TMCwar escalates
People in the healthcare business knew the fight for control at The Medical City (TMC) was bad, but they probably didn’t know it was this bad.
Biz Buzz recently received a letter from the hospital’s chair, Dr. Augusto Sarmiento, who came out swinging at his colleague and CEO of the medical institution, Dr. Alfredo Bengzon.
Sarmiento—who co-founded the Ortigas-based hospital with Dr. Argerico B. A. Sison, Augusto Barcelon and Bengzon —said recent events had seen the Bengzon-led Medical City “pursue a path of questionable corporate governance.”
In particular, Sarmiento was concerned with the indefinite postponement of the hospital’s annual stockholders meeting, which Bengzon caused to happen through a complaint filed in the Securities and Exchange Commission against Medical City’s director and treasurer Jose Xavier “Eckie” Gonzales, his own nephew. To recap, Bengzon believes Gonzales was set to mount a hostile and illegal takeover of the hospital with the help of a Singapore-based equity partner whom he brought in in 2013.
But Sarmiento, who is apparently allied with Gonzales and the foreign investor, noted that Bengzon went behind his back “in an attempt to change the The Medical City’s trust agreement to have precedence over me as a trustee.”
“While The Medical City remains a good business, poor decisions and mismanagement around our investments in Guam have impacted us and they need to be swiftly addressed,” the hospital’s chair said. “The annual stockholders’ meeting is a critical starting point to discuss these issues.”
“Not only is it vital for shareholder democracy, but above all, The Medical City is legally bound to hold it,” he said, explaining that the hospital “is not a family business” but a professional institution employing thousands of people delivering vital services to communities.
Sarmiento then expressed his support for the shareholders group that Bengzon had been trying to fend off (while at the same time preferring to invite the Ayala group as a strategic investor instead).
“We must also operate in best faith in relation to our shareholders—many of whom have supported us over a number of years as we have grown our business, including Fountel, Viva Healthcare and Lombard,” Sarmiento said, referring to the names of the foreign corporate entities invested in The Medical City. “They have been generous with their expertise and vital financial assistance when we have needed it, and we continue to draw on their skills to support our Filipino-led senior management team.”
Then Sarmiento dropped his own bombshell, basically accusing Bengzon of his ownschemes.
“Claims that we are the subject of a hostile takeover by our shareholders, and that Dr. Bengzon was unaware of the contents of the corporation and shareholders agreement between Fountel and Viva Healthcare are simply untrue, and disappointing to see,” he said. “I believe these claims may be an attempt to divert attention away from the issues we face in Guam.”
“In any case, this agreement was personally approved by Dr. Bengzon five years ago and made publicly available since that time,” he added. Ouch.
The big question now is how the country’s top corporate regulator—the SEC—will rule on the issue. In the end, that will determine whether The Medical City will remain under the control of Dr. Bengzon and his favored white knight, the Ayala group, or possibly end up with Gonzales and his own group of investors ... who may (or may not) be representing a hidden corporate hand. Abangan! —DAXIM L. LUCAS
Going strong
The iconic chain of stores, Toys R Us, has gone out of business in the US, its home market, but it’s still going strong in the Philippines.
And according to its local franchise holder Robinsons Retail Holdings Inc., it will be business as usual for Toys R Us here. In fact, Robinsons Retail president Robina Gokongwei-Pe told Biz Buzz that the brand would continue to grow, thanks to strong demand for toys among Filipino kids (or even adults who want to indulge in toys they never had in their youth).
“We now have 37 stand alone stores and Toys R Us “Toybox” outlets inside Robinsons department store branches,” she said.
In fact, she pointed out that the 50th Toybox—basically a smaller version of the Toys R Us store—would open later this month in Robinsons department store in Tacloban City.
More importantly for Toys R Us’ loyal customers, all warranties on toys purchased from it will continue to be honored, along will the various loyalty programs. Now that’s good news. —DAXIM L. LUCAS
Saving the coco industry
The Philippine Coconut Authority (PCA) is looking for ways to lift the coconut industry as copra prices continue to plummet, now down by as much as 73 percent, since the start of the year.
The commodity remains tied to the international market, which is currently suffering from a glut in coconut oil supply.
The agency is studying all ways to cope, one of which is asking the Department of Trade and Industry (DTI) to lift the ban on the exportation of matured coconuts.
According to PCA Administrator Billy Dela Rosa, demand for mature coconuts in China has been on the rise after state banquets popularized coconut juice.
Dela Rosa said Chinese companies had expressed interest in putting up a processing plant for coconut milk in the country or in importing some 15,000 coconuts every month.
But here lies the caveat: Under DTI, matured coconuts and coconut seedlings are prohibited for export.
Dela Rosa said the policy stems from fear that other countries may plant it in their own land, but he said China did not have an area conducive to coconut planting.
“There’s no place in China except Hainan where they can plant coconuts, and Hainan province has already been industrialized,” he said.
PCA is set to meet with industry stakeholders regarding the proposal, and is hoping to reach a decision within the year. Once PCA reaches a decision, it may ask DTI to lift the ban.
As of last week, the average price for copra was P19.94 a kilo from P36.42 a kilo in January, and the slump in prices is expected to continue, according to United Coconut Association Philippines’ president Dean Lao.
If Lao proves to be right, the tree of life may become a tree of brunt for some 3.5 million coconut farmers. —KARL R. OCAMPO
New partner
More than a decade in the company, James Araullo has been named partner at P&A Grant Thornton, one of the leading audit, tax, advisory and outsourcing firms in the Philippines.
If that name rings familiar, that’s because James is related to Jose Araullo, company chair emeritus and its co-founder. In fact, James is Jose’s son.
This is the latest milestone in his journey in the company since the San Beda accountancy graduate joined P&A in 2004.
He joined the partnership, specifically the company’s audit and assurance division, on July 1. Before this promotion, James was a senior manager, according to the company’s official website.
Since 2004, the company said Jose has had a solid experience in auditing local and multinational companies in various industries including real estate, construction, manufacturing, services, retail and distribution, nonprofit organizations, and business process outsourcing.
Marivic Espano, company chair and CEO, called this a “well-earned recognition of James’ outstanding performance throughout his career at P&A Grant Thornton.”
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