YESTERDAY, we celebrated the 21st anniversary of our proud possession of a family member’s ownership of shares in PLDT. (SIY 128433). This fine organisation, originally a quasi-monopoly, has subsequently gracefully migrated to a lesser market share due to the active telecommunications competitive environment engendered significantly by Globe Telecommunications Inc.
No matter. Both organisations have profited immensely by the Filipino’s desire to communicate with each other.
So our ownership in PLDT stock has been profitable for us as we retained our shares, reaping regular dividends and enjoying the capital appreciation associated with the increased share value.
Not so.
Despite many representations to various parts of the PLDT empire, we have never received a cogent reply, never received an annual report, and, above all, never received any financial benefit from our share ownership.
Why not?
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Which brings us to the sad case, first reported last Thursday in a national broadsheet.
This case centered on a 50-year-old stock brokerage, R+L Investments Inc., based in Mandaluyong City, and a member in good standing of the Philippine Stock Exchange (PSE). It has turned out that lowly settlement clerk, the aptly-named Marlo Moron, has been pilfering the assets owned by R+L’s clients but held by R+L. The pilferage has been going on for eight years, undetected by R+L’s management, undetected by internal and external auditors, and undetected by the PSE.
As the end of 2018, R+L Investments held P765 million worth of stocks on behalf of its clients, according to its audited financial statements. Is this true? What are the auditors doing? Can we believe anything they say?
By Friday, it was reported that the defalcations from R+L Investments may reach as much as P2.6 billion.
PSE president Ramon Monzon stressed the need to push ahead with long planned reforms in the bourse to help prevent a recurrence of fraud.
Too late!
Now the Securities and Exchange Commission (SEC) wants the Capital Market Integrity Corp. (CMIC), the independent audit, surveillance and compliance arm of PSE, to explain what has happened.
The SEC said it expected CMIC to conduct a thorough investigation. I cannot believe that this misconduct has gone undetected for eight years without someone being suspicious.
The Philippines has an unacceptable level of misconduct throughout the financial services sector. When misconduct is revealed, the reflex of the financial institution concerned is to lay the blame squarely on a hapless and preferably lowly employee. There is also the Trumpian “no collusion” mantra which in some cases I just don’t believe.
When, and if, CMIC undertakes and investigation, I hope that time is spent talking to R+L’s clients. There is a tendency, whether it is RCBC, Metrobank, and endless insurance companies, to allow the financial institution concerned to control the narrative.
We need a paradigm shift as to the nature of investigations of alleged misconduct on the part of financial institutions.
We need “deep dive” investigations in which the customers need to be able to describe what has happened. I am sure some of R+L’s clients have experienced symptoms which, if followed by R+L’s management, would have enabled defalcations to have been unearthed years ago./PN
