GSIS poised to file criminal raps vs Manolo Lopez et alBy Dennis G. Carcamo

MANILA, Jun 13, 2008 (Asia Pulse Data Source via COMTEX) -- MERVF | Quote | Chart | News | PowerRating -- The Government Service Insurance System (GSIS) is now preparing to file criminal charges against some officials of the Lopez-led Manila Electric Company (MERALCO), for their open defiance of the cease-and-desist order issued by the Securities and Exchange Commission (SEC).

Lawyer Estrella Elamparo, GSIS vice president for legal affairs, said they are also poised to file disbarment raps against MERALCO legal counsels who secured a 60-day temporary restraining order, stopping SEC to hear the show cause order against the Lopez-owned electric firm.

We will file charges against officials of the MERALCO for the violation of the corporate code and we are looking as well to file disbarment proceedings against the lawyers who made it possible to defy the SEC cease-and-desist order, Elamparo told the regular weekly "Balitaan sa Rembrandt Hotel" media forum in Quezon City Friday.

MERALCO officials have earlier secured a TRO from the Court of Appeals which stopped the SEC order secured by GSIS to halt the elections of the firm's board of directors last May 27.

After the voting, the Lopezes and their allies, through proxy share holders, have retained control of the electric firm, gaining six seats of the board while GSIS, led by its president and general manager Winston Garcia, got four slots.

Elamparo also expressed confidence that the Court of Appeals (CA) will rule in favor of the GSIS during the two-day hearing on June 23 and 24.

She said that if the court rules in favor of GSIS, the government-run firm will have one board seat more while MERALCO will have one seat less in the electric company's board of directors.

The Court of Appeals during the forthcoming hearing will either extend the 60-day TRO or make indefinite by issuing a preliminary injunction against SEC. The appellate court has 45 days to make a ruling on the case.

She maintained that GSIS should have control of MERALCO management since the government entity has majority of the shares in the electric company.

GSIS has almost 25 percent shares and coupled with the 10 percent of other government agencies in MERALCO, Elamparo said.

She stressed that the purely Lopez family share in the electric company is only pegged at 4 percent via the Lopez owned firm -- First Holding Corporation.

Once the GSIS takes over the management of MERALCO, Elamparo said they would be instituting reforms in the electric firm to reduce or cut down the current high electricity cost.

She said one of the ways to bring down power rates is to take away the onerous provisions of MERALCO with Lopez-owned independent power producers (IPPs).

One of the provisions is the take-or-pay policy which compels the electric distributor to pay the cost of power even though they have not been used or delivered by consumers.

These pass-on charges are not justified because these are only appropriate only to BOT build-operate-transfer) contracts, Elamparo said.

She said that while MERALCO is under the Lopez-controlled management, the high cost of electricity shouldered by consumers will still persist.

Another move that the GSIS has taken to cut down the electricity cost is to review the franchise areas of MERALCO, Elamparo said.

In the current franchise, MERALCO has virtually given the electric firm a monopoly in power distribution and there is no way to monitor if it is already charging the households due to the absence of competition, she added.

Though the national government's subsidy given on electricity to the poor families is good and would be a big help, Elamparo said it is only an instant relief or stop-gap measure to ease the burden of indigents in the country with the simultaneous rising cost of electricity and basis commodities.

We think that the reforms that GSIS will institute once it takes over management of MERALCO are long term measure to cut down power rates, she said.

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