OPINION COLUMN – MEDIA-PHILSTAR | Indonesian magnate controls Philstar – First of five parts
First of five parts
THE Philippine Star marked its 40th anniversary on July 27 with an issue of unprecedented length of 216 pages, its motto prominently displayed: “Where Truth Shines.” However, the catchphrase that most accurately describes Philstar: “Where Truth Is Buried”: Not a single mention, out of the issue’s 500,000 words, of “Anthoni Salim,” the foreigner who is the paper’s ultimate controller. The Star has been hiding the fact that a Salim firm had accumulated a 51 percent controlling stake by 2014.
But it is not only the Star, one of the country’s two largest broadsheets, that Salim controls. The Indonesian governs over the largest and most diversified media conglomerate in the country, which includes its 76 percent shareholdings in the business paper BusinessWorld, a 20 percent minority interest in the Philippine Daily Inquirer, TV5 Network, Nation Broadcasting Corp., Cignal TV, and the country’s third oldest newspaper still publishing, the Cebu-based The Freeman.
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Salim’s control of these media firms is in violation of the constitutional ban on foreign capital in media, although Salim has exploited legal loopholes to do this. Amazingly, no one, no administration, has questioned this anomaly defying our Constitution in court.
Anthoni is the son of Soedono Salim, the late Indonesian-Chinese billionaire who was strongman Suharto’s biggest crony, who had built a vast business empire in Indonesia.
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After Suharto was overthrown after 32 years in power in 1998, one of his three sons,* Anthoni recruited Filipino Manuel V. Pangilinan, a Hong Kong-based banker, to organize and head his holding firm, First Pacific Co. While the first companies Pangilinan set up proved to be ill-fated ventures (e.g., Bonifacio Land, Steniel Manufacturing, and Metro Bottled Water), it was Pangilinan’s controversial capture of PLDT during President Estrada’s term that boosted First Pacific’s expansion in the Philippines.
Conglomerate
While most of the revenues came from Indonesia-based firms in the 1980s. Anthoni’s conglomerate earns the biggest chunk of his profits from his Philippine firms after 2000.
This is not really surprising, as the First Pacific group’s main firms now are in monopolies or near monopolies: electricity distributor Meralco, telecoms firms Philippine Long Distance Telephone (PLDT) and Smart, water distributor Maynilad, and toll operator Metro Pacific Tollways. Thus, probably 80 percent of Filipinos living in Metro Manila have to buy Salim’s products and services.
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Salim has managed to pull off one of the most successful media deceptions ever. Since he is in media and utilities — industries the Constitution bans foreign capital in — Salim’s PR corps have succeeded to falsely portray his top executive Pangilinan, the CEO of First Pacific and his other major firms, as the conglomerate’s principal owner.
Thus, media always refers to it as the “MVP group.” Salim, though, is “He who cannot be named.” His name was not even mentioned even in First Pacific’s anniversary speeches and didn’t even attend its star-studded 45th anniversary party in the Meralco theater last May. He has never even visited the country.
The deception, though, is easily exposed: Pangilinan, based on the firm’s annual reports since 2005, owns only less than 1 percent (0.20 percent) of First Pacific, and roughly the same percentage holdings in the group’s Philippine-based holding company, Metro Pacific. Scottish accountant Christopher Young, said to be Salim’s financial wizard, and American Edward Tortoreci, his strategist and organization man, even have slightly bigger shares than Pangilinan.
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Unchanged
Strangely, Pangilinan’s percentage shares in First Pacific have been unchanged in the two decades he built up Salim’s conglomerate in the Philippines. Pangilinan, therefore, is Salim’s glorified executive, whom he can kick him out of the “MVP group” anytime, since he has been the single biggest stockholder of the holding company, with 45.2 percent. Many years ago, though, I asked Pangilinan why he owns just a small percentage of Salim’s conglomerate. Grinning, he replied, “Are you sure?” hinting that he may have secret arrangements for his actual shares to be hidden from the public. If this is so, why would he do so?
Having established that Salim is the biggest shareholder of First Pacific, with Pangilinan merely his executive — albeit probably the highest-paid executive in the Philippines with a compensation of P800 million annually — we can pierce the layers of the corporate veil concealing Philstar’s ultimate owner as follows.
The Salim-controlled First Pacific governs PLDT since it is its single biggest, largest shareholder with a 27.2 percent stake (inclusive of a 1.6 percent economic interest) and was given management control by the firm’s other stockholders. Its shares were mainly bought from the Cojuangco family in 1998, with the very controversial help from then-president Joseph Estrada. There were reports at that time that he earned P3 billion for his efforts. Former ambassador and businessman Alfonso T. Yuchengco publicly claimed in 2009 that he had been forced in 1998 to give up his stake in the vehicle holding PLDT shares, with Estrada’s police threatening to throw to jail a son on fabricated drug charges.
Empire
From PLDT, Salim/Pangilinan established his media empire, including Philstar, through the following steps.
PLDT management appoints the trustees of, and therefore controls, the PLDT Beneficial Trust Fund, its 9,000 employees’ retirement fund set up in 1967. While PLDT does not disclose to the public the identities of the fund’s trustees, information gathered from other published sources shows that late Foreign Affairs Secretary Albert del Rosario, a longtime Pangilinan associate and adviser, and Ray Espinosa, Pangilinan’s right-hand man and principal counsel of the group, served as chairman of the fund at different times.
The Trust Fund incorporated in 2012 BTF Holdings, Inc. as its corporate vehicle. Four of the current BTF Holdings’ six directors are PLDT or long-time Salim executives: Ray Espinosa, also a First Pacific director; Marilyn Vitorio Aquino, PLDT chief counsel, corporate secretary, and First Pacific associate director; and Danny Y. Yu, PLDT’s chief financial officer. The remaining two are Pangilinan’s counsels: Alex Erlito Fider, corporate secretary of several Salim firms, including Smart Communications, Metro Pacific Tollways, and Maynilad; and Estrelita Gacutan, corporate secretary in several Salim-controlled firms. Both partners of the Picazo Buyco Tan Fider and Santos law firm are Salim/Pangilinan’s main counsels today.
Finally, BTF Holdings owns 100 percent of MediaQuest Holdings, incorporated in 1999, which in turn owns Hastings Holdings set up in 2001.
It was MediaQuest Holdings which bought a 20 percent stake in Philstar in 2009, with Hastings Holdings buying another 31 percent in 2014, for BTF Holdings to own 51 percent of the newspaper. The Belmonte clan’s shares were reduced to 20 percent.
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OPM
Salim got to control Philstar using other people’s money — PLDT employees’ money. The Beneficial Trust Fund had invested P14.5 billion in MediaQuest — nearly 80 percent of its P18.4 billion in assets, reversing PLDT’s policy since 1967 that it should only invest in safe instruments such as blue-chip stocks and government bonds. If ever Philstar goes under — not a remote possibility with 3,000 newspapers in the US closing from 2005 to 2025 — as readers are fast shifting to social media’s myriad news outlets — the 9,000 PLDT employees will be impoverished when they retire.
The extent of the Salim-Pangilinan group’s corporate control of Philstar is reflected in its boardroom. The Belmonte scions — Kevin and Miguel — occupy only two of the six board seats, while the other four are Salim-Pangilinan executives. Its chairman Victorico Vargas had occupied several high-level positions in the Salim conglomerate’s firms and is even a First Pacific director endorsed to the post by Pangilinan. Marife Zamora was a PLDT director for a decade while Danny Yu and Leo Posadas are senior executives of the telecommunications firm.
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Miguel’s being Philstar’s CEO, sister Rose Anne the COO, and Kevin heading Philstar Global (Philstar’s digital operations) portray to the public that they are still the main owners of the newspaper, not Salim. But the Belmontes are having their cake and eating it too. The family sold its shares to Hastings, reportedly for P4.4 billion, a figure Pangilinan himself told media that was the offer price before the sale was made. Belmonte patriarch and former speaker Feliciano Belmonte Jr. could hardly conceal his euphoria with the transaction, describing it to the media as “a big payday for our family.”
It is remarkable that Salim’s control of a major part of Philippine media has not been challenged in court. That is partly because the conglomerate has grown so big and powerful and, unlike other business groups, has a huge media organization. The late Raul Locsin, my first boss in media, termed such ownership by a business group as “a gun in the holster.” That is, if anyone — a politician, another newspaper, or even the president — questions the legality of a foreigner’s control of a media enterprise or criticizes any of Salim firms’ operations, the gun is pulled out, and a hail of media tirades will hit him.
Marcos
This is not just a business story but one that affects our very political fabric. Salim’s control of Philstar and his other media interests explains why much of mainstream media, particularly print, has been supportive of President Ferdinand Marcos Jr. and antagonistic toward his political nemesis, Vice President Sara Duterte. Philstar’s headlines and news stories have framed the impeachment trial in ways that portray Duterte as already guilty of the accusations against her. With only two exceptions, its columnists are intensely pro-Marcos and anti-Duterte.
Why would Philstar serve Marcos’ interests? Because Salim’s firms such as Meralco, PLDT, and the tollways company are vulnerable to government action. These enterprises operate in industries subject to franchises, extensive regulation and constitutional restrictions on foreign participation.
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Government policy can have an immediate impact on their fortunes. A case in point: President Marcos’ recent statement in his State of the Nation Address concerning electricity companies’ system losses, for example, was followed by a sharp fall in Meralco’s share price.
Salim’s control over such a substantial sector of Philippine media raises a fundamental issue for our democracy: How can we have a democracy if one of its major pillars, media, is servile to the ruling administration?
*Salim’s second son Andree, who is totally not involved in his brothers’ firms, set up Singapore-listed QAF Ltd., the parent company of Gardenia Philippines, whose Gardenia brand is reportedly the largest-selling loaf bread in the country.
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Next in this series: Meralco has generated $1.5 billion in profits for Salim’s First Pacific.
Facebook: Rigoberto Tiglao
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Website: www.rigobertotiglao.com
n First Pacific and PLDT reports, SEC filings
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