SEC urged to speed up probe of Villar

MANILA, Philippines - The Securities and Exchange Commission (SEC) has been asked to immediately investigate allegations that presidential candidate Manuel "Manny" Villar profited illegally from the sale of his company's shares to the public in 2007.

Ernesto Francisco, who lawyers for another presidential bet and Villar rival Jamby Madrigal, said he wrote SEC chairperson Fe Barin as early as March 16 to request the regulator to investigate why shareholders of Vista Land and Lifescapes Inc., the real estate firm owned by Villar's family, were allowed to sell shares that were subject to a lock-up period.

In the same letter, Francisco said he pointed out that Villar may have violated certain laws by appearing before the board of directors of the Philippine Stock Exchange (PSE) to take up Vista Land's application for initial public offering (IPO) of shares.

Francisco said Barin replied to him in a letter dated March 22 that the request for investigation had already been forwarded to other SEC commissioners Juanita Cueto and Atty. Justina Callangan.

"However, despite the urgency of my request, I learned that it was only last Wednesday, April 21, that a letter addressed to me was prepared for the signature of Atty. Callangan, to inform me that my request was referred to the SEC Market and Regulation Department which exercises supervision over the PSE," he said.

"The SEC is thus urged to fast-track its investigation of this irregularity if only to avoid suspicion that it is protecting Senator Villar or worse, that it is trying to cover up its own participation in this irregularity," he added.

Vista Land is one of the largest home builders in the country. It has spawned the wealth of Villar, the biggest advertising spender among presidential contenders.

Before Vista Land sold it shares to the public, it obtained prior approval from the SEC.

Shares under lock-up

In June 2007, Vista Land sold 3.11 billion shares in an IPO at a price of P6.85 per share. The shares consisted of of 2.12 billion new shares, and 985.994 million secondary shares owned by existing shareholders, and were under a lock-up period of 6 months to 1 year, according to Francisco.

A lock-up agreement prohibits existing shareholders from selling their shares for a period of time to limit the supply of shares available for trading, which may help support the issue price after an offering and thus, protect the investing public.

Francisco said that with Vista Land now trading at P2 apiece, "those who bought the 3.11 billion Vista Land shares at P6.85 may have lost a staggering total amount of P15.06 billion during the IPO conducted just 3 years ago."

On Thursday, Senate President Juan Ponce Enrile alleged that Villar pressured the PSE board to release 29.28% of Vista Land shares in lock-up to enable the company to sell it as part of its secondary public offer. (Read: Estrada, Enrile: Villar pressured PSE board for financial gain)

At the time, Villar was the Senate president and had no direct stake in Vista Land. Enrile replaced took over his position in the upper chamber in November 2008.

Shareholders not allowed to donate

Francisco said Villar used part of Vista Land's IPO proceeds to fund his campaign, a move prohibited by law.

Vista Land's IPO raised a total of P21.28 billion, of which P14.52 billion, representing new shares, went to Vista Land; and P6.75 billion, representing secondary shares, went to existing shareholders Polar Property Holdings Corp., Althorp Holdings Inc., Golden Haven Memorial Park Inc. and Cambridge Group Inc., and foreign companies Calveston Investments Limited and Cameron Global Limited.

In an earlier interview with ANC's Headstart, Villar admitted that more than P8 billion of the amount went to him after payment of taxes.

"The local corporations and foreign companies which sold Vista Land shares are all prohibited by law from giving contributions to Senator Villar or to any other candidate in the May 10 national elections," Francisco said.

"This is the reason why on April 12, I formally asked the Commission on Elections to investigate the source of funds of Senator Villar. Further, on April 19, I filed a formal complaint against Senator Villar for the commission of an election offense, i.e., receiving/using prohibited contributions."

The PSE board had denied there was irregularity in Vista Land's transactions in 2007. It said these were done in compliance with the Securities Regulation Code and rules of the PSE.

via