This book chapter appears in Aulakh, P.S. and Kelly, P.F. (2019). Mobilities of Labour and Capital in Asia: Spatialities, Institutions, and Cultures. Cambridge: Cambridge University Press.
This guide to the Philippine Securities and Exchange Commission’s i-Report database originally ran as a sidebar to my collaboration with Karol Ilagan and Malou Mangahas of the Philippine Center for Investigative Journalism.
AS PART of its mandate to supervise and monitor corporate activity in the Philippines, the Securities and Exchange Commission (SEC) maintains the i-Report database, which contains electronic copies of publicly available corporate filings with the agency. The most readily accessible registry of business entities in the Philippines, the database is indispensable for the everyday work of regulators, lenders, and investors—and was a crucial source of data for this story.
But outside a limited circle of researchers, the database has remained largely underused. This may partly have to do with its relative obscurity, or with the content and format of the documents that may seem inscrutable to lay eyes.
In practice, the system can be frustratingly clumsy at times. For instance, payment for the online access requires buying prepaid cards at the SEC main office; the SEC does not offer the option for online payment. Charges are meted out on a per-pageview basis, which means that thumbing through reports for crucial bits of information—reports that are sometimes several hundred pages long—can quickly deplete one’s account. The database also requires the user to run an outdated version of Java, and negotiating the security warning pop-ups every time a new document is loaded quickly becomes tiresome.
(Apart from the SEC i-Report, records may also be obtained through the SEC Express System, another facility that allows for access of corporate or partnership documents without having to personally come to the SEC. The SEC Express System is available online, via a call center, or through an appointment.)
With that said, the database is a unique window into the world of money and politics in the Philippines.While much of the documents may seem opaque to those who are not accountants or lawyers, they are nonetheless meant to be public disclosures. They are fairly standardized documents that offer a reasonable amount of information accessible to an average person with above-average patience.
It is as comprehensive a record of aboveboard business entities that we can hope for. Once understood in the context of other data, it even offers occasional glimpses of what goes on beneath the tables.
The following is a brief guide to how two documents available on the SEC database can be used for public due diligence.
General Information Sheet (SEC Form 20-IS): This form is a solid starting point for any investigation. It provides:
• A firm’s corporate name, business/trade names, its date of registration, and the declared primary purpose of the business;
• A one-page summary of the firm’s capital structure, indicating the number of shareholders, their nationalities, and types of shares they hold;
• A list of the firm’s directors, including their addresses and nationalities; and
• A list of the firm’s major stockholders, again including their addresses and nationalities, along with the number of shares they are subscribed to, and their percentage of ownership.
Other details on the SEC Form 20-IS, such as the firm’s SEC registration number, business address, and phone numbers, can be used for cross-referencing against other publicly-available information:
• Shell companies, subsidiaries, and affiliates are often (but not always) registered at the same time, and will be assigned sequential SEC registration numbers. In situations where a firm’s incorporators are known to use corporate layering, or have related businesses, it is worth checking if the firms within the same sequence of SEC registration numbers involve the same personnel.
• Business addresses and phone numbers can be run through search engines to see if news stories and/or corporate profiles return information of interest.
• In some cases, business addresses can also be looked up the street view of Google Maps, which can sometimes give an indication of related businesses—and in some instances, reveal evidence of fraudulent registration.
Financial Statement-Annual (SEC Form 17-A): This form is perhaps the most comprehensive record of a firm’s activities. It includes information about:
• A firm’s declared business activity;
• Its properties;
• Legal proceedings it is involved in;
• Matters that have been submitted to a vote among security holders. assets and liabilities,
• Its financial position, i.e. assets and liabilities;
• Key performance indicators, e.g. current and debt-equity ratios, revenue and net income growth;
• Operating results: revenue and income;
• Management’s plan of operation;
• Expansion plans;
• Executive control and compensation information, including relationships between executives, executive positions in other firms, and ownership attributable to the company’s board of directors; and
• Segment information
Form 17-A is submitted to the SEC annually, and can thus form the basis of a historical analysis of a firm’s performance.
Information on assets and liabilities, operating results, and business segments are useful for determining the interests and track record of a firm.
For larger firms, a substantial portion of this document will be a thorough discussion of the above information.
Particularly useful for studying the holding firms at the heart of the Philippines’ family-owned business empires is an item that is typically included as an exhibit called “Segment Information,” which will outline the relative importance of different parts of the company’s portfolio.
This Sankey diagram depicts data from Ayala Corporation’s 2015 Annual Report: cash flows, both into and out of the company, from and to investing, operating, and financial activities, and total assets. Urban land and infrastructure activities emphasized.
As part of Philippine Center for Investigative Journalism’s special report on Duterte’s China romance, I conducted research into the firms that signed deals during his state visit. What I found was that, among the Philippine parties to these deals include:
• firms with no track record in major infrastructure projects, no recent operating profit, and alarmingly small asset bases;
• firms and personalities that have been implicated in anomalous deals, including Arroyo-era “bridges to nowhere” and the Smokey Mountain Rehabilitation Project; and
• two firms involved in the nickel ore trade with China, one of which had been implicated in smuggling cases at Subic.
“How did virtually unknown firms with no track record in bidding for—much less completing—major infrastructure projects, rise to billion-dollar prominence with the change of the administration?
“For the firms that have no records with the SEC: if they aren’t registered to do business in the Philippines, how could they be party to billion-dollar deals on our behalf? For freshly-registered firms how were their directors able to both anticipate Duterte’s turn to China, and secure influence with the new government so quickly?
“Given the ambitious scope of these projects, can the smaller firms, some of which appear to be seriously undercapitalized, be trusted to deliver on time and within budget? Would any sensible lender take the risk of extending credit to these firms—or will their access to capital depend on intercession from on high?”
Read the full story: Duterte’s China deals, dissected.
Other stories in this series, “Romancing China under DU30”:
Karol Ilagan and Malou Mangahas: Beijing and Manila dating again (part II)
Data Annex: The Philippine parties to Duterte’s China deals
This material originally appeared as a chapter in W. Bello and J. Chavez (eds.) State of Fragmentation: The Philippines in Transition. Bangkok: Focus on the Global South.
This entry is the last of a four-part serialization.
All told, the new Philippine economy saw billions of dollars churned into the land by overseas Filipinos and foreign investors, land that had been newly liberated from the state, agriculture, and domestic manufacturing, and redeveloped into subdivisions, condominiums, office space, and malls. This picture so far provides an account for what the new economy is, and why, how, and where these changes are taking place; what is so far lacking is an account of who benefited from this new economy.
As in any other economy, power in the brave new Philippines lies in the opportunities available for capitalist accumulation. Just like ownership of land under hacienda agriculture or dictatorial largesse under import-substitution industrialization, control over these opportunities will mean control over the creation of wealth.
The new economy saw, on one hand, the possibility of amassing wealth from haciendas or from small factories propped up by the state has been decisively closed off, even as important sunshine industries such as electronics manufacturing and business process outsourcing have daunting technical and financial entry barriers. On the other hand, the torrent of foreign investment and remittances that it has unleashed are creating immense opportunities in sectors which, whether by accident or design, are reserved for Filipinos.
Real estate development is one of these sectors. Over the past two decades, an array of crony capitalists, manufacturing-oriented taipans, and landed elites have converged on urban real estate as a central component of their strategies to diversify from their traditional sources of wealth. Continue reading “The city and the restoration of class power”