Justice dep’t wants to dissolve Philcomsat

REPORT FROM BUSINESSWORLD The Department of Justice (DoJ) is proposing to dissolve Philcomsat Holdings Corp. to end the lingering feud among its shareholders, as well as to give the government greater control over the management and assets of the company. Justice Undersecretary Fidel J. Exconde, Jr. told reporters: "If the [Justice secretary] will approve, and also with the cooperation of the warring stockholders, we’ll go for the elections and call for the dissolution of the subsidiary [Philcomsat Holdings]." The dissolution of the company is needed so the assets can be liquidated and eventually transferred to the mother companies, the sequestered firms Philippine Communications Satellite Corp. (Philcomsat) and the Philippine Overseas and Telecommunications Corp. (POTC), Mr. Exconde explained. "[That way, the government] will have more control over the financial management and assets of the corporation. At present, some are blaming the government why we can’t control the release of money. It’s primarily because of the subsidiary, it is not a sequestered company," the Justice official said. The government, through the Presidential Commission on Good Government (PCGG), can always call for a stockholders’ meeting and eventually move for the dissolution of the company, he added. The PCGG owns 28% of Philcomsat Holdings through its 35% stake in the parent companies. The company vice-president, Enrique Locsin, leads the board being supported by the PCGG. The PCGG-backed board has long been fighting with the faction led by lawyer Victor A. Africa, Erlinda K. Ilusorio-Bildner, and Senator Juan Ponce Enrile for control of the company. The two groups have repeatedly accused each other of dissipating the assets of Philcomsat Holdings through large kickbacks and unauthorized transactions, with the dispute even reaching a Senate investigation. In a separate interview, Ms. Ilusorio-Bildner told BusinessWorld her group has long been supporting such an idea. "But how can you just dissolve it if [the group of Mr. Locsin refuses to let go]?" she asked. Members of the PCGG-backed board were unavailable for comment. Ricardo Abcede, PCGG commissioner, also refused to comment on the Justice department’s proposal to dissolve Philcomsat Holdings, saying: "We’re still talking how to go about the plans." The battle for control of the firm remains a question despite several attempts to resolve the case. Last April, the Makati Regional Trial Court ruled that shareholders led by Mr. Africa and Ms. Ilusorio-Bildner are the rightful owners, but the other faction was able to convince the appellate court to issue a status quo order. Because of the dispute, Philcomsat Holdings, which is a publicly listed firm, failed to submit its annual report to the Philippine Stock Exchange on time. Trading of its stocks has been put on hold since April. Before it can call for a meeting of Philcomsat Holdings stockholders, the government has to hurdle legal and technical requirements first, Ms. Ilusorio-Bildner added. For one, the stock exchange has suspended the firm’s financial auditor, she noted. "So who would be able to close the books?" Ms. Ilusorio-Bildner asked. It is now up to Malacañang, through the Justice department, to push for the dissolution of the company by pressuring the supposedly government-backed group to let go of the assets, she added. — Ira P. Pedrasa/BusinessWorld