running their business. Government-appointed directors are generally happy to receive per diems and other perks. They never really matter much since they are there only for a limited time and will probably be changed with every change in administration.
So, for Winston Garcia of GSIS and Corazon de la Paz of SSS to take a serious look at their investments in the bank is not only a rare occurrence, it is a happy one.

It is time for the government to worry about the investment that they made supposedly for their members’ benefits. Since the investment, Equitable PCI Bank has not paid any dividends at all. So, how can their investment in the bank help improve the retirement pensions, hospitalization, emergency loans and other benefits that these two trusts provide their members? P16 billion invested elsewhere would have given the SSS and GSIS at least half a billion a year. The estimate by the GSIS is that the two trust funds should have earned at least P2.9 billion!
On the other hand, the Go family did not invest a single centavo in acquiring their 25 percent of the bank’s total shareholdings. It appears that the Go clan merely assumed ownership of the 25 percent in bank shares during the merger.
When the majority left the stockholders’ meeting, the minority meeting went on. Thus, there are now two sets of directors and officers. Eventually, the case will have to be brought before the courts.
Of course, Winston Garcia, president and general manager of the GSIS is not backing down. He is on the attack and has asked the Securities and Exchange Commission (SEC) to forward criminal charges against some officials of the Equitable PCI Bank (EPCI to the Department of Justice.
In a letter to the Corporate and Finance Department of the SEC, Garcia named the accused officials as Roberto Romulo, Antonio Go, Peter Go Pailan, Anthony Conway and Nilo Divina.