Omidyar donates PDRs to Rappler execs to address 'unwarranted' SEC ruling

MANILA, Philippines — Philanthropic investment company Omidyar Network on Wednesday said it has donated its Philippine Depositary Receipts to 14 Filipino managers of news site Rappler to address the Securities and Exchange Commission’s "unwarranted ruling" shutting down the embattled news company.

 

"This donation completely eliminates the sole basis of the SEC ruling against Rappler Incorporated and Rappler Holdings Corporation,” Omidyar was quoted as saying in a report by Rappler.

 

"We therefore strongly believe that the companies should be allowed to continue operating unhindered in the Philippines," it added.

 

The two US-based organizations that invested in Rappler are Omidyar Network, created by eBay founder Pierre Omidyar, and North Base Media, which advocates independent media.

 

The SEC earlier said it conducted an "internal, inter-departmental investigation" as early as December 2016 after the Office of the Solicitor General requested for a probe into Rappler's possible violation of constitutional limits on foreign ownership of media.

 

The probe zeroed in on Rappler's sale of PDRs—a security which grants the holder the right to the delivery of sale of the underlying share—to Omidyar and NBN Rappler LP.

 

In an en banc decision issued last month, the SEC ruled that Rappler and its parent Rappler Holdings Corp. were "liable for violating the constitutional and statutory foreign equity restrictions in mass media."

 

The corporate regulator said it found that Rappler committed a "deceptive scheme to circumvent the Constitution" and declared void the PDRs issued to Omidyar for being a "fraudulent" transaction.

 

The government's move was heavily criticized by industry groups as an attack on press freedom. Rappler vowed to take the battle to court.

 

"We believe that independent and investigative journalists, such as the highly committed team at Rappler, should not have to put their jobs, freedom, and safety at risk to provide impartial news coverage,”" Omidyar said.

 

"We must support and protect these courageous journalists around the world, otherwise the press will lose objectivity, trust, and the ability to hold those in power to account," it added.

 

SEC Chairperson Teresita Herbosa told reporters last week that Rappler can reorganize another corporation "any time" and offer the same business as long as it would be 100-percent Filipino owned.

 

The news site can also withdraw its earlier filed petition before the Court of Appeals should the company decide to file new incorporation papers, Herbosa added.

 

"Revocation refers only to this company which has the subject of the PDR. When it comes to names, the SEC recognizes if you own the name and you want to reorganize or reincorporate the same name, as long as you own the name, then there is no problem," she explained.