DOJ names Megawide execs in alleged Anti-Dummy Law violation
Megawide [MWIDE 6.27 8.20%] executives were named by the Department of Justice in alleged violation of Anti-Dummy Law related to Cebu airport contract. The DOJ indicted officials of the GMR-Megawide Cebu Airport Corporation (GMCAC), the joint venture between MWIDE and GMR, the India-based infrastructure giant, that MWIDE and GMR formed to bid on (and win) the 25-year operations and maintenance concession for the Mactan-Cebu International Airport (MCIA).
The basis of the indictment is the allegation that MWIDE’s CEO, Edgar Saavedra, and several other MWIDE executives, “allowed and permitted” eight foreign nationals from GMR to operate GMCAC, and by extension, the MCIA, and that such operations and control should only be permitted for Filipino citizens since GMCAC should be considered a “public utility corporation”.
The Anti-Dummy Law was made to penalize those that enabled foreign nationals to evade restrictions meant to limit the control of those foreign nationals over sensitive aspects of our country’s economy and infrastructure. MWIDE issued a media clarification, saying that it hasn’t received any official legal documents yet related to this indictment, and that even if it did, it would successfully meet the challenge in the appropriate forum. MWIDE maintains that it and its subsidiaries have always been (and continue to be) “firmly adherent to all applicable laws, rules, and regulations”.
MB BOTTOM-LINE
As the Rappler story points out, the original complaint that resulted in these indictments was filed around the time just before MWIDE’s original proponent status was revoked for the massive NAIA Rehabilitation project. So, is this just the latest evolution of a long-game political move against MWIDE to suppress MWIDE’s rise in the fast-growing and lucrative airport management space, or is it a case where perhaps MWIDE delegated too much control and authority to foreign nationals and there are important questions of fact that need to be figured out? Maybe it’s both. Or neither.
The market wasn’t so much in the mood for nuance though, and the stock dropped over 8% on the news. Criminal indictments are serious business, and are not as easy to ‘make go away’ as an everyday lawsuit.
Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
- Latest
