The SSS-BDO Deal Should Be Stopped!

January 12, 2004

Workers continue to pay the price of bad investment decisions being made by SSS. While the SSS has yet to account for the dubious transaction that got it involved in the Equitable PCI Bank fiasco in the first place, it is again entering into another questionable negotiation while trying to divest.

The SSS is selling its stake in the Equitable PCI Bank to Henry Sy’s Banco de Oro for a total of almost P14 billion. For a downpayment of only P1 billion, Banco de Oro will have full control of the 187,847,891 common shares in Equitable PCI Bank, representing 25.8% of the total outstanding shares of the country’s third largest bank. The balance of almost P13 billion will be paid in the form of zero bonds maturing in 6 1/2 years.

While the SSS management is portraying the whole thing as a good deal for its 25 million members, we in the Alliance of Progressive Labor (APL) remain unconvinced. After all, the deal would result to SSS losing P 6.7 billion or 42% of its investment and several questions remain unanswered.

According to SSS President Corazon S. De La Paz, the SSS is trying to minimize further losses in its investment in Equitable PCI since the fund has not received dividends since 1999. But we have to ask, was due diligence performed in order to assess the real value of the bank? Who conducted such due diligence? If SSS is concerned about minimizing further loss, why is it allowing Banco de Oro to avoid paying interest for its acquisition by using zero bonds that mature in 6 1/2 years?

Why is SSS, a fund owned by workers, dealing with a company owned by a reputed union buster? We find it highly objectionable that the SSS management did not even feel it proper to distance itself from Henry Sy when the tycoon has yet to settle its dispute with its workers in SM.

Why not sell its stake to its own members instead? If every member of the SSS opts to buy into the Equitable PCI Bank, every member would only have to shell out less than P600. Certainly it would not take 6 1/2 years to collect that amount from every SSS member. With workers gaining 25.8% of the bank, the SSS would even pave the way for the creation of a worker’s bank later on!

We find it highly suspicious that this deal is being rushed at a time when the national elections are in the offing. We find it hard to believe that Ms. De La Paz started this agreement without the approval of President Gloria Arroyo. Is this deal really not connected in any way with the elections?

Finally, who should we hold accountable for this mess? What has happened to all the investigations on the anomalous transactions that the SSS entered into during the previous administration?

Unless these questions are answered, the SSS negotiations with Banco de Oro must be stopped. Instead of secretly dealing with Henry Sy, the SSS management should openly deal with its members and explore all options on how best to recover its investment in Equitable PCI bank.

Alliance of Progressive Labor (APL) 2003
Manila, Philippines
email: info@apl.org.ph

www.apl.org.ph