Stock Market Scam
By Alex P. Vidal
Two years after an Ilonggo former executive of a softdrinks company exposed the depot/non-traditional warehouse (NTW) "fraudulent reporting" in the Cosmos Bottling Corporation (CBC), the Securities and Exchange Commission (SEC) finally started its formal investigation on the reported "P20 billion window-dressing anomaly" in the Coke/Cosmos/PhilBev-San Miguel. This was revealed last week (February 2) by Fortunato "Nonoy" H. Peñaredondo, former CBC area sales manager and assistant vice president in South Mega Manila, who arrived in Iloilo City for the burial of his late mother Marie Luz Hinahon.
Peñaredondo said, "SEC Chairperson Fe Barin and Commissioner Cueto detailed the adverse effect of the scam on the stock market and the dealers and employees of Coke/Cosmos/PhilBev during a meeting with dealers and other stakeholders in the issue last January 26. SEC is very conservative about this," added Peñaredondo referring to the shares of stocks of the public in Cosmos which he insisted is owned separately and should not have been integrated with Coke.
FORMAL INVESTIGATION
The meeting has triggered the process of the SEC formal investigation of the anomaly according to Peñaredondo, Barin raised the issue of "conflict of interest and maybe illegal" in the operational integration of Coke and Cosmos." SEC entered into the picture after several CBC "long-time" dealers and taxpayers, in a letter to Barin dated November 28, 2006, requested for investigation on the reported "anomalous scheme employed by San Miguel Corporation (SMC) to inflate its financial records by implementing the so-called Non-Traditional Warehousing (NTW) or the Central Depot System (CDS)." Thus wrote the dealers led by Erlinda Manalo: "In this system, the Cosmos products were not delivered to our store or bodega but instead stored in the so-called Central depot being rented, manned and supervised by CBC, and for that, we were required to issue post dated checks for the products not yet delivered to us."
"Accordingly, our million (pesos) worth of post dated checks issued to CBC would form part of the account receivables of SMC," they added. The dealers informed Barin that "CBC has filed charges under B.P.22 against us or for alleged non-payment of the Cosmos products our having issued post dated checks, and for our non-withdrawal of the supposed delivered goods to us." They said, "obviously, this scheme is resorted to inflate the revenues of the company thru account receivables and to ‘window-dress’ the company’s financial records, to the damage and prejudice of the investing public. In short, this is a scheme to deceive the public." The signatories requested Barin to "immediately" investigate the matter "for the protection of the investing public."
BASIC ACCOUNTING PRINCIPLES
In his letter to Barin dated December 11, 2006, Peñaredondo also stressed that "the irregularity of the practice is that it does not meet the conditions of a consummated sale according to basic accounting principles wherein the payment or the realization of credit by a customer in exchange for the transfer of physical possession or ownership of the merchandise being bought should occur." Peñaredondo added: "In this case, the transfer of physical possession of Cosmos products from the Company to the dealer did not occur since the NTW’s are rented, manned, and supervised by CCBPA, CBC, or PBI."
MANIFESTO FROM EMPLOYEES
As this developed, 76 employees of CBC SODACO Sales Office Ecoland in Davao City, signed a manifesto dated September 26, 2006 "supporting the cause of the proper, impartial, and just investigation by the SMC management and by the proper government agencies such as the SEC and Department of Labor and Employment (DOLE) of the window-dressing anomaly within the Coca-Cola Bottlers Group of San Miguel Corporation which happened in the four-year period (2001-2005).
"By this act, we aim to achieve justice or the numerous employees of the above-mentioned companies who were persecuted, harassed, and terminated from employment, as well as, the general public who were adversely affected by this anomaly," wrote the signatories led by Jonathan Omega and Rolando Lagare. /MPmailto:madyaas_pen@yahoo.com
Peñaredondo said, "SEC Chairperson Fe Barin and Commissioner Cueto detailed the adverse effect of the scam on the stock market and the dealers and employees of Coke/Cosmos/PhilBev during a meeting with dealers and other stakeholders in the issue last January 26. SEC is very conservative about this," added Peñaredondo referring to the shares of stocks of the public in Cosmos which he insisted is owned separately and should not have been integrated with Coke.
FORMAL INVESTIGATION
The meeting has triggered the process of the SEC formal investigation of the anomaly according to Peñaredondo, Barin raised the issue of "conflict of interest and maybe illegal" in the operational integration of Coke and Cosmos." SEC entered into the picture after several CBC "long-time" dealers and taxpayers, in a letter to Barin dated November 28, 2006, requested for investigation on the reported "anomalous scheme employed by San Miguel Corporation (SMC) to inflate its financial records by implementing the so-called Non-Traditional Warehousing (NTW) or the Central Depot System (CDS)." Thus wrote the dealers led by Erlinda Manalo: "In this system, the Cosmos products were not delivered to our store or bodega but instead stored in the so-called Central depot being rented, manned and supervised by CBC, and for that, we were required to issue post dated checks for the products not yet delivered to us."
"Accordingly, our million (pesos) worth of post dated checks issued to CBC would form part of the account receivables of SMC," they added. The dealers informed Barin that "CBC has filed charges under B.P.22 against us or for alleged non-payment of the Cosmos products our having issued post dated checks, and for our non-withdrawal of the supposed delivered goods to us." They said, "obviously, this scheme is resorted to inflate the revenues of the company thru account receivables and to ‘window-dress’ the company’s financial records, to the damage and prejudice of the investing public. In short, this is a scheme to deceive the public." The signatories requested Barin to "immediately" investigate the matter "for the protection of the investing public."
BASIC ACCOUNTING PRINCIPLES
In his letter to Barin dated December 11, 2006, Peñaredondo also stressed that "the irregularity of the practice is that it does not meet the conditions of a consummated sale according to basic accounting principles wherein the payment or the realization of credit by a customer in exchange for the transfer of physical possession or ownership of the merchandise being bought should occur." Peñaredondo added: "In this case, the transfer of physical possession of Cosmos products from the Company to the dealer did not occur since the NTW’s are rented, manned, and supervised by CCBPA, CBC, or PBI."
MANIFESTO FROM EMPLOYEES
As this developed, 76 employees of CBC SODACO Sales Office Ecoland in Davao City, signed a manifesto dated September 26, 2006 "supporting the cause of the proper, impartial, and just investigation by the SMC management and by the proper government agencies such as the SEC and Department of Labor and Employment (DOLE) of the window-dressing anomaly within the Coca-Cola Bottlers Group of San Miguel Corporation which happened in the four-year period (2001-2005).
"By this act, we aim to achieve justice or the numerous employees of the above-mentioned companies who were persecuted, harassed, and terminated from employment, as well as, the general public who were adversely affected by this anomaly," wrote the signatories led by Jonathan Omega and Rolando Lagare. /MPmailto:madyaas_pen@yahoo.com
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