Business warriors in do-or-die battles

Corporate struggles in the local landscape are getting in vogue, getting the attention of even those whose grasp of business activities is limited to what ordinary laymen understand. Just scan the business pages of the newspapers during the past few years, and you will see the growing intensity of competition among the country's business warriors.

Take the case of the P150-million damage suit filed by the APC Group Inc. against former Marcos Cabinet Minister Roberto Ongpin before the Securities and Exchange Commission. The case provides interesting reading. It is the latest chapter in the bizarre twists and turns of the long-running corporate struggle involving APC, Ongpin, and Philippine Global Communications (Philcom).

Ongpin, the trade minister during the Marcos regime, is accused of "illegally appropriating" for himself corporate opportunities and businesses that belong to Philcom and its subsidiary, Philcom Interactive Systems. Philcom is owned 80 percent by APC which, in turn, is owned 49 percent by Belle Corp., from whose board Ongpin was ousted last year.

Aside from the main charge of misappropriation, the SEC is also being asked to determine whether Ongpin had planned to get Philcom Interactive's Internet business. Two companies -- PhilWeb Com and South Seas Natural Resources Inc., which are co-respondents in the APC suit -- were allegedly set up, using Philcom Interactive's ideas and even some of its key officers.

The SEC's important job is to handle and investigate the case thoroughly. For many businessmen want the SEC to tighten up the implementation of its rules and regulations. The pirating of corporate ideas, products, corporate strategies and other secrets, personnel and the like has long been the bane of the business community.

According to the charge sheet filed by APC, Philcom Interactive developed an integrated business plan geared towards exploiting the new Internet and electronic-commerce technologies. Unknown to Philcom and Philcom Interactive, Ongpin and other key directors of Philcom, in a breach of their fiduciary duties to Philcom and Interactive, took advantage of their high corporate positions and knowledge of Philcom Interactive's confidential business plan.

In his defense, Ongpin said that APC did not know of the planned Internet business of Philcom Interactive. However, the complaints claim that the APC Board was duly informed of the plan. Alex Villamar, who was then president and chief executive officer of Philcom, made a presentation to the APC Board during its July 30, 1999 meeting. In that meeting, Villamar discussed the plans of Philcom Interactive, and elaborated further by saying that a business plan was being prepared. The APC Board noted Villamar's presentation and did not object to it.

It will be noted that Ongpin and six associates control the 10-man board of Philcom. No board meeting was ever called, and no plan was ever formally presented to or rejected by the Philcom Board.

Actually, 80 percent of Philcom had been acquired by APC. But only 40 percent were transferred to APC's name, pending APC's getting the National Telecommunications Commission's permit to own more than 40 percent of Philcom's telecom and Internet business. After NTC's approval was obtained, APC's request for the turnover of the remaining balance of Philcom shares has not been headed by the Ongpin-controlled Philcom board.

The situation is, indeed, odd. While APC owns 80 percent of Philcom, it does not control Philcom's Board. Ongpin and a few other minority shareholders do. Also, the APC has been unable to change the board directors up to this time.

It will be recalled that trust arrangements were made in 1997 for AIA Capital Corp. and Vivian Yuchengco's MVY Holdings Corp. to hold in trust the 40 percent remaining shares that had not been transferred to APC. Yuchengco had filed an interpleader case at the SEC, claiming that while she acknowledges that the Philcom shares she is holding are owned beneficially by APC, she had received written instructions from Ongpin and Gonzales that they are still the rightful representatives of APC.

The APC suit against Ongpin is very informative and interesting. Conflicts of interest, pirating of officers, takeover of shell companies, misuse of resources and manpower, deceptive advertisements - all these items and more ought to sate the curiosity of business watchers who find amusement and satisfaction in seeing the unexpected ebbs and flows in the country's corporate battles.

There are high hopes the Subic Port development program is finally going to begin, after a delay of eight years caused by a TRO issued by the court as requested by Hutchison, a Hongkong-based firm. The two bidders who participated in the last bidding - ICTSI and Royal Ports Services - have entered into a joint venture port operations agreement with the Subic Bay Metropolitan Authority, on an "interim" basis.

After the Americans pulled out the long gantry crane because Dick Gordon did not want to pay for it, the capacity of the Subic port dropped from 75,000 TEUs per year to only 27,000 TEUs. Since then, only geared vessels of APL, Maersk Line and Regional Cargo Line would call on the Subic port. The situation is quite inconvenient and ridiculous for Subic locators who have to ship out their products through the South Harbor. Why truck these wares all the way to Manila when there is a Subic port right inside their backyard?

The decision of the Estrada administration to have a pro-active and creative solution to the untenable port situation at Subic will certainly be welcomed by the Subic locators. And SBMA chairman Felicito Payumo's success in bringing the two business competitors to work together "in the interim" can be considered a feat.

Under the joint venture agreement, the interim period of operation will end when the pending legal cases are resolved. The SBMA, ICTSI and Royal Port Services are going to recognize that the rights of the joint venture operation shall be subordinate to the result of the court case.

Unfortunately, though, some parties are trying to torpedo the implementation of the interim joint venture port operation agreement. Why? Because of politics and the usual crab mentality among Filipinos.

Arturo A. Borja's e-mail address: [email protected]