Contingency

We cannot anticipate everything. But we can do enough so we can better cope with the unanticipated.

In all the country’s boardrooms these days, anxious business leaders are scanning every clue as to where things will go. Performance targets are being rapidly revised. Balance sheets are being reinforced. The worst scenarios are being dutifully considered.

If companies do it, so must government. Ours is notorious for being chronically reactive. When things happen, our first response is to dig into the budget and fund subsidies. More proactive governance is surely possible.

Our energy situation is most problematic. Not only are we almost entirely dependent on imported fuel, we have not moved as quickly as we might have in transforming our energy mix.

Sometimes, of course, bad news become momentarily good news. We are still about 80 percent dependent on coal to produce the electricity we need. That somehow insulates us from the full effect of the blockade at the Strait of Hormuz. Rotating blackouts are not yet happening.

When yet another war broke out in the Middle East, we imagine countries like Singapore pulled out a contingency plan prepared well ahead. Meanwhile, we scrambled for a response. Our decision-makers focused nearly exclusively on cancelling excise taxes on fuel – something akin to cutting off an ear to survive a flood.

In a crisis, governments need all the fiscal ammunition it could get its hands on.

Sen. Alan Peter Cayetano, a few days ago, pushed Senate Resolution 343 calling for a National Contingency Framework. This will provide the basis for a comprehensive plan that will enable the country to better anticipate and prepare for crises.

Cayetano, along with Senate President Tito Sotto and Majority Leader Miguel Zubiri, followed this up with Senate Resolution 350. This resolution seeks the creation of an ad hoc committee composed of committee chairs to help move the contingency plan forward.

The ad hoc committee’s first task is to bring together different sectors and agencies to ensure work actually begins. There are already too many otherwise visionary resolutions gathering dust in the Senate archives. The proposed national contingency plan will, hopefully, avoid that fate.

To be sure, the elements of a national contingency plan are still sketchy. We need some hard thinking about what we can realistically do in the face of crises.

In the present case, the distress is global. The events driving this crisis is beyond our control. But this is not an excuse to act incoherently. This is where some effort at contingency planning might be fruitful.

We hope Sen. Alan Cayetano finds the resolve to see this through. The national response to contingencies may yet meet the standard of coherence.

Family feud

The battle between the Lopez cousins shows no signs of early resolution. For the first time ever, the boardroom battle reached the courts after erstwhile Lopez Inc. president Federico “Piki” Lopez sought a writ of preliminary injunction to stall efforts by rival cousins to oust him from the post. Lopez Inc. is the parent company of the various Lopez-linked businesses.

The boardroom battle between Piki Lopez and cousin Eugenio “Gabby” Lopez III apparently heated up after disagreement over the use of proceeds from the shares sale of power generation companies. Gabby reportedly wanted P2 billion from the proceeds to be allocated to help ABS-CBN. Piki refused.

The various Lopez-owned companies traveled different paths the past few years.

The power assets, managed by Piki, have been generally well-run and profitable. The media assets, managed by Gabby, have been losing money. Since it lost its broadcast franchise in 2020, ABS-CBN reportedly accumulated over P40 billion in losses.

By Gabby’s version, Piki was ousted from the Lopez Inc. chairmanship because the latter did not disclose the details of FirstGen’s transaction that resulted in the sale of shares. Piki’s camp counters that inasmuch as First Gen is a separate company with its own board, the disclosure of transaction details would have violated provisions on insider information contained in the Securities Regulation Code. Our corporate laws have strong safeguards against insider trading.

For his part, Piki argues that channeling Lopez Inc. funds to ABS-CBN makes no sense in the absence of a clear recovery plan to put the media business back on its feet. In addition to its business losses, ABS-CBN allegedly has unresolved audit issues. The latter claim is denied by the Gabby camp.

Piki is reportedly concerned about the use of the P2 billion Gabby wants infused into his flagging media enterprise. Of the total package, P1.2 billion is allegedly earmarked to pay just 68 individuals within the company. The same individuals had already received around P905 million in partial retirement benefits ahead of other, less favored employees. This does not seem, to Piki, like a viable business rehabilitation plan.

Historically, the Lopez companies have tended to focus on heavily regulated businesses – such as power, water and broadcast. The family has long been accused of using their media influence to win regulatory concessions for their other businesses.

This historical behavior might explain Gabby’s insistence that ABS-CBN be recapitalized ahead of other business opportunities. To be fair, the insistence might be due entirely to sentimental attachment to the media enterprise.

The current boardroom battle demarcates between the sentimentality of the older generation of oligarchs and the hard-nosed business sense of the younger generation.