“If we are so appalled by crooked government officials and deals, we also ought to be sensitive to deals in private corporations that serve us in the same manner that government is supposed to be serving us.”
by Ducky Paredes
Self-dealing is defined as “a situation where one takes an action in an official capacity which involves dealing with oneself in a private capacity and which confers a benefit on oneself.”
Michael McDonald, PhD, Chair of Applied Ethics at The University of British Columbia provides examples based from this book: “You work for government and use your official position to secure a contract for a private consulting company you own.” and “using your government position to get a summer job for your daughter.”
That — seeing government graft and government corruption – is easy but, is all “graft” government or is there also something in private corporations that can be called “self-dealing”?
Alfred McCoy, in the book An Anarchy of Families published by the Ateneo de Manila University Press, detailed get-rich-quick formula of a Visayan family:
“Investing just enough capital to gain corporate control, he would then drain the company’s assets through a percentage-basis management contract or lavish executive benefits, practices that often aroused charges of profiteering from minority stockholders.”
While McCoy referred to the pre-martial law financial buildup of the companies owned by the brothers Fernando and Eugenio Lopez, it seems that old habits die hard.
The Lopezes have just 33.4 percent of Meralco compared to the 35.7 percent of government financial institutions (GFIs), yet they still managed to control Meralco through questionable proxy votes and the railroading of its last shareholders’ meeting and election, in defiance of a cease and desist order of the Securities and Exchange Commission (SEC).
Meralco’s financial statements show that the number of its executives and supervisors outnumber rank-and-file workers four-to-one; and these officers earn fat salaries and take home a lot of other perks.
Meralco has ingratiated itself with its employees by providing them non-contributory pension. The pension costs, amounting to P1.7 billion in 2006 and P2.8 billion in 2007 for example, are passed on to Meralco customers.
From its SEC submissions, Meralco did not pay any dividends to its shareholders from 2001 to 2006; in 2008, faced with a large shareholder’s adamant and obstinate attitude, Meralco declared dividends of P500 million.
While the majority of Meralco shareholders have not made much from their investment, the Lopez companies dealing with Meralco by selling it power (First Gen and First Gas), transformers, cables, meters, engineering services, among others, are raking in big profits from the Meralco business for the Lopezes who manage Meralco.
The Lopez IPPs — First Gen and First Gas — have already raked in P60 billion as “capacity fees” in the first three years of their 25-year power purchase agreement (PPA) with Meralco. The P20 billion a year in “capacity fees” are on top of what Meralco pays First Gas and First Gen for power actually delivered.
Meralco customers will be paying the Lopez IPPs P500 billion in “capacity fees” for the duration of those 25 years. What are these “capacity fees”? In the BOT (built-operate-transfer contracts that Napocor has with its IPPs, these go towards installment payments for the eventual transfer of the companies to Napocor. What Meralco has with its IPPs are not BOT contracts but BOO (build-operate-own). So, why pay these IPPs “capacity fees” when Meralco will never own them? Why pay them the equivalent of installment payments when these will never become Meralco properties?
Should the Lopezes ever leave Meralco, don’t be surprised if we are left only with bare skin and bones. Most of these Lopez companies deal with only one customer – Meralco. Should others than the Lopezes ever succeed in managing Meralco, these companies would belly-up.
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If we are so appalled by crooked government officials and deals, we also ought to be sensitive to deals in private corporations that serve us in the same manner that government is supposed to be serving us. Thus, power companies, water service, hospitals, transportation, all companies with government franchises, oil companies and a host of other enterprises that serve us and on whom we depend on for being able to live in this country ought to be held to the same light by which we judge our government officials.
The self-dealing that they do affects us as thoroughly as the self-dealing that a government officials does. These impact of the cost of the service that their companies provide us.
We have a right to demand that these providers are run well and give us more for our peso and are not making a killing for just 33.4 percent of its shareholders while keeping its majority of the 66.6 % other shareholders in the dark about how the company is run.
If a government official who engages in self-dealing can be taken before the Sandiganbayan, why not also bring before the bar of justice those who are doing the same thing with the business that they operate under a government franchise?
In fact, why not have a law that punishes those who self–deal to give themselves more than their fair share of a franchised operation? Then, maybe, the sort of persons who would apply for government-franchised businesses would be better than the ones who now do so.
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The Third Leg of the six-leg San Mig Senior Tournament of the Federation of Philippine Amateur Senior Golfers, Inc. (FPASGI) will be on Friday, July 18, 2008 at Intramuros Golf Club. Tee-off will be sequential beginning at 6:30 up to 9 in the morning.
Tournament fee (only FPASGI members can join) is P1,500 which includes everything – Green Fee, Caddy Fee, Mandatory Mulligan, Lunch, Giveaways and Raffle Prizes.
Intramuros is not an easy course. It may be shorter than regular courses but the number of hazards that one has to avoid makes it as much as a challenge as other, much longer courses.
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hvp 07.06.08)
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