There is a huge battle over Philex and its shares today. That gold mining company’s Board even took out an ad denouncing one of the directors representing government’s shares for demanding pre-emptive rights over its latest impending sale. Gold, as solid as its weight, has become the most prized commodity these days. Alert to global financial and economic trends, and seeking shelter from the turbulent winds that are blowing paper assets like autumn leaves, keen investors are now seeking to convert their soon-to-be completely worthless cash into solid and safe havens of value -- the safest of which is gold. And the only thing that comes close to matching gold in desirability as an investment are shares in gold mining companies that are expected to boom in the near future.
While gold still has a few ups and downs, as major gold hoarders try to coax small holders to release their little stash, the medium- to long-term trend is simply the inverse of how other stocks will be heading south for some time. Just recently, the name of Manny Pangilinan popped up as a quiet, creeping buyer of Philex stocks, paying an attractive premium for its loose shares. The word going around is that the group behind Pangilinan, the Indonesian Salim group, aims to gain over 40 percent of the mining company. Upon hearing this, the new CEO of the Social Security System (SSS), Romulo Neri, protested the sale of that block of Philex shares in view of his agency’s pre-emptive rights as a major stakeholder, owning 19 percent of the company. Not surprisingly, however, other Philex board members didn’t like this.
To ease their woes, they’ve begun to call for Neri’s sacking from the SSS. Yet from every aspect of this controversy, Neri is merely doing the right thing. As he was quoted in newspapers: “According to the country’s corporate law, this preemptive right would be waived only if it is stipulated in the company’s by-laws and ratified by shareholders… This did not happen in this case. If the SSS does not assert this right, then this would set a bad precedent that would put all Philex shareholders at a disadvantage in the future.” He added, “As we have said, we (only) aim to protect the interest of Philex shareholders and SSS members.”
While this controversy could be left to the Philex board and Neri to resolve, it must be stressed that the interest of all SSS members’ in this case is paramount. This early, though, rumor has it that ZTE-point man Jun Lozada will be drafted by “civil society” in the anti-Neri campaign.
As I started to study this, I called ACCESSS, the Alert and Concerned Employees of the SSS and talked to Jun San Andres over the phone Friday morning. Even as its board has yet to convene on the issue, the initial reaction I got was not averse to the actions taken by Neri thus far.
First, the SSS does have pre-emptive rights and Neri’s assertion of that right is only appropriate. Second, my view of the trend for gold finds support with Jun San Andres. Thus, selling or buying at this time can be both profitable for the SSS and its membership. Jun added that this may be the best time to invest since Neri’s predecessor simply didn’t have the acumen for investing and kept the SSS’ growth stymied.
Jun, though, raised only one concern: That the allowable limit to SSS’ investment in stocks -- already set by law -- not be breached. I checked that one out and I was told by one investment analyst that the SSS still has P15 billion pesos in investible funds. While conservatism in investing these funds, especially in highly volatile foreign markets, is imperative, local opportunities for supporting vital growth industries are as important and form part of the funds’ responsibility to society and its members.
Few can disagree that gold is a safe and very promising sector now, and that is why the oligarchs are also moving in to corner Philex today. But should we let these oligarchs reap the boon from gold or should be keep it for the people of this Republic?
My answer is obvious: We should have the whole nation of 90 million Filipinos benefit from this country’s patrimony, and any opportune investment by the SSS in getting this for its members is most welcome. However, latest reports say that Neri is not really considering buying the Philex shares at stake today. I, nonetheless, don’t think the country should give up the idea of taking for the people this natural wealth that forms part of our heritage.
Exploiters of this country’s gold throughout the decades, be they in the Mountain provinces or in Bicol or in Mindanao, have not improved the lives of people in these localities, much less the country as a whole -- despite having dug up hundreds of billions of dollars worth of mineral riches.
The world today is seeing a flurry of Western governments nationalizing private banks and corporations that have salted away wealth by swindling the general populations in their countries. The top shareholders and CEOs of these corporations exploited the companies to the hilt and have deliberately run these companies to the ground. While cohorts from the corporate cabal like Henry Paulson (formerly of Goldman Sachs) designed a “rescue” package, it nevertheless drowns the taxpayers in future debt, leaving the needy people out to hang.
In Philex, the oligarchs are quickly moving in to corner the huge bonanza for themselves and leave the people out, despite the leading role of public institutions such as the SSS in sustaining that company through the lean years.
