By Chanda Shahani
Central Azucarera de Tarlac, Inc. (CAT) is a company whose listing in the Philippine Stock Exchange (PSE) was suspended in 2010 and it had a fine imposed on it as well. As of June, 2011 CAT still remains delisted with the PSE
The sugar refinery is controlled by President Benigno Aquino III’s aunts and uncles, The refinery is within Hacienda Luisita in Tarlac and CAT failed to submit its annual report for the fiscal year ending June 30, 2010, as well as its quarterly report for the period ending Sept. 30, 2010.
The delisting offers an opportunity to dig deeper into the management structure of CAT and determine how fully compliant CAT is with SEC Memorandum Circular No. 6-2009, which espouses the principles of corporate governance.
More importantly, we take note that SEC Memorandum Circular No. 6-2009 is the “framework of rules, systems and processes in the corporation that governs the performance by the board of directors and management of their respective duties and responsibilities to the stockholders.”
SEC Memorandum Circular No. 6-2009 was passed on June 18, 2009 Looking at Annex A, we can see that the company is compliant with the requirement that there be two independent directors. However, a more detailed scrutiny will reveal that one of the independent directors Georg Weber-Hoehl, has been with CAT since 1976, or for at least 33 years before SEC Memorandum Circular No. 6-2009 was passed by the SEC.
An even more detailed look at SEC Memorandum Circular No. 6-2009 will show the requirement that the chairman of the audit committee be an independent director with the assumption that this provides a needed check and balance, has been met. However, further scrutiny will show that the Chairman of the audit committee is none other than Mr. Weber-Hoehl, whose independence of mind has to be precisely be called into question, due to his decades long affiliation with CAT. The other two directors are Mr. Jose Cojuangco Lopa and Ms. Josephine Cojuangco Reyes, who are members of the Cojuangco family which has controlling power over CAT. Thus the independence of the audit committee is already in question because it essentially represents an interlocking directorate with top management which is a conflict of interest.
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