Cojuangco and the Coconut Levy
Filipino tycoon Eduardo "Danding" M. Cojuangco, who passed away this month, might have won the presidential polls in 1992, six years after he fled the country together with the Marcos family during an uprising in 1986.
If it weren't for the candidacy of Imelda Marcos, wife of dictator Ferdinand whom he was close to, the tycoon might have succeeded his first cousin, President Corazon C. Aquino, who helped oust Marcos.
This possibility was raised by freelance journalist and author Earl G. Parreño in his book, Boss Danding, which was published in 2003.
"[President Fidel V.] Ramos won the 1992 presidential election with 5.3 million votes. Danding placed third with over four million votes. Analysts say that had the Marcos loyalists' vote not been split between him and Imelda, Danding might have clinched the presidency. Imelda got more than 2.3 million votes," Parreño said in his unauthorized biography of Cojuangco.
The years 1986 to 1992 may have tested the mettle of the astute Cojuangco, a billionaire whose influence and wealth grew during the twenty-year reign of Ferdinand E. Marcos.
However, based on his turnout during the 1992 presidential polls, Cojuangco's absence from the national scene apparently failed to diminish his influence. It also didn't hurt that his running mate in 1992 was the popular Joseph E. Estrada, who was elected Vice-President and, in 1998, became President.
Three years after fleeing the country, Cojuangco was able to come home in November 1989.
His arrival allegedly upset then-President Aquino that she removed a diplomat from a panel negotiating the bases treaty with the US on suspicion that he had disobeyed orders and issued Cojuangco a passport. This is according to a 1997 book, A Matter of Honor: The Story of the 1990-1991 RP-US Bases Talks written by Alran R. A. Bengzon, who was Aquino's health secretary and head of the negotiating panel. (However, Aquino, her government, and the panel would have more things to be worried about: a coup.)
Less than ten years later, in 1998, when Estrada was elected President, Cojuangco was able to take the helm again of San Miguel Corporation, a company he was accused of acquiring using funds collected from coconut farmers, way back in 1983.
At least one vital Supreme Court decision took this view.
In December 2001, the high tribunal said that all coconut levy funds collected from farmers are public funds.
Since the funds used to buy what later would become United Coconut Planters Bank (UCPB) in 1975 and what originally was a 51% stake in San Miguel in 1983 came from the levy, these assets were therefore owned by the farmers.
The Supreme Court decision declaring the coconut levy as public funds came 15 years later as part of a legal saga of considerable proportions.
When Cojuangco passed away this month, he was chairman and chief executive officer of San Miguel, nine years after he secured a favorable Supreme Court ruling regarding his stake in the company.
The high tribunal in April 2011 said that "...Cojuangco’s claim on his 17% stake in San Miguel was not illegal since he did not use coco levy funds to acquire it in 1983," a report from ABSCBNNews.com said. {See: Anatomy of Cojuangco’s stake in San Miguel]
Cojuangco has denied that his wealth was ill-gotten.
"I have never denied my association with Marcos," Cojuangco says in Parreño's book that cited a 1998 Manila Times interview. "And to my dying day, I will never deny it. But it's the connotation of the word 'crony' — magnanakaw — that hurts. Kasi wala akong alam na ninakaw ko."
On December 1, 1989, military rebels launched what is considered as the most serious coup attempt against the Aquino administration. Rebels bombed Malacañang and took over military facilities, including Fort Bonifacio, according to a report by the Washington Post. [See: Manila turns back coup bid with the help of US air power]
A Cabinet minister was later prompted to seek US assistance, said Bengzon's book. The assistance took the form of "persuasion flights" that were mounted by American fighter planes on areas controlled by rebels. This assistance no doubt compromised the position of the Philippine panel then negotiating the bases treaty with the US.
**The acquired San Miguel shares were composed of two blocs.
The first bloc was 31.3%, which was worth P1.65 billion at that time, according to The Long and Tortuous Road to Coconut Levy Recovery, a 2007 book written by Romeo C. Royandoyan, the Executive Director of the Centro Saka Inc., a coconut farmers group.
It was sold by the Soriano group (San Miguel's founders) to 14 holding companies — known as the CIIF (Coconut Industry Investment Fund) bloc — that was created by and subsumed under the UCPB, which at that time was also headed by Cojuangco. [From 1978 to 1982, the UCPB was the depository bank of the coconut levy, according to Royandoyan's book. During the years before that, levy collections were deposited in the Development Bank of the Philippines and the National Investment and Development Corporation, which used to be a subsidiary of the Philippine National Bank, which, in turn, was once a state-owned lender.]
The second bloc, worth P374 million at that time, was sold to Cojuangco by Enrique Zobel, who, at that time, was the chief executive officer of the Ayala Corporation.
The first and second blocs of the San Miguel shares were acquired through a combination of equity, direct, and indirect loans granted by UCPB. The two blocs were involved in two of eight separate coco levy cases that were subdivided after the shares were sequestered in April 1986.
The first bloc, which was whittled down to 27% in 1986 and later to 24% in 2005, was converted to preferred shares from common shares in 2009. While the conversion offered higher dividends for owners, preferred shares no longer allowed the owners to have board seats at the company. The shares were later bought back by San Miguel.
Funds from that sale including dividends, are being held in trust by the government as everyone awaits a new law creating a trust fund for the beneficiaries, the coconut farmers. In February 2019, the Coconut Farmers and Industry Development bill was vetoed by President Duterte. [See: Duterte vetoes coconut farmers trust fund bill]
The first bloc of shares was pared down for the first time in March 1986, just a month after President Corazon C. Aquino was installed as president.
At that time, the owners of the CIIF bloc agreed to sell the whole bloc for P3.3 billion to Andres Soriano III in four installments, a transaction that took place because the assets at that time weren't frozen or sequestered yet by the Presidential Commission on Good Government (PCGG), Royandoyan said in his book.
The first payment of P500 million was received six days before the PCGG placed the whole CIIF bloc under sequestration on April 7, 1986.
However, the whole transaction was cancelled after it was discovered that funds Soriano III used came from Neptunia Corporation, a company owned by San Miguel International, a wholly-owned subsidiary of San Miguel, Royandoyan said in his book.
Eventually, five percent of the 31.3% bloc was shaved off and later became treasury shares. The downpayment was forfeited in favor of the PCGG, which kept them, at that time, for agrarian reform. (The Comprehensive Agrarian Reform Law was yet to be passed in June 1987.)
Meanwhile, sometime in the early 2000s, leaders of coconut farmers' groups such as Royandoyan and Joey Faustino took their seats at the boards of the UCPB and San Miguel Corporation, exercising their rights as representatives of farmers who owned shares in these companies.
In 2005, most members of the San Miguel board — which included representatives from Government Service Insurance System and the Social Security System because they were shareholders — decided to hold a share sale.
The transaction, which was given the go-ahead, gave the stockholder the option to buy additional shares for every one that their institutions owned. The transaction had the effect of diluting the shares held by the coconut farmers because they simply didn't have enough money to protect their stake in the company. As a result, from the previous 27%, the bloc that they held got diluted further to 24%.
