We understand the diplomatic way the Philippine Stock Exchange (PSE) worded its statement on two publicly listed companies related to businessman Antonio Tiu, who is now embroiled in the Senate blue ribbon subcommittee’s inquiry into corruption charges against Vice President Jejomar Binay. Tiu, who chairs AgriNurture Inc. and Greenergy Holdings Inc., was dragged into the controversy following allegations that he is a dummy of Binay’s.
Investor confidence is at stake and any wrong wording in the PSE statement will cause the stock prices of the two companies tumbling. In fact, share prices of AgriNurture and Greenergy plummeted when Tiu’s name was first mentioned at a hearing of the Senate subcommittee last month. In stocks, confidence is all that matters. It is the name of the game.
But it is not enough for the PSE to politely inform the public that it is monitoring Tiu’s testimony at the Senate hearings. In fact, it must conduct a full-blown investigation of the relationships and dealings of the two listed companies with Sunchamp Real Estate Development Corp., a subsidiary of Greenergy. Sunchamp is in the middle of the controversy involving the Vice President because he claims that it is the real owner of a 350-hectare estate in Batangas that is now referred to as “Hacienda Binay.”
How can a group of companies not deal with one another? Businessmen put up companies with synergies in mind, with one company expected to generate or contribute profit to another, and vice versa. In fact, funds are sometimes freely transferred from one company to another. On occasion, some unscrupulous individuals use corporate layering to hide ill-gotten wealth or launder money, or go public to muddle any ongoing ownership investigation.
The PSE can actually start off from what Securities and Exchange Commission Chair Teresita Herbosa told the Senate subcommittee: that the due-diligence audits the SEC had conducted on the listed Tiu companies had resulted in “adverse findings and incomplete disclosures.”
Herbosa said that: The SEC had reviewed and investigated the disclosures and reports of Greenergy and AgriNurture and would issue notices of clarificatory conferences to the company officers and their auditors; the SEC had questions about some of the statements submitted by the companies and would ask them to explain; and the penalties for false statements by a company could include its closure. The PSE itself has strict penalties for nondisclosure of material information or disclosure of false information.
It is not enough for the PSE “to make sure that any narration of Mr. Tiu during the Senate hearings that are considered material developments have actually been disclosed or are properly disclosed to the public,” as PSE president Hans Sicat said in the bourse statement issued early this week. Sicat noted that while Sunchamp was not a listed company, any of its transactions that could materially affect any listed company still needed to be properly disclosed by the concerned listed company. But the PSE should not simply wait for these firms’ disclosures. After all, why would AgriNurture or Greenergy disclose something adverse to them and thus drag them into the corruption controversy involving the Vice President?
It is incumbent on the PSE to ensure that the investing public is amply protected. The PSE should not be so easily satisfied by the listed firms’ short replies that they had no dealings with the government of Makati City, the turf of the Binay family.
Why not require the companies to submit documents on their major business dealings? What if the dealings were indirect, such as through a third-party trading company or a middleman? Shouldn’t the PSE track the layering that may have been employed in those dealings or transactions? What is the real extent of the relationships among Tiu’s listed and unlisted firms? Is money being transferred from one Tiu company to another? What other companies are owned by Tiu and how are these related to AgriNurture and Greenergy? Where did all the money come from?
A lot of questions about the corporations owned by Tiu, or even about the businessman himself, are begging for answers. The PSE, with its credible team of investigators, should lead the inquiry to find the answers.