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Homework answers / question archive / The celebration of the millennium by the Philippines was marked by several turbulent economic and political developments as bombs planted by local terrorists destabilized peace and order, the Asian Financial Crisis hit local businesses and the AG case began to challenge the underpinnings of the Tumbaga administration

The celebration of the millennium by the Philippines was marked by several turbulent economic and political developments as bombs planted by local terrorists destabilized peace and order, the Asian Financial Crisis hit local businesses and the AG case began to challenge the underpinnings of the Tumbaga administration

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The celebration of the millennium by the Philippines was marked by several turbulent economic and political developments as bombs planted by local terrorists destabilized peace and order, the Asian Financial Crisis hit local businesses and the AG case began to challenge the underpinnings of the Tumbaga administration. Though all impacted the stability of the country, it is perhaps the last which provided a telling indictment of our current situation and the lingering malaise that still plague us.

Universal Amusement incorporated was formed by Marko Ripotin 1995 who is also a major stockholder of Ample Group. At the time, the company seemed promising. It was politically well connected through David Murtz who was the largest stockholder of another one of their affiliates. It had secured the rights to be the Philippines sole operator of online bingo gaming for ten years. Additionally, it had also been granted the right to place a casino in its mixed use development project at Aquarius Manila.

These projects stoked market confidence. AG stock increased by 5,000% from January 1999 to October of the same year fueled not only by the lucrative gaming licenses that it had gotten but also by the rumored acquisition of Macau gaming magnate Cornelius Kahn of a minority stake in the business. Everybody bought in. The President bought Juliet. Large trading houses purchased blocks of stock and did brisk business. Individual investors bought and sold to take advantage of small dips and gains. With all these activities, stock prices eventually reached P107 before tanking at P6.50.

It was the fall of the stock that prompted calls for investigation and which would eventually uncover Marko Ripot's convoluted maneuvers. Through investment houses, he had accumulated large amounts of stock which he manipulated to create the false impression of heavy demand. National Investment House Corporation-Stock Brokers Incorporated (NIHC-SBI) was particularly active as they executed 339 private placement agreements had helped control over 50% of the stock, charges were eventually brought against them and Mr. Ripot along with seven other investments houses.

It was then that the real underhanded operations began. The Securities and Exchange Commission as well as the Philippine Stock Exchange had been in charge of the investigation and were pressured by the King to report in favor of Mr. Marko Ripot, according to the testimony of then PSE head Mr. Felipe Kumpleto. He stated that he had been called by the King repeatedly. The first call was in November 22 and Mr. Kumpleto remembers the King stating that "[the SEC] is no longer investigating the case, it's only the PSE investigating now so please expedite it". The second call continued along these lines. Eventually in Feb, 14 2000, Mr. Kumpleto and Mr. Amado Pabuya of the PSE Surveillance and Compliance unit were asked to come to the King's Office Residence. They presented their findings of blatant stock manipulation to Mr. Tumbaga only to have him declare that the SEC head Jose Batobalane had already been bribed and that they too should simply exonerate Mr. Ripot.

Accusations and counter-accusations quickly followed. Mr. Ripot, faced with multiple charges and no clear way out, began declaring that he had bought off Mr. Batobalane and Mr. Pabuya. Mr. Batobalane had been given $50,000 in cash and 200.000 shares of AG stock through a lawyer who served as an intermediary. Meanwhile, Mr. Pabuya was given $48.000 in exchange of pointing out the loopholes in the PSE report that he himself had prepared.

The King and his family were drawn into the mess. The King was to fight for his political life in the impeachment court against allegations of insider stock trading and abuse of public trust. David Murtz's fleeting association with the AG group was to be exposed in the newspapers. Business activities of all the members, once ignored were suddenly to be scrutinized.

The Philippine Center for investigative Journalism has noted that Tumbaga's ascension to various political offices was followed by a "rash of company formation." None of David Murz's numerous business interests were formed before his father's 1987 rise to the Upper Chamber while only one of SlinhaLualhati's was. Additionally, several of their business partners held various political offices and some companies transacted directly with the government itself.

In no other situation, however was the link between influence and business more pronounced than in the AG case. David Murtz's was the largest stockholder of a short lived affiliate. Licenses were granted "because it had the endorsement of the Office of the king.' Marko Ripot was protected as much as possible through the King. The line between personal and public interest was blurred and it is this lack in our leadership, more than any internal or external pressures that have contributed to our slow decay.

 

 

Questions:

1.    Although it is everyone's right to engage in business, should members of a political family be given this right as well? Would it be advisable to curtail this ability or would that then be a violation of their rights?

 

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