US investor donates stake to Rappler
Omidyar Network on Wednesday announced that it had donated $1.5 million worth of investments in Rappler to 14 Filipino managers of the online news site. Omidyar Network said the donation voided the Securities and Exchange Commission ruling that revoked Rappler’s registration. Malacañang, however, said this did not extinguish Rappler’s violation of the Constitution.
An American investor, which owned a controversial $1.5-million investment in Rappler, announced on Wednesday that it had donated its interests to 14 Filipino managers of the online news site.
The Securities and Exchange Commission (SEC) cited Omidyar Network’s Philippine depositary receipts (PDRs) as a violation of the constitutional restrictions on foreign ownership of Philippine media organizations in revoking Rappler’s registration in January.
“This, I think, is a politically motivated attack. It is not a point of law. And so we feel that by making the decision, by donating the PDR, we are essentially taking away any barrier which has been put in place,” Stephen King, a partner at Omidyar Network, said in a conference call with journalists.
“This donation completely eliminates the sole basis of the SEC ruling against Rappler Incorporated and Rappler Holdings Corp.,” he said.
PDRs refer to derivative instruments which are based on the value of equities as underlying assets but don’t grant own- ership to the holder.
In Rappler’s case, however, the SEC said the PDRs issued to Omidyar Network gave the foreign entity sufficient control even without having actual ownership.
Rappler has insisted it is 100-percent, Filipino-owned and has petitioned the Court of Appeals to overturn the SEC ruling.
King said Omidyar Network, the philanthropic arm of eBay founder Pierre Omidyar, strongly believed that Rappler should be allowed to continue operating “unhindered.”
Various foreign and Filipino human rights and media groups have denounced the SEC ruling as an attack on press freedom in the Philippines.
Following the SEC decision, President Duterte banned Rappler’s reporters from covering events in Malacañang.
Presidential spokesperson Harry Roque, who has accused Rappler of producing “fake news,” said the donation “does not remove the fact that Rappler breached the Constitution.”
“This latest act is nothing but a circumvention of the law, which restricts ownership of media entities in the country to 100-percent, Filipino-owned,” he said.
‘Generous act’
Rappler chief executive officer Maria Ressa welcomed Omidyar Network’s donation.
“This generous act proves that Rappler is, as it has always been, Filipino-owned and -controlled,” she said.
In addition to herself, Ressa said the managers who would receive the PDR donations were Rappler acting managing editor Chay Hofileña, managing editor (on sabbatical leave) Glenda Gloria, news head Miriam Grace Go, Jennifer Chua, Marie Fel Dalafu, Stacy Lynne de Jesus, Lilibeth Frondoso, Dominic Gabriel Go, Natashya Gutierrez, Gemma Mendoza, Pauline Gel Occeñola, Libertad Pascual and Anne Louise Yosuico.
SEC surprised
“This is a surprise,” SEC Chair Teresita Herbosa said in reaction to Omidyar Network’s move. She said she would be studying the donation.
“Supervening events during appeal, whether it is a ground for withdrawal, dismissal, rendering moot and academic, or continuance, of appeal is for CA to pass upon,” Herbosa said, adding that the SEC would respond or state its position if it is ordered by the appeals court.
King said Omidyar Network “never had any control or influence over [Rappler’s] management or their operations or their editorial policy.”
“We believe that this has been a clear and direct attack not only on Rappler but also on independent journalism and press freedom in the Philippines,” he said.
King said Omidyar Network had been “actively funding independent and investigative journalism around the world for the past 10 years,” investing about $40 million in 50 organizations that supported independent media and various works promoting an open and democratic society.
Omidyar Network has media investments in Nigeria, Ukraine, Myanmar, India, the United Kingdom, and the United States, among others, King said.
King said the order to shut down Rappler was the first time that Omidyar Network had seen “this kind of severity.”
“I don’t think we have ever seen a government use the kind of legal instrument that we are seeing in the case of Rappler, to this extent that they are revoking its license to operate,” King said.
Press freedom
“This is the first time and we are very concerned about what this could do to press freedom in the Philippines,” he added.
King assured that Omidyar Network would continue to support Rappler even without “a financial relationship.”
He said the media organization would continue to be a “vocal advocate of press freedom in the Philippines.”
Ressa said that by accepting the donation, Rappler was not giving in to the SEC. “We are not conceding that the SEC is right.”
“We are up against the vast power of government and the SEC made the call and we challenged it at the Court of Appeals. We are not dissolving Rappler because we believe that we have always been 100-percent, Filipino-owned and the journalists control Rappler,” she added.