FIGHT OR FLEE

By Philip M. Lustre Jr.

IF you’re a big entrepreneur and the powers-that-be have taken a fancy on you, you have two choices: fight or flee. The entrepreneurs whom Rodrigo Duterte has picked for a shakedown have chosen to fight in their subtle ways. They did not flee.

There are two rules when an entrepreneur does business in the Philippines. First rule: Don’t get too big. Second rule: If you become big, don’t be conspicuous. Moreover, he could expect certain well-connected parties would covet their businesses the moment they show unexpected strength and profitability.

Those entrepreneurs who comprise big business in the Philippines are advised to establish political connections. Otherwise, they are targets for shakedowns, buyouts, and corporate raids. They could have miserable lives. They have to establish ways to protect themselves.

Several months ago, an erratic Rodrigo Duterte had made the unforgivable mistake of making public his intentions to acquire utilities firms, when he accused them of allegedly reneging their contractual commitments and obligations.

His careless attacks against public utilities firms owned by the Zobel de Ayala family and First Pacific showed the not-so-hidden agenda to acquire them for cronies, including the overextended Davao-City based entrepreneur Dennis Uy. Why Dennis Uy is always the first choice is something that is getting obvious to the public.

The Ayalas chose to fight the clueless Duterte in their own way. Knowing his instability, they took a move forward to preempt any attempt to acquire Manila Water or a part of its equity. They have sold 25 percent of its equity to entrepreneur Enrique Razon Jr., who is not exactly identified with Duterte although he is reputed to be a big-time survivor.

In an announcement, the Ayala-led firm said Razon, through his firm Prime Metroline Holdings Inc., has agreed to infuse ₱10.7 billion in Manila Water, which currently supplies customers in the east zone of Metro Manila.

The acquisition has neutralized veiled attempts of the Duterte camp to acquire without infusing money. It has been known and discussed in business circles Duterte’s tendency to follow examples set by dictator Ferdinand Marcos, who acquired firms he fancied without making any investments. Critics called it “saliva investment.”

It would appear the Ayalas could not stomach the entry of any Duterte crony in the utilities firm. It would not jibe their entry to its corporate philosophy. The Ayala Group has established a reputation for appropriate corporate governance.

Besides, the Ayala Group follows a Code of Corporate Governance, of which the entry of a perceived crony would be a violation of its own rules. It takes a strong stand against crony capitalism. 

The Lopez family, who owns and controls ABS-CBN, a broadcast giant, has followed a different mode to fight back. They simply refuse to negotiate and sell.

They have amply prepared to the May 4, 2020 termination of its franchise. No, they have yet to show panic. In fact, they have never been in a panic mode.

They have chosen to take advantage of the digital platform in its broadcast activity, even as they have refused overtures by several parties to negotiate for a sellout.  Meanwhile, they have chosen to park the ABS-CBN like an unused car, work for its franchise renewal in 2022  when a more mentally stable president gets elected, and reopen only when they have the franchise extension.

The Ayalas and Lopezes have refused to kowtow to the uncouth pretender from the South. In brief, they have no respect for him.

POLITICAL FICTION.

By Philip M. Lustre Jr.

ONE of the most perpetuated and well-preserved political fiction for many decades is the purported strength of the Iglesia Ni Cristo. Because they vote like a bunch of docile sheep, political commentators, particularly media people, describe it as "strong," "powerful," and "game changer." This is not exactly true.

Allow me to comment on this political fiction:

1. The INC support is good for 1.5 million votes.Exit polls of a reputed polling firm has established this figure. These votes hardly determine the winners particularly in national elections (president, vice president, and senators). But they could provide the swing votes. Hence, they could influence the outcome of closely contested senatorial elections, particularly those candidates in the 11th, 12th, 13th, and 14th positions

2. An INC support does not mean automatic political victory for the candidate. An INC supported candidates also lose. My personal interviews with certain political guys have yielded disturbing facts. Members of rival religious organizations like Ang Dating Daan, JIL, Christian Evangelicals tend to vote for the opponents of INC-backed candidates. In brief, they cancel each other out.

3. Many INC-backed candidates lost. Examples are Danding Cojuangco in 1992, and BBM in 2016.

4. There is no known set of criteria to gain INC support. There are no consultations between leaders and members. INC leaders merely give the list of candidates to be supported by INC members. It is often said that an INC member has to abdicate his right to think every election day. He merely follows what his leaders tell him. Candidates negotiate with INC leaders to gain their support.There are reports that certain INC members don't follow the list. There are also reports of trade-offs.

5. Because of the absence of any consultation process or set of criteria for INC support, it's always open-ended with the INC.Known plunderers and murderers could get INC support. But the INC has gained a reputation for opportunism. The quid pro quo for INC political support is usually the appointments to key government posts of INC members.

THEY MISREAD THE PEOPLE

By Philip M. Lustre Jr.

DEEPLY mired in their hubris, the ruling elite, disparagingly called “Inferior Davao,” could have misread the temper of times, as they have mishandled the franchise termination of ABS-CBN and ordered the closure of the broadcast giant.

Salivating and careless to  show real intention, Inferior Davao  led by the impulsive but unstable Rodrigo Duterte has shown inordinate interest to acquire the broadcast giant, resorting to arm twisting tactics to bully the Lopez family, its majority owner, and force them to sell the ABS-CBN preferably to Dennis Uy, his crony.

“What Dennis wants, Dennis gets” seems to be the battlecry of the Davao City-crony, who leads the business arm of Inferior Davao. His rise from obscurity and tantalizing acquisition binge to become Duterte’s main business crony has baffled the business community, making him a topic in coffee shop talks.

But the business empire he leads seems to be standing on soft ground, making its vulnerable to a sudden collapse. Analysts have pointed to his firms’ abnormally high debt-equity ratio. A failure in the debt repayment of one of his firms could trigger a domino effect on the other firms, raising the specter of a collapse.

Duterte’s attempts to shame the Lopezes over the television three months ago did not lead to negotiations for sellout of their crown jewel to Dennis Uy or any other crony. The Lopezes have clamped down. 

Patriarch Oscar Lopez, a second generation Lopez, and nephew Eugenio Lopez III, nicknamed Gabby, have been silent on the fate of what could be regarded the biggest broadcast network in the country.

No, ABS-CBN is not for sale. The Lopezes have stuck to their guns; they would not negotiate to any interested party. The Lopezes has chosen to park the broadcast giant like an unused car, although they have kept its digital platform for use to stay relevant. 

The Lopezes have taken the stance that they would take their chances in 2022, when a mentally stable president replaces Duterte, and reopens only after they get a new franchise.

What Duterte and the entire Inferior Davao crew that includes the likes of Bong Go, Jose Calida, Bato dela Rosa, and other flunkeys and acolytes do not know is that ABS-CBN is far beyond the ownership of Lopez family and other listed stockholders.

The ferocity of many opposing netizens indicates the ownership issue is not the single issue that has to be acknowledged by Inferior Davao. In fact, their reaction shows it is the Filipino people, who now own ABS-CBN. It’s their institution. It’s where the people get informed and entertained.

Moreover, the 6-8 pm daily news program of the broadcast giant could be regarded a sort of daily national meeting where the Filipino people got their briefing about developments in the Philippines and other parts of the world. The succeeding telenovelas like “Ang Probinsyano” is their main entertainment stuff.

Closing ABS-CBN and taking them away is tantamount to depriving them of information and entertainment they need for daily existence. True to its name and identity, Inferior Davao does not understand the cultural terrains of the entire Filipino people, particularly those in Luzon. They have a limited, albeit parochial view, of the entire situation.   

Closing the broadcast giant on basis of the May 4, 2020 termination of its franchise and despite its track record of an obedient corporate citizen (its paid its taxes and did not violate any law) could be regarded a direct affront to the Filipino people. Duterte and his Inferior Davao would pay dearly for what they have done.

PREPARED FOR EXTREME SCENARIO

By Philip M. Lustre Jr.

IT was not difficult to read the dynamics of the franchise extension of ABS-CBN. At the outset, the Lopez family, owner of the controlling interest of the broadcast giant, knows they face an uphill battle to have its franchise extended beyond the May 4, 2020 expiration. For them, the dynamics would lead to a single scenario, which is the extreme, and they have prepared for it.

Since 2018, they know the extreme scenario: franchise termination, non-extension, and closure of the broadcast facility for at least the next two years. Learning from their 1972 experience when Ferdinand Marcos practically dispossessed them of their business empire in exchange for nothing, the Lopezes do not want this time to be caught with their pants down again.

They do not want to be put in another extremely precarious and defensive position, when they could not negotiate for anything. History should not repeat itself, its patriarch Oscar Lopez could have thought. Hence, they are prepared for the extreme scenario.

It is the people in power who misread the Lopezes. Rodrigo Duterte, the mentally unstable political overlord, and Bong Go, his chief acolyte, could have thought the Lopezes were cowering in fear, as they have wielded the unrestrained use of state power. They could have thought the Lopezes would negotiate and sell their crown jewel for a song.

They guys in Malacanang probably do not know the Lopezes have been steeled by the shabby treatment Marcos gave them. They have failed to understand the extent of their resolve to slug it out once more. They are fighters and survivors by all means.

Congressional leaders have mistaken the Lopezes’ reticence as readiness – or willingness - to strike a deal with them for a franchise extension in exchange for pieces of gold. Although they know Duterte would refuse franchise extension, those crocs had managed to sail by themselves laying down baits to entice the Lopezes to go to the table and negotiate with them. Alas, the economic family did not in any way bite.

Negotiations for a new franchise did not happen. Why would the Lopezes negotiate when they have prepared for the worst scenario three years ago? Hence, the Lopezes did not bother to dangle any bribe money in exchange for franchise extension. 

In fact, they have chosen to keep distance from those crocs.

Knowing the difficulties they would suffer with the political maggot from Davao City and his ilk and the bribe-taking lawmakers, the Lopezes have prepared instead for the worst: close shop for the next two years, work for a new franchise after the 2022 presidential elections, and reopen only under a new political leadership.

They did not foresee a fair deal from the political leaders.  They foresaw they would be forced to sell the broadcast firm at a bargain price and use of its broadcast facilities to promote China’s agenda. The last scenario is totally unacceptable. They would not have any part of it.

Hence, the Lopezes have chosen to stick to their guns. They would not negotiate for franchise extension. They have been prepared for the worst. They will be back in 2022.

NO, THEY WON’T SELL IT FOR A SONG

By Philip M. Lustre Jr.

OF course, the Lopez family won’t admit it publicly. They are reticent of their real feelings and intentions to a fault. But anybody who knows the history of the Lopez family and their struggle against the dictatorship of Ferdinand Marcos, their nemesis, would know they are not easy nuts to crack.

The Lopezes, one of the more persistent economic families, had their past lessons, largely bitter and one-sided, but they know how to fight back and survive. They have outlived the dictator and recovered their business empire in a reversal of fortune.

This is the reason the Lopezes, in an eyeball to eyeball situation with Rodrigo Duterte, have not in any way blinked. They know Duterte, a dying mad man, does not approximate an inch of Marcos, the wily and calculating political genius, but largely on the evil side. Of course, they would not admit Duterte does not actually merit their unequivocal attention. From their standpoint, Duterte does not make them nervous or uncomfortable.

This is the reason the Lopezes were not selling their majority interest in ABS-CBN. They would not sell them for a song as the mad man had wanted. Three months ago, Duterte was egging out the Lopezes to sell ABS-CBN in what could be regarded a blatant arm twisting tactic to scare them of their wits. Sell them or I would punish you – this was the crackpot’s message.

“Utot mo (go and fart).” This was their subtle message. Why not? The Lopezes’ mindset works under a simple equation. Why would they be afraid of a political maggot from Davao City, when they did not blink under Marcos? They zigged and zagged out of the worst imaginable political vendetta by Marcos and they passed with flying colors.

They would get scared of Duterte? No, the Lopezes are hard-boiled conos; they would not budge and give him an inch. They prefer to keep their pride intact than surrender to a political leader, who is crude and boisterous by all means and standard. “Pundonor,” as the Spaniards say it. Punto de honor, Or point of honor.

Moreover, they are fearless nationalists, who would not allow the media station to fall under the control of a perceived dummy of China. They would not allow ABS-CBN to be used for China’s propaganda to integrate the Philippines to become its province. Hence, its deterioration is an option to negate being used for China's propaganda.

Entrepreneurs are creatures of creative greed. At the end of the day, every entrepreneur is defined by the amount of wealth he creates or throws into waste. The yardstick is frequently the color of his money. Hence, every entrepreneur is open to negotiations. “I’ll buy you,” or “you’ll buy me” is the usual opening statement.

But the Lopezes would not agree to negotiate with Duterte’s chosen entrepreneur. Not with Dennis Uy, the overextended Davao City-based businessman, whose business empire is feared to collapse anytime because of the inordinate rise of his firms’ debt-equity ratio. He does not have the money to strike a megabuck deal to meet the Lopezes' asking price. Not to dubious Apollo Quiboloy, who faces accusations of dollar smuggling in the U.S., or the Villars, who have no passion for media business. The Villars prefer to make money by converting those open agricultural estates into subdivisions.

Truth is Duterte and his mentally-challenged ilk had miscalculated the Lopezes. His limited mind could have probably thought they are cash-strapped. This is absolute nonsense. Truth is they are loaded. They have earned a windfall from the sale of two erstwhile corporate gems to First Pacific: Meralco and Maynilad. The Tagalogs have a sentence for what the Lopezes did: “Nakapagsubi na (they have saved something).”

The Lopezes are no different from grizzly bears, or polar bears, who have fattened themselves to meet the most debilitating winter, hibernate in the cold, and rise up in spring to repeat the same cycle of their existence. Survival is in their DNA. The history of the Lopezes is a history of survival from patriarch industrialist Eugenio "Inying" Lopez Sr. down to his living heirs.

They would just park ABS-CBN like an unused car, take their chances when a more mentally stable president gets elected in 2022, and restart the media giant after the 2022 elections. They have done their actuarial studies; they know they could stand the financial pressures of a two-year hiatus. They will keep the media giant firm.

No sweat. 

WHAT HAS HAPPENED TO THIRD PHL TELCO?

China Telecom ban latest in global pushback against Chinese intrusion

By Philip M. Lustre Jr.

ACTIONS by the U.S. Department of Justice and other federal agencies to terminate China Telecom’s authority to operate in the U.S. market constitute the latest developments in the mounting pushback against Chinese intrusion worldwide.

From geopolitical tension and Chinese aggression in the South China Sea to cooling China-Italy relations, to coronavirus-related disagreements with ally Iran, China’s recovery from COVID-19 and its attempts to aid the rest of the afflicted world have failed to give the goodwill and upper hand it seeks in the global stage.

This is being complicated by recent accusations that China is source of the destructive virus that has caused a pandemic, even as various entities have threatened they would bill China for the adverse effects of the virus and seek damages in various legal forums. China is now in a crisis public relations mode mainly to escape culpability or lessen the future damage to its global reputation.

In the U.S., the Department of Justice and the State Department were requesting the Federal Communications Commission (FCC) to revoke China Telecom’s license to carry out international telecommunications services to and from the U.S.. They are concerned that state-owned China Telecom is “vulnerable to exploitation, influence, and control” by the Chinese government.

In the Philippines, the entry and operations of Dito Telecommunity, the reputed third telecommunications firm after the PLDT Group and Globe Telecom, into the market could be adversely affected by the developments in the U.S. involving China Telecom, a part owner of Dito Telecom.

Because of the recent developments, Neri Colmenares, chair of leftwing Bayan Muna, said the government should scrutinize further the third telco player, saying it would require a congressional inquiry “in aid of legislation” since China’s entry into the domestic telecommunication sector is “a threat to the sovereignty of the country and national security.”

“This development in the U.S. will delay Dito Telecom’s rollout because it should now be subject to tighter scrutiny from government and requires a congressional investigation.  Because of its expansionism in the West Philippine Sea, the Chinese government is not a friend. We continue to assert that allowing China entry into our telecommunications sector is a threat to Philippine sovereignty and national security,” Colmenares said.

Dito Telecom has announced it has drawn out the initial $500 million (P25 billion) from state-owned Bank of China to lay down the infrastructure for its nationwide backbone. Adel Tamano, chief administrative office, announced the firm would start operations by March 1, 2021.

Dito Telecommunity Corp., formerly Mindanao Islamic Telephone Company Inc. (Mistel), is a "consortium" (not a joint venture- author) of Udenna Corp. of Davao City-based businessman Dennis Uy, and its subsidiary Chelsea Logistics Corporation and the China stated-owned China Telecommunications Corporation, a parent company of China Telecom.

Dito Telecom would have a hard time operating in the Philippines once the China Telecom is banned in the US mainly because of interconnection issues. Without interconnecting to other telecomunications firms, it is next to impossible to operate freely. Interconnection is regarded as the heart of sustainable and vigorous telecommunications sector.

Its rollout has been stalled thrice.  It was initially scheduled for inauguration in the final quarter of 2019. Its operation was later moved to July 2020, but now has been programmed for a March 2021 opening.

Its unveiling is in danger of being put off anew following the opposition of several U.S. departments in the operation of the China Telecom (Americas) Corp. in the U.S. Several U.S. departments had encouraged the Federal Communications Commission (FCC) to revoke China Telecom (Americas) Corp’s authorization to provide international telecommunications services to and from the U.S.

“This recommendation reflects the substantial and unacceptable national security and law enforcement risks associated with China Telecom’s continued access to US telecommunications infrastructure,” said the group of departments, which include State, Justice, Defense, Homeland Security, and Commerce, in a statement, along with the United States Trade Representative, in a statement regarding the filling at the FCC recently.

The call is in the midst of the continuous scrutiny being done by FCC to China Telecom in an investigation that was started last year. The US subsidiary of the Chinese state-owned telecommunications company holds the license to grant service in the US since 2007.

The FCC united to vote May of last year to deny the request of another state-owned Chinese telecommunications company, the China Mobile, to grant service in the US. According to FCC chairman Ajit Pai, the Commission was able to determine following the vote that China Mobile was controlled by the Chinese government.

The U.S. government laid out several issues they had with China Telecom including the “increased knowledge of the People’s Republic of China’s role in malicious cyber activity targeting the U. S.” The agencies stressed that China Telecom is “vulnerable to exploitation, influence, and control by the PRC government”.

In Italy, China’s Belt and Road initiative has failed to develop stronger relations between the two countries mainly because the anticipated economic benefits for Italy have yet to materialize. Italy’s trade deficit with China had in fact widened further last year. The spread of COVID-19 did not help the situation as the Italian government moved to stop all flights to China over worries about the coronavirus.

Alongside stalled investments, trade benefits have failed to add up for Italy. Italian exports to China showed a 1% decline last year, even as overall foreign sales rose, according to preliminary figures released by statistics agency Istat in January. With Chinese imports growing, Italy’s total trade deficit with China climbed to €18.7 billion ($20 billion).

Immediate tensions related to the virus “will blow over once COVID-19 disappears,” said Jan Weidenfeld of the Mercator Institute for China Studies in Berlin. “But those more fundamental issues of reassessment of what doing business with China means, that is here to stay.”

China’s ties with Iran have also seen better days as Iranian health ministry spokesman Kianush Jahanpur criticized Chinese government statistics on the Wuhan coronavirus outbreak, appearing to blame those statistics for other countries’ slow response to the emerging pandemic.

“It seems statistics from China [were] a bitter joke, because many in the world thought this is just like influenza, with fewer deaths,” Jahanpur said during a video conference. “This [impression] were based on reports from China and now it seems China made a bitter joke with the rest of the world.” Jahanpur added, “If in China they say an epidemic was controlled in two months, one should really think about it.” The remarks sparked a row with Chinese officials, with China’s ambassador to Iran saying the country should “show respect to the truths and great efforts of the people of China.”

With no regard for the ongoing battles against COVID-19 around the world, China has also kept up its aggression in the South China Sea. Its Coast Guard and paramilitary vessels continue to harass fishing boats, military ships and oil and gas rigs in the area, and even sunk a Vietnamese fishing boat earlier this month.

“There’s no apparent pause or reduction at all” in Chinese activity in the South China Sea, added Collin Koh, a maritime security expert at Nanyang Technological University in Singapore. “It appears to be business as usual for the PLA, and for that matter, the China Coast Guard as well.”

The Philippines expressed support for Vietnam after Hanoi protested against what it called the ramming and sinking of a Vietnamese fishing boat by a Chinese coastguard vessel in the disputed South China Sea last April 3.

The Department of Foreign Affairs in Manila expressed deep concern over the reported sinking of the boat off the Paracel Islands, adding that the incident happened ‘at a time when a common approach was crucial in confronting the coronavirus pandemic.’

The Philippines has its own problems with its ‘China pivot’. China’s intrusion into the country is highlighted by the recent report of about 3,000 members of the Chinese People’s Liberation Army (PLA) entering Manila as tourists or workers in Philippine offshore gaming operators (POGOs).

The PLA report comes at the heels of security fears hounding the Philippines’ power and telecommunications sectors. China maintains ownership over the national grid as well as the Philippines’ third major telecoms firm – Dito Telecommunity, of which 40% of its equity is owned by China Telecom, the same company facing a potential US ban. #

THE HUMOR OF AMANG RODRIGUEZ

By Philip M. Lustre Jr.

ONE of the most colorful persons to have graced Philippine politics was a humble man named Eulogio Rodriguez Sr. A son of Rizal province, Rodriguez, who was "Amang to friends and foes, had a political career that spanned both the prewar and post war eras. He was the longest tenured Senate president. He held the post for over ten years until Ferdinand Marcos replaced him in a turbulent takeover.

Amang Rodriguez, for whom a major thoroughfare in Quezon City has been named (remember E-Rod?), was reputed for his unparalleled sense of humor. He could make people laugh with his special humor. There were many humorous vignettes about him. No, Amang was much intelligent than the likes of Tito Sotto, Manny Pacquiao, Migs Zubiri, or even the sick old man of the South, who did not bother to run for senator and was never elected as one. Tito, Manny, Migs, among others could be regarded as dumb but not humorous.

Although elected senator under the Liberal Party, Ferdinand Marcos joined the Nacionalista Party in 1963 to become its standard bearer in the 1965 presidential elections against incumbent president Diosdado Macapagal. Amang Rodriguez, dubbed as "Mr. Nacionalista for his party loyalty, opposed Ferdinand Marcos, uttering the prophetic words: "luluha tayo ng dugo diyan." Amang did not like Marcos because it was Marcos who took his place as Senate president. But Marcos knew how to charm his opponents.

Together with his chief party backer, the Speaker Jose Laurel Jr., Ferdinand Marcos went to Amang Rodriguez's residence in New Manila to ease the pain of having an opponent as his party ally. But Amang refused entry to his uninvited guest. He feigned illness, but not without telling one of his kasambahays, a male, to face Pepito Laurel and Marcos to tell he was ill. "Maysakit po si Sir. Under seduction siya," the kasambahay told the two politicians. Even Marcos narrated this anecdote in his speaking engagements when he became dictator.

Amang Rodriguez was always patronizing to reporters, who covered the Senate, but in a different way. While he was a perfect gentleman to lady reporters, he was irreverent to the men. He called "Kupal" every male reporter who covered to the Senate during those days. In return, every male reporter called him "Kupal" too. He never lost his cool to journalists; he never sued any journalist for libel.

The late Maning Almario, a journalist who happened to know personally Amang Rodriguez, once narrated how he warned journalists, who were about to partake a whole lechon baboy. "Don't eat too much lechon, guys. It has plenty of collateral," Ka Maning quoted Amang as telling them. They all laughed.

Another vignette was how he chided a local official and partymate, who always narrated complaints about the Nacionalista Party. "I don't want to talk to you. You have many reclamations," Amang told him. In another instance, he coined a new word "ejempol," which was a odd mixture of Spanish and English words for example.

It was in a bitter debate with Senator Cipriano Primicias Sr. that Amang cemented his humorous and disarming style. In the middle of plenary debates and interpellation, where Amang was defending a bill he authored, Primicias stood to point out many errors in the proposed measure. Amang was so embarrassed by the mistakes, but not without leaving the Senate hall with a humorous line. "Yes, I made a mistake in the bill, Your Honor. I stand erected," Amang said with an air of contrition.