The expanding empire of Lucio Tan
Through the protection and favorable policies of the reactionary Estrada regime, Lucio Tan�s business empire worth several tens of billions of pesos is on an expansion binge.
Estrada employs bureaucratic power and influence to the hilt in order to provide favors and privileges to Lucio Tan. Aside from benefiting from the reactionary government�s dismissal of his P25 billion tax evasion case and its all-out support to the operations of the Tan-owned Philippine Airlines (PAL) and his seizure of the Philippine National Bank (PNB) this December, Tan is now maneuvering to take hold of the National Steel Corporation.
Since assuming power, Estrada has given his all-out support to Lucio Tan in order to save PAL from bankruptcy. Upon orders from Estrada, the Securities and Exchange Commission (SEC) supervised the granting of a 12-year extension on PAL�s debt repayment schedule to enable it to pay its $2.24-billion liability, have its financial problems alleviated and prevent Tan�s corporation from folding up. Despite opposition from some banks, the SEC approved Tan�s retention as chairman and chief executive officer of PAL.
As a favor to Tan, and to the detriment of migrant workers and other Filipino passengers who would be burdened by higher fares, the Estrada government, through the Civil Aeronautics Board (CAB) and the Department of Foreign Affairs, pushed for the review and revision of air agreements to reduce the number of passengers carried by other air companies plying the Manila-US, -Korea, -Hong Kong, -Taiwan and -Singapore routes. In October, the government ordered the reduction of passengers carried by China Airlines and Eva Airways flights plying the Philippines-Taiwan route from 9,600 to 6,500. The order was rescinded only after the Estrada government was taken aback by Taiwan�s move to completely cut off air traffic between the two countries and its threat to expel Filipino workers from Taiwan.
Estrada himself led in bullying and oppressing PAL workers who struck against the widespread layoffs, contractualization and casualization being carried out by Tan. Collaborating with some yellow union leaders who were under the influence of revisionists and opportunists in the Bukluran ng mga Manggagawang Pilipino�the workers were compelled to accede to a 10-year moratorium on strikes and suspension of Collective Bargaining Agreement (CBA) negotiations, in return for supposed stocks worth P60,000 per worker.
In line with his promise to Tan that workers should not be �pampered�, Estrada repeatedly intimidated the striking workers of PAL. In June, Estrada summoned the PAL union leaders to Malaca�ang to browbeat them into swallowing Tan�s policies on the strike moratorium and CBA suspension. Furthermore, the courts later declared the strike of June 1998 illegal. This gave Tan the freedom to boot out 7,000 PAL workers.
Through the collaboration of Tan, the CAB and the Air Transportation Office (ATO), the application of Air Philippines owned by William Gatchalian to conduct international operations was blocked to force Gatchalian to sell 50% of his company to Tan. The sale was consummated in November.
TAN EFFECTED control of PNB on December 8 after he pocketed 35% of its stocks and had himself and his associates elected to the bank�s Board of Directors. As early as October, Tan had already started to accumulate PNB stocks through the Luys Securities Co., Inc. and the Mandarin Securities Co., Inc. Both these companies are owned by known close associates of Tan.
Tan is eyeing absolute majority ownership control over PNB by buying out the government�s 35% share once the stocks are auctioned off next year. He is also preparing to merge PNB with his Allied Bank in order to build one of the largest banks in the Philippines. Tan is keenly interested in PNB principally because the bank is PAL�s largest creditor. By controlling PNB, Tan can be sure of acquiring more leeway with PAL�s debt payments or blocking loan applications by rival corporations. Tan�s control of PNB is also related to his scheme to get hold of the NSC.
THE NSC FOLDED up in November after banks, foremost among which was PNB, refused to grant it any latitude in its debt payments.
But unlike the case of PAL, Estrada did not bother to help out the NSC, instead allowing it to collapse under the weight of a P15.4-billion debt (which is far smaller than PAL�s P80-billion debt). Prior to this, the government repeatedly denied NSC�s appeal to impose restrictions on the dumping of cheap surplus steel products from Russia.
The NSC�s business suffered from the competition. NSC was also denied incentives that would have enabled it to overcome its mounting debt problems.
Six billion pesos out of the P15.4-billion NSC debt was borrowed from the PNB. In order for Tan to grab hold of NSC, PNB needs only to write off its debts in exchange for stocks (debt-toequity swap). Through this, Tan would be able to pocket a large number of NSC stocks without going through public biddings.
The reactionary Estrada government is now preparing measures to support Tan�s plan to get hold of NSC. Among these is the imposition of higher tariffs on imported steel products to prevent the flooding of cheap steel from Russia. This is precisely what the Estrada government had refused to grant the old NSC management before the steel firm�s closure. Estrada is also preparing incentives to attract foreign big capitalists who can work with Tan on the NSC.
TAN IS ONE OF THE foremost comprador big capitalists in the Philippines. Among his big business operations are Allied Banking Corp., Oceanic Bank, Eastern Pacific Bank, Asia Brewery Inc., Tanduay Distillery, Fortune Tobacco Corp., Macroasia Corp. (airline catering), Century Park Sheraton Hotel, Charter House Hotels, Foremost Farms Inc. (piggery) and the Asian Pacific Equity Corporation (APEC, now listed as Tanduay Holdings in the stock market). In mass media, Tan is part owner of ABS-CBN (3%) and is believed to hold some interests in the Philippine Post newspaper. He has property in Hong Kong including three residential towers in Queen�s Garden (worth no less than $650 million); the Eton Tower, a 24- storey building in Causeway Bay ($103 million in 1993); a residential site in Cox�s Road ($132 million); and Dynamic Holdings that owns the 30-storey Dynamic Cargo Center and real estate in Shenzen and Guangzhou, China ($600 million).
Overall, Tan�s properties are estimated to be worth more than $2 billion with 46,000 workers under his employ. Tan accumulated his business empire through the help, favors, protection and privileges that were accorded him by the past bureaucrat capitalist regimes, especially the Marcos dictatorship. He has been one of the biggest contributors to the political funds of reactionary politicians, shelling out several hundreds of millions of pesos to the Estrada campaign in 1998.
Tan�s comprador operations expanded severalfold under the fascist dictatorship. His businesses benefited a lot from the oppressive fascist rule. Tan has been a notorious unionbuster since martial law, having smashed workers� unions such as that in Fortune Tobacco Corp.
Tan�s empire continued to grow under the Aquino and Ramos regimes. Despite being one of the biggest cronies of the Marcos dictatorship, the wealth he accumulated under martial law remains largely.
Tan portrays himself as having been oppressed by the Ramos government. But in fact, in 1996, Tan made a P2.315-billion profit from buying 463 shares of stocks from PAL sold by the Ramos government at a discount of 64%. Each share then worth P14 was bought by Tan for a mere P5.
CRONYISM AND bureaucrat capitalist operations are worsening under the reactionary Estrada regime. The mad scramble among the big bourgeois compradors to control big business, get hold of government funds and banks, public works contracts, the colonial trade and partnerships with foreign monopolies signifies the depth of the crisis.
Lucio Tan is one of the biggest cronies/patrons who has benefited from government measures favorable to their interests. Among the other cronies/patrons of Estrada are Eduardo Cojuangco Jr., the Marcos family, William Gatchalian, Mark Jimenez and his big syndicates involved in smuggling and other criminal activities. In return for policies favorable to their business interests, these cronies provide all-out support to the Estrada regime. A case in point is the buyout of the Manila Times by Mark Jimenez, a move designed to turn the newspaper, formerly a critic of Estrada, into a government apologist. Another is the collaboration of business and government agencies to boycott the Philippine Daily Inquirer to force it to its knees and stop it from criticizing Estrada.
There are widespread protests against cronyism coming from among the anti-Estrada reactionaries. These reactionaries could not stomach Estrada�s coddling of known and despised cronies of the Marcos dictatorship, including Lucio Tan, the more brazen operations of big cronies and the more direct role that Estrada has been taking in managing and reaping benefits from such operations. This indicates the ever-narrowing elbowroom left for the ruling classes to share and the dwindling benefits and privileges corollary to bureaucratic power.
Bureaucrat capitalism and cronyism are being exacerbated by Estrada�s government. As time passes, he can only succeed in swelling the ranks of a people united in militant resistance to the rule of his rotten and despised regime.
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