THE Department of Justice has indicted trader George Sycip, son of the late tycoon Washington Sycip, and other officials of Alliance International Inc., a tuna canning company, for violation of the Corporation Code of the Philippines.
In a resolution dated Dec. 4, the DoJ through Justice Undersecretary Deo Marco found probable cause to hold Sycip, Annsley Bangkas, Alvin Y. Dee, Jonathan Y. Dee and Ibarra A. Malonzo liable for violation of Section 74 and 75, in relation to Section 144 of the Corporation Code.
The Justice department also ordered the Office of the General Prosecutor to file the appropriate complaint against the respondents.
Alliance is a publicly listed company currently embroiled in a management conflict following the acquisition by Strong Oak Inc. of the firm’s 430.286 million shares worth P563.674 million. The sale has resulted in the dilution of the stake of the company’s foreign shareholders.
The case stemmed from the complaint filed by Alliance’s foreign shareholders —Harvest All Investment Limited, Victory Fund Limited, and Bondeast Private Limited—against Bangkas, Alliance’s assistant corporate secretary; Sycip, chairman of the board of directors; Alvin and Jonathan Dee, and Malonzo, who are all members of the firm’s board of directors.
The complaints, initially filed before the Office of the City Prosecutor in Pasig, arose from the alleged denial of the respondents of the complainants’ right to inspect the corporate books and records.
Section 74 of Corporation Code provides that the records of all business transactions of a corporation, and the minutes of any meetings, shall be open to inspection by any director, trustee, stockholder or member of the corporation.
Refusal to allow the records to be examined will hold a company’s officers liable for damages and is punishable under Section 144 of the code by a fine of not less than P1,000 but not more than P10,000, or imprisonment of not less than 30 days but not more than five years.
Section 75, on the other hand, underscores the right of any stockholder or member of his right to financial statements.
Acting on a petition for review filed by the complainants, the DoJ has found probable cause to indict the respondents.
“Respondents denied the said right to inspect by employing a scheme to repeatedly refer the issue between the Board and certain lawyers. Respondents, consisting of members of the Board and Assistant Corporate Secretary voted in favor of such actions and/or implemented the same,” the resolution stated.
“The scheme notably amounted to a delay of at least 72 days, and yet even with opinions from lawyers, there is no resolution to allow the inspection,” it added.
This tactic, as shown by “clear evidence,” of continuously delaying any decision on the matter “indicates an evasive scheme adopted by respondents to defeat the rights of complainants to inspect the corporate books and records of Alliance,” the resolution stated.
The foreign shareholders pursued the case after Alliance had twice denied their request for inspection of the books and records, with the firm telling them their request has been “deferred” pending instruction from the board.
The first request was made on Jan. 15, 2014 via the shareholders’ representative, Dr. Albert Hong Hin Kay, a stockholder and member of the Alliance’s Board. The second request was made via a final demand letter to Alliance on Jan. 23, 2014.
The request was prompted by the “substantial financial downturn” suffered by Alliance, which has adversely impacted its share price in the market.
In their counter-affidavits, the respondents denied the accusations, saying there was no denial of the request to inspect the corporate books of Alliance but merely referred the matter to the Board.
However, the DoJ was convinced the elements of the crime possibly committed by respondents are present in the case, saying there is indeed a denial on the rights of the complainants.
“Complainants are stockholders of Alliance and thus have the right to inspect the corporate books and records. Complainants twice served Notices of Inspection to conduct the inspections on 22 and 27 January 2014 and identified their representatives,” the DoJ resolution stated.
The inspections were to be conducted during reasonable hours and even at the office of Alliance and its corporate secretary, it added.