NGCP defends no board meeting sans Chinese shareholders policy

The board of National Grid Corporation of the Philippines (NGCP) cannot  convene a meeting without the representatives from State Grid of China (SGC), which owns 40% of the firm, senators learned Wednesday.

Senator Raffy Tulfo, who chairs the energy committee, raised this issue at the continuation of the hearing on the operations of the NGCP. He said the state grid firm is giving “special consideration” to its Chinese shareholders.

NGCP Corporate Secretary Ronald Dylan Concepcion explained that the Filipino shareholders, who own 60% of the firm, can hold a meeting on their own if the Chinese representatives failed to attend two scheduled meetings.

“If no business is conducted after two meetings and they are not  present, the Filipino shareholders can go ahead,” Concepcion told the panel.

He explained that this policy under the shareholder agreement is meant to protect the interests of the minority shareholders, which in this case are the representatives from SGC.

“That provision under the agreement is a legitimate minority protection device and that has been upheld by the Supreme Court. It is not actually the tyranny of the minority. In that instance, it’s actually to protect the interest of the minority from the majority who might railroad decisions, especially on issues that involve expertise like technical issues,” Concepcion said.

“That is just the protection that the agreement provides the Chinese. Its’ not that we are giving them more power or favoring them. In fact, still under that agreement and under our bylaws, it’s still the 60% that controls because it’s the 60% that are Filipinos,” he added.

Public utility

But Tulfo pointed out that this should not be a policy especially to a company that manages a public utility.

“This is a public utility. Now, ‘yung sinasabi na to protect the interest of the State Grid of China, madami na pong safeguard na nakapabalot sa mga polisiya ninyo. Ang dami na pong special consideration. Ano pang klaseng protection ang kailangan ninyo [There are a lot of safeguards in your policy, a lot of special consideration. What more do you need]?” Tulfo said as he accused NGCP of “protecting” SGC more than its consumers.

“Ibig sabihin ang mga taga-State Grid of China [What the SGC are saying], they are the one calling the shots,” he added.

Concepcion said this instance has not happened yet in the NGCP and the Chinese representatives are very cooperative in their board meetings.

“The Chinese in NGCP are very cooperative. They are not very antagonistic and they respect Philippine laws. They do their business under the Philippine laws. They do not violate it. They respect Philippine laws. So in fact, they recognize that they cannot actually strong arm the Filipino shareholders,” the NGCP official said.

'De facto veto'?

Senator Sherwin Gatchalian, vice chairman of the panel, pointed out that this might be violative of the intent of the 1987 Constitution to limit the ownership of foreigners in public utilities to 40% because it is of public interest and national security.

He said the NGCP policy, which needs two adjournments before the Filipino shareholders can conduct a meeting on their own, is a “de facto veto” — a position that the NGCP refuted.

“For me, that is a de facto veto by the minority and that’s not what is contemplated by the Constitution. The Constitution gave us 60% so we can make decisions, but if the foreigner, the Chinese, is vetoing our board meeting by that provision, then we cannot make any decision,,” Gatchalian said

“My point is we’re violating the constitution because we cannot make any decision. Yung two meetings pampalubag loob na lang ‘yan,” he added.

The lawmaker expressed concern over the policy as the same is applied to emergency situations.

“In my  interpretation, this is a very important safeguard to protect all of us Filipinos but we sold ourselves to the devil by foregoing this safeguard. We cannot convene. If they say ‘No, I don’t want to convene’ for example, there’s a sense of urgency, there’s national security, we want to change everyone all the management there, only the board can do that but they cannot convene,” Gatchalian said.

Pinoys can decide

NGCP spokesperson Cynthia Alabanza said the Chinese representatives can only delay the conduct of the board meetings but they cannot stop Filipinos from pushing through with the meeting.

“At the end of the day, can they delay? Yes. Can they hold us hostage? No. Decisions can be made within the day, within the hours. It will take a few more documents, paperwork to be done by the Filipinos when it needs to, they can make decisions without the Chinese,” she said.

Concepcion reiterated that there was no such incident in the past and all members of the board were present in all  NGCP board meetings.

Still, Tulfo said it is still a possibility. “I know you are saying it doesn't happen but it can happen,” he said.

Concepcion insisted that the policy is allowed and mentioned that there is a Supreme Court decision that would support this.

Gatchalian said the SC decision might be applied for ordinary corporations and not for firms which are managing public utilities.

Pressed by the senators to provide the specific SC decision that affirms this policy, Concepcion said he cannot recall the exact case. He committed to provide a copy of the specific SC decision to the Senate energy committee. —KBK, GMA Integrated News