NOTA BENE: I'm now in the finishing stage of my second book titled "BUMPS Fifty Years of Dictatorship and Democracy in the Philippines (1972-2022)." Writing my second book is quite bloody because of so many details I have to encapsulate in a single book. I hope to finish it by November. The first part discusses how Erap Estrada came to power. It also says how Erap quickly used his presidential powers to facilitate the sale of PLDT to Indonesian interests led by the Salim family. It should be made clear that MVP is only an employee of the Salims.
Chapter 7 EDSA
DOS, ‘EDSA TRES’
ALTHOUGH movie actor Joseph Ejercito Estrada, a former city mayor, senator, and vice president, won overwhelmingly over presidential candidates Jose de Venecia, Raul Roco, Renato de Villa and a host of minor candidates in the 1998 presidential elections, his political victory did not sit well with critical sectors, which sneered on his official competence to lead the nation. Weeks after he was sworn into office, critics surreptitiously launched what could be regarded a destabilization campaign, dubbed as the “Operation Donald Duck.” The campaign involved a negative campaign to put him on the defensive by showing his incompetence, demonstrate his weaknesses for women, money, gambling, and every conceivable vice, and highlight his hard drinking ways. It was a sequel to the dirty political campaign of the 1998 elections. It fairly gained ground to put him on the defensive.
Operation Donald Duck was said to have been concocted by political operators of alleged allies of then Vice President Gloria Macapagal Arroyo and the so-called “perfumed elite crowd” based in the Makati central business district. They spoke condescendingly of Estrada. The alleged agenda was to destabilize his government with the aim to seize political power when he allowed weakness to handle the series of destabilization moves and negative campaign.[1]
Proponents of the Operation Donald Duck destabilization project knew Estrada’s weaknesses. He possessed an inordinate vulnerability for money because he was said to have been supporting at least three other families aside from the families with legitimate spouse Eloisa Pimentel and long-time paramour Guia Gomez, a former actress. Estrada was said to have been leading an epicurean lifestyle. He was notorious for his hard drinking ways during those days.
Moreover, Estrada did not possess the work ethic for public service. As a public official, he hardly read and studied the burning public issues. He delegated the presidential works to his subalterns. By 6 pm, he opted to start his drinking sprees with friends and it could last until wee hours of the morning. Because he was hard on the bottle, but soft on his job, Estrada had no deeper understanding of the works and processes of his office. Hence, his critics attacked him for his weaknesses. [2]
‘DEAL OF THE CENTURY.’ Although Estrada occupied the presidency for only 30 months, as he was unceremoniously kicked out of Malacanang in the fateful people’s revolt, dubbed as “EDSA Dos,” in 2001, Estrada gained global notoriety for using his presidential powers reportedly to consummate by force the “deal of the century.” Estrada was known for what he did to the Philippine Long Distance Telephone Company (PLDT), the telecommunications monopoly giant. Two months after he assumed the presidency in 1998, Estrada forcibly facilitated the sale of PLDT to First Pacific Company, Inc., the Hong Kong based investment firm owned by the Salim family of Indonesia.
The much ballyhooed PLDT sale to First Pacific Company Ltd. of the Salims constituted a bump on the road to democracy because it typified the use of presidential powers for private gain. Furthermore, it favored a foreign firm to the detriment of legitimate local capital. It triggered diminished business confidence in the country, as its forcible sale constituted a bypass of the constitutional limit on foreign equity on public utilities. Moreover, the sale exposes the inherent political weakness to protect the local industries from foreign encroachment. The deal went to show that even the incumbent president woud not hesitate to use his political power to favor foreign interest to the detriment of local business.
Neither the Cojuangcos, who represented the majority shareholders, nor the Yuchengcos, the minority shaholders, were willing to sell their stakes at PLDT. They were forced to sell whatever they possessed to First Pacific in the forcible takeover. Estrada handed the PLDT majority shareholdings on a silver platter to the Salims, the patriarch of whom – Soedono Salim – was widely believed and perceived to be a crony of Suharto, the erstwhile Indonesian strongman.
Estrada functioned as the unofficial broker in that deal, as he was said to have pressured the family of Antonio Cojuangco to sell their majority shareholdings in PLDT to First Pacific. In exchange, Estrada was alleged to earn a commission that ranged between P1 billion to P3 billion in 1998, according to a claim of the late Perfecto Yasay Jr., a former Securities and Exchange Commission (SEC) chair and foreign affairs secretary during the term of Rodrigo Duterte. He also pressured the late Alfonso Yuchengco, a minority stockholder, banker, and insurance entrepreneur, using his presidential powers to force his family to sell their shareholdings to First Pacific. He was said to have used police and gangsters to intimidate the Yuchengcos to submit to his dictate.[3]
POLITICAL CATACLYSMS. The 1997 Asian financial crisis led to political cataclysms in Indonesia, forcing strongman Suharto to relinquish power. Indonesians burned villages, looted houses, and resorted to violence particularly on the ethnic Chinese. The Salims were Chinese migrants, who adopted indonesian names. Patriarch Soedono Salim was perceived a crony of Suharto, after he created the noodle monopoly there. Desperate to transfer their wealth elsewhere due to the lingering political problems, the Salims, through acolyte Manuel V. Pangilinan, or MVP, their trusted executive, worked to transfer their investments to the Philippines.
The First Pacific takeover of the PLDT would not have happened without Estrada’s intercession. Rigoberto Tiglao, an ex-journalist and state official under the Arroyo government, and now a perceived pro-China newspaper columnist said: “Without President Estrada, the only Philippine president impeached in Congress and then toppled by the ‘parliaments of the streets,’ the Indonesia tycoon Salim could not have taken the country’s biggest telecommunications firm, which became his platform for building his public utility conglomerate in the country. His intercession was so crucial that it is not an exaggeration to call the surrender of the country’s biggest telco to Indonesia, the Estrada-Salim takeover.”
Tiglao said PLDT’s acquisition of the controlling interest in PLDT was “indisputably the fastest and most secret acquisition” of a major firm in the country’s business history. It was completed in five months in 1998 at a time when the entire Asian financial market was in a major crisis. According to Tiglao, First Pacific had $900 million in cash to make “crisis-created bargains.” It had the money after First Pacific sold its Amsterdam-based Hagemeyer and three other firms. It also sold for $400 million its Pacific Link to Vodafone.
Said Tiglao: “That was certainly a clever move for any magnate during a crisis period to convert his conglomerate assets into cash. However, some say it could have been to put Salim’s assets away out of reach of Indonesian post-Suharto authorities, which had claimed that the conglomerate owned the government $5 billion, and moved to take over Salim’s firms in payment for this big debt.” Moreover, it was viewed as the start of moving the First Pacific money to public utilities firms, which are more stable and profitable than in another field.
Tiglao said: “Nothing of its scale occurred even during martial law, and the $749 million First Pacific spent for the buyout dwarfed Marcos’ associate Eduardo Cojuangco ‘s and the coco-levy funds’ $200 million (equivalent to $328 millon in 1998) of San Miguel shares from the Ayala and Soriano oligarchs. The big difference between these two corporate takeovers in Philippine business history is that the Ayalas and Sorianos voluntarily offered to sell San Miguel shares to Cojuangco.”
Tiglao continued: “In contrast, President Estrada threatened a major, though indirect, stockholder of PLDT, Alfonso Yuchengco, to sell his shares to Indonesian First Pacific and to give up his right of first refusal as contained in PTIC’s corporate by-laws, which entitled to counter any offer to buy the firm’s shares. There is hardly any doubt that banking taipan Yuchengco with his own resources and his many allies in the Chinese-Filipino business community could have easily raised the funds to counter First Pacific’s plan to acquire PLDT.” But this was an assertion that was not necessarily backed by facts. Many Chinese-Filipinos do not exactly go into big ticket investments without a corresponding assurance of solid returns on their investments.
ENTER MARK JIMENEZ. Enter the not-so-hidden card: Mark Jimez, the obscure Spanish-speaking Filipino businessman, who was alleged to have earned a fortune by selling computer equipment in Latin America. Jimenez, who was Mario Batacan Crespo in real life but adopted his new name when he migrated to the U.S., returned to the Philippines after he was indicted in the U.S. for tax evasion and illegal campaign contribution charges to the Democratic Party, specifically to the Bill Clinton presidential campaign. Using his fabled wealth, Jimenez easily gained access to the powers that-be. Estrada invented a title for him; Presidential Adviser for Latin American Affairs, although it was not exactly known if he gave advice to Estrada, or how he helped Estrada to gain diplomatic headway in South and Central American countries.
According to Tiglao, the deal would not have been consummated without the participation of Jimenez, who served as the broker. It was Jimenez, who suggested that Estrada would get a higher commission from the deal. Estrada did not waste time to acknowledge Jimenez’s capacity to broker a deal. He empowered him to talk to Pangilinan and consummate the deal. It was an astounding success and Jimenez, now deceased, was said to have closed the deal to Estrada’s satisfaction. Because of his feat, Estrada described him as “corporate genius.”
This was an issue of unimaginable horror not only in the business community but the nation as well. Estrada’s concept of what could be regarded a corporate genius was a mere fixer, or broker, if a kinder word is used. Jimenez did nothing extraordinary in business like the way Henry Ford made automobiles, then a nascent technology, affordable for ordinary wage earners. He was no Bill Gates or Steve Jobs, who ushered the world into the modern digital era. Jimenez was no Andrew Carnegie either, who ruined his fiercest competitors to become the richest man of earth of his time, but gave his fabulous wealth to become “the father of modern philantropy.” Estrada’s limited mind could only confer the word “genius” to a fixer.
Jimenez did not put up something extraordinary to be described as a somebody, who performed a feat, or something pivotal in the economy. He brokered an important deal for the existence of the Salims because they had to transfer their wealth away from the prying eyes of Indonesian authorities, who wanted them to pay their debts, and Estrada, who wanted to earn a fortune out of his presidential powers at that time. It was the selfish side of Estrada to settle for the money, which, from all indications, constituted what could be regarded a lump sum for his retirement when he bowed out of the presidency in 2004. Estrada never denied the deal, although he denied he engineered it and earned a fat commission from it.
Press reports said First Pacific Company, Ltd. announced it took control of PLDT after it bought the controlling interest for a total of of $749 million, or P29.7 billion, the biggest ever buyout in the country’s business history. Of the amount, First Pacific paid $552 million for the 52.7% of the shareholdings in Philippine Telecommunications Investment Corp. (PTIC), the holding firm which the late PLDT patriarch Ramon Cojuangco set up to control PLDT. PTIC, during those days held 21.5% of PLDT, as it was the biggest bloc of stockholdings. Hence, the Cojuangcos controlled its management. The family of Antonio Cojuangco held 44% of PTIC, while Yuchengco had 7.7% and corporate lawyer Antonio Meer, 3%.
Also on Nov. 24, 1998, Metro Pacific Asset Holdings Holdings, Inc, a firm owned and controlled by First Pacific Company Inc. purchased from former Ambassador Alfonso Yuchengco and Y Realty Corp., a company owned and controlled by the Yuchengco Group a total of 18,720 PTIC shareholdings worth P2.61 billion, according to Tiglao. Both the Cojuangcos and the Yuchengcos considered as “hostile” the First Pacific’s takeover of PLDT, but in the end, the two business families relented because Estrada used his presidential powers to twist their arms into submission. Estrada did not let the chance to earn a fortune to slip by inaction. He was proactive to ensure the consummation of the deal.
The buyout of PLDT in 1998 and Meralco in 2008 has put First Pacific on solid ground. It has bruited out that it was the way for the Salims to launder the loot they gained by close association with Suharto. Estrada was their convenient partner. In the absence of stiff laws against money laundering at that time, Estrada could not be pinned down. He was accused on a different crime and kicked out of power in a people’s revolt. (to be continued)
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