Arroyo team wants new chair for SMC

SMC chairman Eduardo Cojuangco

In this story: Resignation sought Nomination of new directors RELATED STORIES, SITES

By Amabelle Layug, CNN writer

MANILA, Philippines -- The Philippine government will ask the courts to unseat five directors appointed to the board of San Miguel Corp. by ousted president Joseph Estrada.

The move is part of a bid to regain control of the food and beverage conglomerate from Estrada ally, SMC chairman Eduardo Cojuangco.

Philippine Solicitor General Simeon Marcelo said the removal of the Estrada appointees is the initial step in efforts by the government of new president Gloria Arroyo to oust Cojuangco as SMC chairman and chief executive.

"That is in the battle plan. We'll take this step-by-step," Marcelo said. ``We'll fight the battle and then hopefully we can elect our own chairman."

Cojuangco was a close business associate of the late dictator Ferdinand Marcos, and is also a key political patron of Estrada.

He obtained a 47 percent stake in SMC under Marcos' reign, and was chairman from 1982 to 1986 until he was ousted together with the fall of Marcos.

The shares were then sequestered by the Aquino government, on suspicion that they were part of the Marcos family's ill-gotten wealth.

But a day after Estrada assumed the presidency of the Philippines in July 1998, the court allowed Cojuangco, who directly owns 20 percent of the 47 percent sequestered stake, to vote his shares pending a court resolution defining the ownership of the contested shares.

The remaining 27 percent stake, which represents five board seats, is owned by a coconut levy fund held in trust by United Coconut Planters Bank (UCPB). Cojuangco owns the bank.

Resignation sought

The Presidential Commission on Good Government (PCGG) has sent several letters to the five Estrada nominees on the SMC board asking them to resign.

However, the five directors insist that their term expires on May 3.

Besides Estrada's brother-in-law Raul de Guzman, the other nominees of the previous administration on the SMC board are movie producer Espiridion Laxa, Alan Lee, Ben Paulino and Dr. Hermogenes Tantoco.

With Estrada's ouster in January, the government insists that de Guzman, and the other Estrada-nominated directors have lost their authority to represent the government in the SMC board.

``These are shameless usurpers who continue to cling to their offices even as their terms have already been revoked,'' Marcelo said. ``Worse, they not only refused to resign but even want to be elected for another term," Marcelo noted.

The government wants the five directors removed in light of SMC's plan to buy Pure Foods, the nation's second biggest food company, and to sell the juice and water business of San Miguel liquor's unit, La Tondena Distillers, to Coca-Cola and the local bottling unit of the soft drinks giant for $141 million.

The Arroyo administration insists that its controlling 47 percent block of shares in SMC was acquired using the levy funds collected from coconut farmers during the Marcos dictatorship.

But Cojuango disputes this, saying those shares were acquired using private money.

Nomination of new directors

Government lawyers will also file with the high tribunal a petition for an extension of the January 20 deadline to nominate new directors, said presidential legal adviser Avelino Cruz.

The government has also asked the Securities and Exchange Commission to allow the government to get proxies from other shareholders to vote for its nominees to the SMC board, Finance Secretary Alberto Romulo said in a separate interview.

The government plans to regain control of SMC from Cojuangco by occupying eight of the 15 board seats.

The Government Service Insurance System (GSIS) and the Social Security System (SSS), which have a combined 12-percent interest in SMC, would also file proxy statements with SEC to solicit voting rights from other shareholders.

The five board seats, along with two held by GSIS and SSS, could give the Arroyo government enough muscle to remove Cojuangco as chairman at the company's annual stockholders' meeting on May 3.

While the reason to oust Cojuango may be political, company insiders say Cojuangco was able to make SMC immensely profitable, transforming it into a lean well-run conglomerate.

SMC is the Philippines' largest beverage, food and packaging company, with domestic market leadership and overseas operations in Hong Kong, China, Indonesia, Taiwan and Guam.

Its products include beer, soft drinks, gin, rum, wine, mineral water, meat and dairy products, animal feeds, glass containers, metal closures, plastic crates, carton boxes and other packaging products.

The company also has some interests in the development and management of real estate.

San Miguel to buy Ayala food unit
March 8, 2001
San Miguel, CCA set for share swap
January 28, 2001

San Miguel Corporation
Eduardo Cojuangco bio
Office of the President of the Philippines

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