|
I read
recently in one of the news dailies the challenge made
by Sen. Juan Ponce Enrile for the Securities and
Exchange Commission (SEC) to implement its order
stopping the counting of proxies in favor of the Lopez
group during the annual stockholders’ meeting of the
Manila Electric Co. (Meralco) held on May 27.
Enrile
was reported as saying that if the SEC could not even
enforce the order, then it is inutile and must therefore
be abolished.
I could
understand Senator Enrile’s frustration. The
cease-and-desist order (CDO), being an official act of
government that was properly handed and served upon the
respondents, is presumed to be valid. It could not be
ignored, much less defied, even if certain
irregularities appear on its face.
Under
these circumstances, one can arguably claim that the
failure of the SEC to enforce the questioned order makes
it useless as the government’s watchdog against
corporate wrongdoing.
But what
if—more than just the irregularities appearing on the
face of the CDO, because it was prepared with undue
haste—its issuance was the result of unlawful pressure
from Malacañang because of its undisguised dislike of
the Lopezes, whom it would like ousted from Meralco?
Would the SEC’s refusal to enforce its order make it
inutile? I don’t think so. In that situation the SEC
should be commended for not implementing a patently
illegal order stemming from abuse of power.
That the
Arroyo administration wants the Lopez family out of the
management of the public-utility company is not
disputed. Oscar Lopez strongly hinted this when he
exasperatedly remarked that they be bought out of
Meralco. This was his reaction to the government’s
much-publicized accusation that the mismanagement of
Meralco was the reason for the high cost of electricity.
In fact, soon after the stockholders’ meeting, the head
of the Government Service Insurance System (GSIS),
Winston Garcia, appeared on television claiming that the
Lopezes will soon be out of Meralco. Thereafter, the
Palace through Executive Secretary Eduardo Ermita
expressed unequivocal support of Garcia’s legal
maneuvers against the Lopezes.
Accusing
the Lopezes of mismanaging a public-utility company that
has resulted in the high cost of electricity for our
people heavily implies the imputation of serious
offenses. Thus, it comes as a big bewilderment that the
government has undercut the paramount public interest by
merely filing a civil complaint with the SEC for the
purpose of having its favored nominees elected to the
board, instead of criminally prosecuting those
responsible and immediately seeking their
disqualification from management.
I
question the propriety of proceeding against the Lopezes
before the SEC on an issue that is essentially an
intra-corporate dispute. Jurisdiction over this kind of
matter has already been transferred to the regular
courts.
But I
could hazard a guess on why the government chose not to
go to the courts: Administratively, the SEC is still
under the supervision of the Chief Executive through the
Department of Finance, while the courts are under the
Judiciary. Pressuring a subordinate agency or official
can be easily and more subtly pursued than interfering
with the authority of a co-equal branch of government.
From the
viewpoint of the Lopezes, it seems that they had no
choice but to defy the SEC-CDO. Had they complied, they
would have surely been ousted from the control of
Meralco at the May 27 stockholders’ meeting. That was
not acceptable. To be fined heavily or imprisoned for
contempt appears to be a less risky proposition that can
be vigorously fought out in the courts for a very long
time.
During
my watch at the SEC, I had the harrowing experience of
defying the President, who pressured me to officially
act in violation of the law. He ordered me to stop the
investigation for securities fraud of his close friend.
He also commanded me not to issue a temporary
restraining order that would have prevented a
stockholders’ meeting of another public-utility company
from taking place.
Because
of this undesirable experience, we sought, through
legislation, the strengthening of the SEC as an
independent agency, insulating it from political control
and outside influence. While we succeeded in
incorporating this reform in the Securities Regulation
Code, old mindsets have made it extremely difficult for
the SEC to perform its functions properly. It is like
pouring new wine into old wineskins, where the latter
breaks and the new wine is rendered useless.
****
The author was chairman of the SEC from 1995 to 2000.
He headed the regulatory changes of the commission and
initiated the preparation of the draft of the Securities
Regulation Code incorporating these reforms. He is a
visiting professor of law at the Richardson School of
Law, University of Hawaii, in Honolulu. |
