in Serious stuff, my friend

Going loco over the coco levy

Farmers are still hard-pressed to regain ownership of a stake in San Miguel Corp., whose flagship product is its eponymous beer. (File photo by Nonie Reyes)

Details are sketchy but at five in the morning of a weekday in the mid-seventies — a year or two or so after Ferdinand Marcos declared martial law — a newspaper publisher received a phone call in his office.

It was from a powerful Cabinet minister.

The publisher was reportedly taken aback.

He didn’t usually get calls at five in the morning.

Moreover, he never thought Malacañang bothered enough to know about his schedule, let alone his whereabouts. (It was common knowledge however that he could be found at his office at around that time.)

But then again, this was just par for the course.

After all, the Philippines was under military rule.

The press was muzzled, activists were initimidated and/or murdered, and activities of known Marcos critics were monitored.

As a matter of routine, newspaper publishers also received calls from government officials especially when they planned to cover and/or write stories not exactly flattering to the Marcos regime.

Which was exactly what happened that morning.

The minister asked the publisher to abandon the newspaper’s plan to assign a special reports team to write about the coco levy controversy.

It was a scheme successfully hatched by Marcos crony Eduardo “Danding” M. Cojuangco Jr., which was later exposed by Virgilio M. David, a former general.

In his study, David said that the levy (a kind of tax) paid by coconut farmers whenever they sold copra (dried coconut meat) in the 1970s was funneled into various companies owned by Cojuangco, the uncle of current Philippine President Benigno “Noynoy” C. Aquino III.

Instead of being used for the industry’s development, the levy went to various private companies headed by Cojuangco, among other cronies.

In effect, from a public fund, the levy became a private asset controlled by Boss Danding.

And that’s when the fun began — or at least for Cojuangco and the other cronies.

The coco levy funds were used to buy a total of 47 percent of San Miguel Corp. in the mid-eighties.

The funds came from various companies owned and controlled by Cojuangco et. al., the very same corporations into which the coco levy was funneled.

Total shares in San Miguel bought by the coco levy funds are divided into two — 20 percent under Cojuangco himself and 27 percent under the so-called CIIF (Coconut Industry Investment Fund) companies, also owned and controlled by the Boss.

In 1986, when the Marcoses fled and most of their assets were sequestered, the levy was estimated at P9.65 billion, according to the Commission on Audit, which examined the records. That amount is worth P42.48 billion* now, which, give or take a few billion, is roughly the yearly budget of the Department of Agriculture.

A little more than a decade after fleeing the country, Cojuangco was able to come back and later regain leadership at San Miguel Corp.

In December 2001, the Supreme Court ruled with finality that the 27 percent shares in San Miguel — comprising three board seats in the corporation — are public. These funds are currently held in trust by the government — through the Presidential Commission on Good Government — until such time that these can be properly turned over to the farmers (perhaps through a special government facility).

This was followed by a May 2004 decision from the Sandiganbayan, the Philippines’ anti-graft court, which said that 27 percent of San Miguel shares — also known as the CIIF block — were acquired using coco levy funds.

But as coconut farmers and their government were preparing for the next step in recovering the levy, things got screwed up again.

In September 2009, more than 25 years after the first coco levy was collected, the Supreme Court — with members mostly appointed by ex-president Gloria Macapagal Arroyo — approved the conversion of the 27 percent San Miguel shares to preferred from common.

What was the effect of the conversion?

It allowed coconut farmers to lose their claim over the 27 percent San Miguel shares that were acquired using money they forked out.

While preferred shares theoretically earn more (its dividends are higher than common shares) and its owners are first to be paid (in case the company goes bankrupt), the conversion also allows the company to buy back the shares after a certain period (i.e., five years).

Once the shares are bought back by San Miguel, the farmers will no longer have shares to speak of.

As a result, the farmers would have been screwed more than once.

The farmers paid a levy, the levy went to Marcos cronies, Marcos cronies used the levy to buy San Miguel shares, and now the farmers are expected to lose the claim over the same shares which were acquired using their money in the first place.

So it’s back to square one. It’s as if the Marcoses never left and EDSA I never took place.

In the meantime, let’s go back to three decades ago when the Cabinet minister made that call to the newspaper publisher about the coco levy scandal.

What exactly took place afterwards?

Did the publisher — known for being fair and independent — give in to pressure?

I have no idea.

Question now is, as things stand, would the publisher’s decision have mattered one way or the other?

———————

From the Give Credit Where It is Due Dept. This blog entry was prompted after I read a letter to the editor written by Joey Faustino published by the Philippine Daily Inquirer. Faustino, the head of a coconut farmers’ group, reiterated that the share conversion was destrimental to farmers. [See: Faustino’s letter to the editor]

*These are my personal estimates, using Measuring Worth, which helps determine the current value of a US dollar compared to previous periods, and International Economics, which shows past Philippine peso-US dollar exchange rates. Measuring Worth shows many other ways to determine — for the lack of a better term — value.

0 comments