SMC wants directors to stay

SMC chairman Eduardo Cojuangco is a long-time ally of ousted Philippines president Joseph Estrada

In this story: Not a government company Cojuangco allies RELATED STORIES, SITES

By Amabelle Layug
CNN Writer

MANILA, Philippines (CNN) -- Food and beverage giant San Miguel Corporation has gone to court to fight a dismissal move against some of its directors.

SMC has asked the country's Supreme Court to dismiss a petition filed by the government of Gloria Macapagal Arroyo that seeks to replace five board members who were nominated by disgraced former president Joseph Estrada.

SMC is chaired by Eduardo Cojuangco, a long-time ally of Estrada.

In a document lodged with the court, SMC counsel Estelito Mendoza maintained that the five directors representing the government's interests on the SMC board could not be replaced, as they were elected by shareholders at the annual shareholders meeting in April last year.

The Presidential Commission on Good Government (PCGG), an agency tasked to recover ill-gotten wealth by the late dictator Ferdinand Marcos and his cronies, filed the petition on April 2.

It claimed the present government representatives on the SMC board have no right to sit on the board, having been nominated by the Estrada administration.

The PCGG said the new Arroyo administration wants to install its own nominees on the SMC board.

The PCGG controls 27 percent of SMC shares which, along with the 20 percent held by Cojuangco, were supposedly acquired illegally during the Marcos regime using proceeds from a levy imposed on coconut farmers.

Not a government company

Mendoza stressed that SMC is not a government company but a private corporation and that the directors hold office until their successors are elected in accordance with the Corporation Code.

"Like all other incumbent members of the SMC board of directors, the five were elected by the stockholders as board members at the annual meeting of the corporation held last year. No position in the San Miguel board is identified as reserved for 'PCGG nominee to the SMC board' and voted upon separately."

The government-nominated SMC directors were voted in for a term of one year.

"The five directors cannot be forced to resign; hence there is no vacancy to which new PCGG directors can be elected," Mendoza said in the SMC comment.

But the PCGG claims that nominees to the board are but "agents" of the PCGG and the president of the Philippines.

Mendoza says this is a violation of the corporate law that says the nominees' duties of "obedience, loyalty and diligence" are to the corporation alone and not to the stockholders who nominate them.

"No person has become a member of the SMC board by appointment of the President of the Philippines or the PCGG, including those who are labeled as PCGG nominees," he said.

Cojuangco allies

Arroyo wants the five government nominees currently on the board to be replaced, noting their strong ties with the ousted Estrada.

Installing her own nominees will help to gain control of the company and force Cojuangco to step down as chairman.

As well as supporting Estrada, Cojuangco was a close associate of Marcos.

However, analysts say they favor Cojuangco staying on as the company's chairman because of his success in turning SMC from a flagging company into a money-maker.

SMC's fortunes have dramatically improved during the past two years. Revenues grew from P78.23 billion in 1998 to P88.71 billion in 2000, while net income more than doubled from P3.31 billion to P7.51 billion in the same period.

Analysts lauded Cojuangco for accomplishing this during the difficult financial circumstances that hit the country during the past two years.

Asiaweek.com | Business: Giant On The Prowl | 3/17/2000
SMC's Estrada nominees face vote
April 16, 2001
Arroyo team wants new chair for SMC
April 2, 2001

San Miguel Corporation
Governments on the WWW: Philippines
PCGG

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