Meralco hits back at GSIS

MANILA, Philippines – Manila Electric Co. (Meralco) lashed back at Winston Garcia, president and general manager of state pension fund Government Service Insurance System (GSIS), for his accusations the power firm has not been transparent with its operations.

Christian Monsod, a director of Meralco and senior consultant to the chairman, said Meralco has been very careful in complying with the law with respect to the right of a director or stockholders to examine its records.

“In a long line of decisions, the Supreme Court has provided the guidelines for the exercise of the right to examination: (1) it covers all books and records although that is not absolute; (2) it must be exercised at reasonable hours on business days (3) the demand is made in good faith and for a legitimate purpose,” Monsod said.

Garcia has been asking for financial documents from Meralco following GSIS’ acquisition of the government’s roughly 10 percent stake in the power firm.

Last January, GSIS bought the government’s less than 10 percent stake in Meralco for P8.9 billion. The transaction increased the GSIS stake in Meralco to about 23 percent.

Monsod said management has repeatedly invited Garcia to review the documents he has requested at the company premises anytime during office hours and has even provided him copies of certain requested documents.

“All directors have a fiduciary responsibility to balance the interest of the demanding shareholder against the interest of the corporation as a whole, and all other shareholders,” Monsod said, adding that copies of documents can end up in the hands of those with adverse interest to Meralco.

Monsod said he hopes Garcia will understand the position of management because Meralco has about 80,000 shareholders and it should treat all shareholders equally.

Garcia is calling for a change in the management of Meralco, saying that the current rein-holders have not been transparent.

Monsod countered that management has offered to give Garcia a full briefing and this is being scheduled at his convenience.

“In fact, on certain issues, such as in the nomination of candidates for directors, the other directors favorably considered his proposal for a more liberal interpretation of rules this year, which is different from past practices,” he said.

Boardroom war

Meralco is set to hold its annual stockholders’ meeting on May 27. Changes in the board may happen given GSIS’ demands.

At present, the Lopez group, through First Philippine Holdings Corp. (FPHC), holds a 33.4 percent stake in Meralco.

Other government entities such as Philhealth, Land Bank of the Philippines, Social Security System, and Pag-Ibig Fund hold a combined 10 percent stake. This, and the government’s 23 percent stake in Meralco bring the government’s total stake in the power firm to a total of 33 percent.

But the current Meralco leadership would not be moved.

In a press statement, Meralco challenged Garcia to take control of the power firm before proposing any changes in Meralco’s management.

“GSIS president Winston Garcia, like any shareholder, has a right to state his view with respect to the management of Meralco, but if he wants to change the management, Mr. Garcia knows that he has to take control of its Board in the shareholder meeting this month,” Meralco said.

Meralco treasurer Rafael Andrada said, “It is not surprising that GSIS has been engaged in the last weeks in an active solicitation of proxies.”

Andrada added that “because ultimately, the shareholders will have to decide which management they prefer - the present management or the one that is chosen by Mr. Garcia.” – Donnabelle Gatdula