Manny Villar Jr. a Philippine Presidentiable Controversy Collections.

Friday, April 23, 2010

Estrada, Enrile: Villar pressured PSE board for financial gain

Presidential candidate Joseph Estrada and Senate President Juan Ponce Enrile alleged on Thursday that Sen. Manuel Villar, another presidential bet, used his influence as then Senate president to illegally profit from the public listing of his company's shares in 2007.

Estrada claimed that Villar pressured the board of the Philippine Stock Exchange (PSE) board to decide in the former Senate President’s favor on an issue regarding the shares of Vista Land and Lifescapes Inc., the holding company for Villar family’s real estate businesses.

In June 2007, Vista Land listed existing and new shares in the bourse, but some of these shares were subject to a lock-up period. The shares of those who owned 10% or more could not be sold during the lock up period, which lasts 6 months to 1 year.

These shares are equivalent to billions of pesos, according to Estrada, and are part of those that Vista Land was able to list in the exchange to raise over P20 billion in fresh funds.

Estrada alleged that Villar, the standard-bearer of the Nacionalista Party, is now reaping P5 million of the over P20 million raised from the stock exchange to fund his presidential campaign.

Real estate business has spawned the wealth of Villar, the biggest advertising spender among the presidential contenders.

Vista Land is the largest homebuilder in the country.

Public official in PSE board

According to Enrile, Villar joined a private meeting of the PSE board in June 29, 2007, a few days after Vista Land has listed its shares. The PSE board meetings are usually held behind closed doors, with only the directors allowed to participate.

In the copy of the minutes of that PSE board meeting provided by Enrile, the re-electionist senator noted how Villar allegedly pressured the directors to exempt some Vista Land shares from the lock-up period.

Villar’s request was to release 29.28% of Vista Land’s shares – which translated to 2 billion new common shares – in lock-up to enable the company to sell it as part of the company’s second public offering.

At the time, Villar was the Senate president and had no direct stake in Vista Land. Enrile replaced him as Senate president in November 2008.

Enrile accused Villar of using his influence then as the third most powerful official in the land to pressure the PSE board directors to release the locked-up Vista Land shares. Enrile said Villar posed a "veiled threat" to the board directors when Villar remarked during the board meeting that the stock brokers among the directors were themselves violating the legal limitation on their shareholdings in the exchange.

(Stock brokers still own some 38% of the PSE after refusing to sell shares and dilute their stake. Under the Securities Regulation Code (SRC), brokers may only own a maximum of 20% of the stock exchange.)

The minutes of the 2007 meeting showed that, after Villar left the boardroom, there was intense debate among the PSE directors who are brokers and non-brokers as they discussed the Vista Land lock-up issue.

"From the records of all these proceedings, there is no doubt in mind that Sen. Manny Villar himself lobbied, pressured and exerted pressure to railroad the approval of his family-owned company's request for exemption to enable him and his family to sell their shares, which were otherwise subject to lock-up at a hefty premium," Enrile said during the press conference.

The board members eventually agreed not to subject the disputed Vista Land shares to a lock-up period.

Personal gain

Enrile warned that if Villar could go out of his way to pressure a private group when he was still the Senate president, he would do the same if he wins the presidency in the upcoming polls.

Enrile, a senatorial bet under Estrada’s political party, warned against the risks of having a leader who would pressure "a business institution to get what he wants."

"If he can have it as senator, as Senate president, how much more when he becomes a president? If that is a fact, that indeed, he pressured the Philippine Stock Exchange (PSE), I call on the PSE board to say so," Enrile said during the press conference.

"They (PSE board) are there to protect the investing public, and they must come out with the truth about this allegation. Otherwise, there can be no more other conclusion but that Manny Villar indeed use (his) own misdeed to blackmail them (PSE board) into allowing him to illegally profit from the public listing of his company's shares," Enrile added

Estrada said he did not intend to malign Villar's character. He said it is just his duty to inform the public about what kind of leader Villar could be since he is running for the highest position in the land.

PSE board speaks

In a statement, the PSE said that there was no irregularity in the Vista Land transactions in 2007.

"The PSE Board had earlier approved the public offering of VLL (Vista Land)." it said.

Regarding the issue on the lock-up of some Vista Land shares, the exchange said that the board met to clarify that the “lock-up” rule would not apply to the sale by existing shareholders (owning less than 10% of the outstanding capital stock of the company at the time of the offering) of their shares as part of the public offering following a listing by introduction."

A company that lists via introduction can trade shares on the exchange without having to go through an initial public offering.

PSE chairman Hans Sicat said the bourse is "committed to...implement its rules to protect the interest of its stakeholders and the investing public.”

Sicat joined the PSE board only in 2009.

No stock manipulation

The camp of Villar hit back at Estrada and Enrile, saying the two are peddling lies.

Villar's lawyer, Nalen Rosero-Galang, challenged Estrada and Enrile to produce evidence that Villar manipulated the stock market.

Rosero-Galang said the public offering of the shares of stock of Vista Land & Lifescapes was done in compliance with the requirements of the Securities Regulation Code and the rules of the Philippine Stock Exchange.

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