Calling A Spade...
By Solita Collas-Monsod
She says her husband owns 60% of the businesses. He says her husband does not. She proffers notarized deeds of assignment of shares of stock signed by him and his associates in favor of holding companies whose shares of stock are in turn assigned in blank (by the same parties), all of which are in her possession. He questions their authenticity.
"She" is Imelda Marcos, "he" is Lucio Tan (LT). They are co-defendants in Civil Case 005 in the Sandiganbayan, the charge of PCGG being that she and Ferdinand Marcos (FM), acting through their dummies, agents, and/or nominees in the persons of Lucio Tan et al. acquired beneficial ownership/interest in seven companies (including Asia Brewery, Fortune Tobacco, etc), "as well as the subsidiaries and companies which these operating ompanies have acquired or in turn invested in." And since the presumption is that the Marcos wealth is ill-gotten -- the Supreme Court having made judicial determination circa 2003 that the total lawful income of FM and Imelda from 1965 to 1986 amounted to P2,319.583.33 or $304,372.43 -- then obviously they must be made forfeit to the government.
The irony here is that Imelda, as mentioned above, has admitted such ownership, and in fact has filed a cross-complaint against her co-defendant LT, because, she claims, he refuses to turn over the relevant stock certificates despite her repeated demands for him to do so. She also claims that her husband’s acquisition of these properties was on the up and up (dispensing with all the legal verbiage).
The stakes are enormous: controlling interest -- 59%, to be accurate -- in the Lucio Tan group of companies, calculated by the PCGG in 1987 to be worth something in the neighborhood of P51 billion. To be sure, lawyers are not known for their numeracy, and I have yet to find out how they came up with that figure. But no matter how you cut that cake, the value of the equity, plus the accumulated (and uncollected) profits over the past 32 years, of that group of companies -- engaged in agriculture, construction, manufacturing (beer, tobacco), real estate development, and making additional corporate acquisitions -- would amount to, at the very least P100 billion by now. Lucio Tan is not reputed to be the second richest man in the Philippines (he used to be the richest, but either Henry Sy overtook him or is being more honest in his declarations) for nothing.
It is also no secret that Lucio Tan had no empire to speak of until Marcos came along. The question is whether the help that Marcos extended to LT’s businesses was impersonal/altruistic in nature -- in line with encouraging business in the Philippines -- or whether he had a vested, proprietary interest from the word go.
To shed light on that question, I offer for the reader’s delectation some documents supplied to me by Catalino Generillo, the lawyer who was kicked out from his job as special counsel to PCGG in Civil Case 005 because he committed the unforgivable crime (in the eyes of his bosses) of not only taking his work very seriously, but worse, looking like he might be successful.
The first document, reproduced below, reads as follows:
FORTUNE TOBACCO CORPORATION
March 26, 1977
MEMORANDUM for --
Re: General Bank & Trust Company
We were advised today by the Central Bank that not later than 7:00 P.M. on Monday, the 28th instant, sealed bids to purchase all the assets and assumes (sic) all the liabilities of General Bank & Trust Company shall be accepted and open (sic). Among the required conditions are:
1) All bids must include a letter of commitment from a bank acceptable to Central Bank to secure the advances of the latter in the amount of approximately P310 million by means of a standby letter of credit.
2) The winning bidder shall then be awarded a commercial banking license to operate.
For the first requirement, we felt that within a very limited span of time (until Monday, the 28th instant), such a condition is extremely difficult to comply (sic) except perhaps if given at least 90 days to do so. While we are confident we can raise the funds within 90 days, may we request your Excellency for your valuable assistance to persuade the PNB to issue the letter required by the Central Bank. On the other hand, we are submitting to PNB a proposal to guarantee their exposure under the letter commitment in which they are adequately protected.
As a result of this new development, we intend to offer only P300 million for the equity portion. In accordance to the last Memo which I received from Mr. Ramon Orosa on this basis, the purchase is now a reasonable package.
(Signed) LUCIO TAN
* * *
Notice that LTs request is humongous. He wants the President to order PNB to issue a a standby letter of credit worth P310 million, and he wants it done over the weekend (the letter was written on a Saturday). But notice also, that at the end, LT seems to be reporting to the President that he is going to offer "only" P300 million.
Do you think that LT would dare to ask the President to act unless he knew that the President had a pecuniary, proprietary interest in the outcome? Or that the President would act on such a request unless he indeed had such an interest? Otherwise, what would it matter to the President that LT was intending to offer "only" P300 million for the bank?
And look what happens next:
PHILIPPINE NATIONAL BANK
March 28, 1977
Central Bank of the Philippines Manila
Attention: Mr. Amado Brinas, Senior Deputy Governor
At the request of and for the account of Messrs. Lucio Tan and Willy Co, we are pleased to advise that within 90 days and upon receipt of the advice of the Central Bank, the Philippine National Bank is prepared to establish a Standby Letter of Credit in favor of the Central Bank under such terms and conditions that will be approved by the Board of Directors and which are acceptable to the Central Bank to secure the commitments of Messrs. Tan and Co in connection with their bid to purchase the General Bank and Trust Company, as follows:
Amount : P310,000,000.00
Interest : 12% per annum
Repayment : Quarterly as to principal and interest
Very truly yours,
(Sgd) P.O. DOMINGO
* * *
LT writes FM on a Saturday, and the PNB sends the required letter on Monday. Obviously FM made the call and gave the order. PNB wouldn’t go out on a limb like that, and with such a fast response time. Can you imagine PNB approving a P310 million loan on the same day that it was requested? And by the way, Catalino Generillo brought out a witness, a former senior vice president of the PNB, who testified that at the time, the single borrower’s limit was P200 million. So the PNB, in accommodating FM and LT not only acted with the speed of light, but also broke the law. What’s more , the Central Bank let them do it!
But even more is to come: After LT won the bid for GenBank (now Allied Bank), the Central Bank deleted the requirement for an issuance of a standby letter of credit and accepted mortgages instead. It also extended the payment period from two years to five years. How about that for an extremely soft landing for LT/FM?
(To be continued)