POSTSCRIPT / January 30, 2000 / Sunday

By FEDERICO D. PASCUAL JR.

Philippine STAR Columnist

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Why Tan is actually also  a victim in BW scandal

PRESIDENT Estrada was right in a sense when he said that his bosom friend Dante Tan was himself also a victim in the dizzying rise and fall of BW Resources Corp. share prices in the stock exchange last October.

Tan and some well-connected San Juan friends were reported by market sources to have lost more than P1 billion in the frenzied stock shuffle that went out of control with the entry of more experienced operators.

The talk in the market is that P2 billion was made available for share acquisition by Macau dealer Stanley Ho, who reportedly wanted Tan’s group to reserve some BW shares for him.

* * *

BW was reportedly just an opening gambit for Ho, because he was actually pushing a more ambitious blueprint for a local gambling empire.

Sources said Ho wanted Pagcor (Philippine Amusement and Gaming Corp.) replaced by a Casino Commission where he would be calling the shots like he did when he put up casinos for the Marcos regime.

But with multi-sectoral objections to his entry into the local gaming and hospitality business, Ho has made known his having second thoughts. He is expected to pull out if convinced that Tan cannot swing it for him (While Tan is a major stockholder of BW, he is not an officer of the firm.)

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THERE are three investigations going on simultaneously on the BW brouhaha. They are being conducted separately by the Philippine Stock Exchange, the Securities and Exchange Commission, and the Senate committee on banks and financial institutions.

For procedural reasons, the SEC wants the PSE to complete its investigations first, after which the commission will render its own report. A February deadline has been mentioned for the PSE, and March for the SEC.

But the Senate committee, which is virtually a lonesome Sen. Raul Roco, will presumably go on as long as publicity can be wrung from it for the Bicolano presidential wannabe.

* * *

WHEN President Estrada, after two telephone calls, could not get SEC chairman Perfecto Yasay to rush a report clearing Tan while the PSE was still investigating, the President reportedly turned to PSE president Jose Luis Yulo.

Poor Yulo is now in a fix. He is running for reelection this March and wants to remain in the good graces of voting PSE members. But investigators have found prima facie evidence that some PSE officers were among those who traded heavily in a suspicious manner.

Then there is the President breathing down his neck. What will Yulo do?

* * *

THERE are at least four possible end-verdicts for the PSE report: (1) Heap the blame on both PSE brokers and the Dante Tan group, (2) Clear both the PSE brokers and Tan’s group, (3) Throw the book at PSE brokers but clear Tan, and (4) Clear PSE brokers but put the blame on Tan and his associates.

A fifth option is to look for passable culprits who are neither PSE brokers nor members of the Tan group. There are some such persons, as PSE records show, but these heavy traders can still be linked at least by affinity to top PSE brokers.

Some lay observers may ask, as we ourselves asked rhetorically our sources, “What’s wrong with making money in the stock market?” Basically nothing, we were told, except that there are strict rules to be followed.

Next issue, we will list some of the officers of some brokerage firms who transacted heavily BW shares. We also have the names of some of their relatives and affiliates, including one identified as the common-law wife of an officer of BW and a brokerage firm.

* * *

STOCK records show that several months before October last year, a San Juan group and allies engaged in wash sales or the selling and buying of shares by the same trader to simulate activity.

The group reportedly reserved a block of shares to play with. From P1 par value, the price first went up to P1.70, an improvement considering that BW earned just P2 million in 1998 and virtually had no tangible assets.

But as in the case of a swimmer thrashing in the sea, the group’s activity attracted far more experienced sharks. This further boosted sales, until BW prices soared to P180 and even P208 when rumors filtered into the market that Stanley Ho was coming in.

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BETWEEN June 23 and Sept. 22, 1999, the price of BW played within the allowable band. Starting Sept. 23, the price rose steeply for the next 12 trading days to peak at P107 on Oct. 11.

During those 12 days, the trading band limits were never breached. (At the time, the band was 50 percent up and 40 percent down.) The price crashed through the floor on Oct. 14, when BW prices went down 39.58 percent, almost the 40 percent lower limit.

When the limit is reached, the PSE freezes the price, meaning that while the shares could still be traded, the price is frozen.

The PSE wrote BW, asking its officers to explain the unusual price plunge of Oct. 14. In its reply, BW claimed lack of knowledge why the price dropped.

The next day, BW withdrew its letter before trading started, prompting the PSE to suspend BW trading that day. Another letter came at past 11 a.m., but the rule says that the explanation must be disseminated at least one hour after receipt before the suspension can be lifted.

* * *

HOW did the San Juan group lose in the shuffle? By the time Ho was ready to plunk $30 million into BW, the group reportedly no longer controlled the block earlier earmarked for him. He came in at P87 per share.

The group had to scrounge around for money, borrowing heavily to be able to buy back the shares they had sold tentatively in the frenzy of rising prices. The heightened activity, however, pushed prices further up, wiping out profits earlier made.

To compound their predicament, like lighting from the blue, Yasay suddenly announced an investigation into what looked like insider trading artificially pushing prices of BW to unusual levels.

It was pure disaster for those caught unprepared. From a high of P208, the price dropped to P67, then crashed to P7. (Last Friday, it closed at P8.80.)

With this scenario, the claim of President Estrada that Tan was actually a victim himself becomes believable. In a way, the President was also a victim.

* * *

STILL on prices, this time of petroleum products, when President Estrada no less throws up his hands and says of impending oil price increases, “It’s beyond our control….” we better start praying in earnest.

The President, the commander-in-chief, the father of the nation we look up to to lead us across the desert is helpless in the face of an aggressive oil monopoly?

We cannot accept the spectacle of our President reduced to begging foreign oil sharks to please delay or shave price increases. Right here in our own country, the President and the entire nation are held hostage by a foreign-dominated oil monopoly?

Indeed, what we need is not only a Day of Prayer, but daily prayers.

* * *

THIS is what we get for allowing the premature deregulation of the oil industry. The oil firms are left free to raise prices whenever they want. Deregulation is being used to justify the greed that moves the oil ogre to extract more blood from us captive consumers.

President Estrada actually saw a glimmer of a solution weeks ago, but he allowed Energy Secretary Mario Tiaoqui to blur his vision with… you can imagine what the oil firms sent Tiaoqui to dangle in front of the President’s eyes.

Although the President saw the promise of a way out in the National Oil Commission (OilEx) being proposed by Bataan Rep. Enrique T. Garcia, Tiaoqui was faster and closer to the President than Garcia.

* * *

IF it’s any consolation, Speaker Manny Villar told us yesterday that he was keeping an open mind on the OilEx. The Garcia bill (HB 8710), he said, will be taken up by the House this week at committee level.

A manager used to working our solutions to tricky problems, Villar refuses to say we’re that helpless against oil price increases.

Let’s pray no Tiaoqui type gets to him with the same dazzling arguments used on the President.

* * *

HAS anybody noticed that Feb. 2 is just three days away? It happens to be the day 13 years ago when the Constitution was ratified.

President Estrada can recover some plus points by declaring Constitution Day a holiday, as it is observed in most countries with hallowed constitutional traditions.

It will not collide with his Constitutional Correction for Development idea since Concord does not seek to supplant the charter but only to amend it.

Anybody moving for amendment must first show his respect for the charter. Giving Constitution Day the importance it deserves is a move in that direction.

Meanwhile, the Vanguard of the Philippine Constitution, headed by its president Ernesto L. Pineda, law dean of the Pamantasan ng Lungsod ng Maynila , has lined up activities for Constitution Day.

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(First published in the Philippine STAR of January 30, 2000)

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