Who is Lucio Tan? A report by PCIJ Shiela Coronel
Ibex Intl
LUCIO TAN IS obviously uncomfortable with the camera. He looks at it with a
plastic grin that barely masks the grim forbearance with which he faces crowds.
He is so unlike Joseph Estrada, the president he is often seen posing with, a
man who preens, hams, performs before the camera like the movie star that he
is. No two men could be more unlike each other: the former, a reclusive tycoon
who conducts his business with so much secrecy that it has aroused official
suspicion; the latter, a crowd-pleasing politician whose life is an open book.
At first glance, it seems there is little that binds them, except perhaps the
slicked back hair and a rather famous fondness for women.
Yet, unknown to many, both men go a long way back. The president himself said
so last April, at the height of the election campaign, when he was guest at a
dinner at the Tan-owned Century Park Sheraton Hotel for the managers of the
tycoon’s sprawling business empire. “Alam ninyo, itong si Mr. Tan, mayor pa
ako ng San Juan, magkaibigan na kami (Mr. Tan and I have been friends ever
since I was mayor of San Juan),” Estrada told the gathering, according to
Salvador Mison, a retired general who heads Tan’s management company, Basic
Shareholdings, Inc.
Mison remembers a smaller and more intimate dinner just days before the May 11,
1998 elections, this time at the Tan residence on Biak-na-Bato street in Quezon
City. Lucio Tan and his brothers were there, as were key officials of Tan
companies. Estrada came with Senator Franklin Drilon, both of them assuring the
tycoon about the prospects of the campaign. Tan was, after all, not only
Estrada’s long-time friend; it is widely acknowledged that he was also a
major donor to the Erap campaign. Although the tycoon is not included in the
list of contributors submitted to the Commission on Elections, his brother
Harry is shown as having contributed P3 million to the ruling party.
Well-placed sources in the Erap camp, however, estimated Lucio Tan’s donation
at P1.5 billion.
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Not only that, says Mison, the resources of the Tan companies—trucks,
distributors, salesmen and other employees—were mobilized for Estrada, as
they were for Ramon Mitra in 1992 and Ferdinand Marcos in 1986. The grassroots
sales and distribution network of Tan’s cigarette and liquor conglomerate is
an asset to any campaign. Extending to the remotest reaches of the archipelago,
it is rivaled only by San Miguel Corporation, the biggest company in the
country.
To the politically sophisticated, this is nothing new. Money is a central
feature of Philippine elections, and businessmen have invariably bankrolled
campaigns. The conventional wisdom is that a campaign contribution is an
investment that guarantees access and favorable treatment once the recipient of
the contribution is elected. Ethnic Chinese businessmen have traditionally been
the big spenders: Before the 1970s, when they were awarded Filipino
citizenship, their uncertain status made their enterprises vulnerable to
political intervention and election contributions were an insurance against
shakedowns. Citizenship made Chinese-Filipino businessmen more secure, but
unlike native Filipino entrepreneurs, who have access to high officials through
family networks, the ethnic Chinese are outsiders who literally have to buy
political influence.
Lucio Tan just happens to play this role on a far grander scale than any other
Chinese-Filipino businessman before him. Moreover, the questionable origins of
his business empire and his unorthodox business practices make him a
controversial character. But more than that, the sheer obstinacy—and
audacity—with which he has taken on the Aquino and Ramos governments stand in
stark contrast to the generally politically safe and compliant behavior of
ethnic Chinese tycoons. His high-profile support for Estrada also breaks the
traditional mold of Chinese businessmen putting their money on both sides to
avoid political controversy.
Not surprisingly, the image of Lucio Tan—whose multibillion-dollar business
empire makes him probably the richest man in the Philippines and who is facing
legal charges for evading over P26 billion in taxes—side by side with Joseph
Estrada, as president the most powerful individual in the land, makes many
Filipinos shudder. In a country where the intimacy between wealth and power has
had such disastrous results and where businessmen with access to Malacañang
had always ended up looting the nation’s coffers, the alarm bells were sure
to ring.
Says Solita Monsod, economics professor and former economic planning secretary:
“Lucio Tan is a role model for the worst kind of conduct as far as our
national economic objectives are concerned. He signals that you can evade taxes
and get away with it, pay the courts and get the judges to decide in your
favor, get good lawyers and delay your cases. The messages that are given by
the kind of treatment that he gets from the government are the antithesis of
what we need for sustainable development: an even playing field and government
intervention of the right kind.”
TAN’S DEFENDERS, THOUGH,
portray him a victim of elitism and racism. In the 1950s and ‘60s, Eugenio
Lopez Sr. was as audacious in his dealings with the government. Today, if a
blueblood Lopez or Ayala were seen publicly so cozy in presidential company (as
indeed Jaime Zobel de Ayala was during the Aquino administration), most people
would probably shrug it off as their birthright. But Tan stirs things up not
because he is believed to be evading taxes or paying off politicians—after
all, many businessmen in this country do so—but because of the magnitude of
his alleged sins: supposedly billions of pesos in unpaid taxes and outsized
campaign contributions that make politicians too beholden to one man. There is,
moreover, the discomfiting fact that Tan is a parvenu, a Chinese upstart, an
outsider. Tradition dictates that his place is in the shadows.
Which was where, not too long ago, Lucio Tan was. His beginnings are as obscure
as they come; his story, the classic émigré rags-to-riches tale. Born in 1934
to a struggling immigrant family in Naga, he worked his way through college,
set up a business dealing with scrap in the late 1950s, and also found
employment in a cigarette factory, where he was assigned to buy leaf tobacco in
the Ilocos provinces. This was where Tan probably encountered the young
congressman Ferdinand Marcos, says a long-time associate who asks not to be
named. Politicians were then, as now, very much involved in the trading of the
region’s biggest cash crop, and were often dealing directly with the ethnic
Chinese traders who were buying it.
By the time Tan ventured off on his own and set up Fortune Tobacco in 1966,
Marcos had just been elected president. Fortune grew phenomenally after martial
law, thanks to generous tax and other incentives (at one point, it would later
be alleged, the Bureau of Internal Revenue allowed Tan to print his own
cigarette stamps). By 1980, Fortune was the country’s biggest cigarette
manufacturer. Today, it accounts for over half of the cigarettes sold in the
country and buys 75 percent of all the tobacco produced here.
In 1977, Tan acquired from the government the bankrupt General Bank and Trust
Co. for only P500,000, in what is widely described as a sweetheart deal.
Genbank is now Allied Bank, one of the country’s top banks. In 1982, Tan put
up the Asia Brewery, benefiting from a Marcos ruling that lifted the ban on the
establishment of new beer companies.
Without doubt, Tan has extraordinary business acumen, but like other
businessmen close to Malacañang during martial law, he flourished not only
because he was “smarter than others” but with the help of generous
incentives from the Marcos regime. Such generosity came with a price. As
Marcos’s financial adviser, Rolando Gapud, revealed in an affidavit issued in
1987 to the Presidential Commission on Good Government (PCGG): “I know that
Mr. Marcos and Mr. Lucio Tan had an understanding that Mr. Marcos owns 60
percent of Shareholdings, Inc. which owns shares of Fortune Tobacco, Asia
Brewery, Allied Bank and Foremost Farms...Mr. Lucio Tan, apart from the 60
percent equity of Mr. Marcos, had been regularly paying, through Security Bank,
P60 to P100 million a year to Mr. Marcos, in exchange for privileges and
concessions Mr. Marcos had been giving him.”
In 1986, when Marcos was fighting for his political life, Tan gave him full
support, even busing employees to the ailing dictator’s rallies. Romeo
Magtubo, Fortune Tobacco’s union president who is now a party list
representative in Congress, recalls how the factory’s workers were loaded
into “Love Buses” and sent en masse to cheer for Marcos, after which they
were given allowances by the company for their effort.
When Marcos fell and Corazon Aquino became president, Tan, like other Marcos
cronies, was out of favor. The PCGG investigated his companies, several of his
firms were sequestered, and he found himself, at least in the beginning,
without a lifeline to Malacañang. What transpired in the next 12 years is a
remarkable story of how a politically savvy tycoon has subverted government
efforts to keep him in line and tame his influence. Tan’s triumph, his
journey from the shadows into the light, shows the power of money and
connections, the weakness of government, and the vulnerability of individuals
and institutions.
TAN’S ACTIONS ARE worth following, if only because they betray a keen
understanding of how government works and a knowledge of the chinks in the
armor of institutions like the BIR, the Supreme Court and Congress. The
remarkable thing is how, after 1986, Lucio Tan was able to get his way with all
three, even when there was a hostile president in Malacañang. Tan lawyers
employed aggressive legal tactics, bringing on suits and countersuits against
individuals and agencies that filed cases against them. They also used dilatory
ploys to make cases drag. Moreover, the tycoon’s many opponents allege, those
in Tan’s employ bribed legislators, government regulators, even Supreme Court
justices. Bert Bacsal, who has known Tan for over 30 years finds these charges
preposterous. “How could he get away with all that in a political environment
that was hostile and adversarial?” he asks. “These allegations are not only
unfounded, they have hardly a speck of credibility.”
SNIP -< LIST OF CONTRIBUTORS AND DONORS TO ESTRADA CAMPAIGN
AND THEIR CORRESPONDING REPORTED AMOUNTS DONATED.>
But even with a more sympathetic administration in power, Tan doesn’t seem to
have let his guard down. The assumption of key government posts by people
associated with or known to be friendly to him assures him of legal
invincibility. To begin with, there is the president. Tan has not exactly kept
it a secret that Erap is his pal, and the well-planned photo ops are apparently
meant to advertise a closeness to Malacañang. In a politicized bureaucracy
that takes its cue not from the rulebooks but from the capricious exercise of
executive power, such perception of coziness opens doors, ensures certain
favors, and makes possible a bending of the rules without fear of sanctions.
Tan has also managed to pave the entry of some of his associates into the
Office of the President. His former secretary, Rosario Yu, who was seconded to
the Estrada campaign, has been appointed presidential assistant and is
frequently seen in Malacañang. His second wife’s uncle, Julio Tan, is
presidential consultant for Chinese affairs. And his daughter’s
father-in-law, steel industrialist John Ng, was recently named presidential
consultant on the steel industry.
More importantly, Tan benefits from his close association with the political
and financial wizards behind the successful Estrada campaign, the same group,
incidentally, that was also responsible for the fiasco that was Ramon Mitra’s
1992 bid for the presidency. The core group of both campaigns was made up of
the brothers Ronnie and Manny Zamora, Juan Luis ‘Bubuy’ Virata, and banker
Edgardo Espiritu, now finance secretary. Providing grease for their wizardry
was Lucio Tan’s money. These men make a formidable team, bound not so much by
a common vision but by highly honed skills in the art of financial and
political dealmaking. It is their group that now wields tremendous clout in the
Estrada administration.
How lucky can Lucio Tan get? His association with Executive Secretary Ronnie
Zamora goes back to the martial-law era, when the latter was still Marcos’s
assistant executive secretary. Virata, Tan’s long-time financial adviser and
the man he put in charge of PAL, is currently deputy treasurer of the ruling
party and part of the president’s inner circle. Espiritu was among those
briefing the tycoon at his private suite at the Sheraton on the progress of the
Mitra campaign in 1992, says Mison.
The finance secretary is close enough to Tan to have recommended his banking
colleague Federico Pascual, former vice-president of the Philippine National
Bank, to the presidency of Allied Bank. Last year, Pascual was named by Estrada
to head the Government Service Insurance System (GSIS). At the same time,
Solomon Cua, Espiritu’s business partner, was appointed finance
undersecretary.
On his first day in office, Espiritu announced that the tax cases against Tan
were “very weak” and “will likely lose.” He went even further to say
“there was some kind of violation of due process here” as Tan is among the
country’s biggest taxpayers. Not long afterward, Espiritu announced that he
was amenable to a compromise with Tan on tax evasion.
In addition, Espiritu appointed attorney Lily Gruba as finance undersecretary.
Gruba, admits Mison, happens to have lawyered for Lucio Tan. At the finance
department, she is in charge of legal affairs, including the government cases
against Tan, and also the task force on Philippine Airlines, which Tan acquired
in 1992. Mison finds nothing troubling about this. “Why didn’t anybody
object when the Ayalas and the Sorianos put their men in government?” he
asks. “Ramon del Rosario was made finance secretary when he was president of
Anscor (Andres Soriano Corp.). How come nobody questioned that?”
THE WAY HIS supporters see it, Lucio Tan is a victim of political persecution,
unfairly sidelined by the Aquino government because of his association with
Marcos and hounded by President Fidel Ramos for supporting Mitra. There is
probably an element of truth in these allegations, but they also betray a
cynicism about how laws and government regulation are merely an extension of
politics, a view that the long arm of the law and of government seizes only
those who are politically out of favor. This notion leads to a somewhat
perverse conclusion: That there is no sense in following the law and that
energies are better spent in ensuring getting back in the government’s favor
or somehow influencing how the law is interpreted and implemented. <SNIP>
End - continued in PCIJ : <http://www.pcij.org>
LIST OF WHAT LUCIO TAN OWNS ACCORDING TO PHILIPPINE SEC.
PHILIPPINES
Alipatic Chemical Products
Allied Banker Insurance
Allied Banking Corp.
Allied Leasing
Allied National Import Co.
Asia Brewery Inc.
Basic Holdings Corp.
Century Park Sheraton
Charter House Inc.
Cokiat Co. Inc.
Dominion Realty and Construction Corp.
First Malayan Development
Foremost Farms Inc.
Fortune Tobacco Corp.
Fortune Tobacco International Corp.
Golden Inc.
Grandspan Development Corp.
Green Acre Farms Inc.
Himmel Industries Inc.
Lindale Resources
Lucky Travel Corp.
Lucrative Realty Inc.
Magnum Integrated Services & Trading Corp.
Malayan Textile Mills
Manufacturing Services & Trading Corp.
Pan-Asia Securities Corp.
Paragon Electronics Corp.
Philippine Airlines Ltd.
PR Holdings Inc.
Premium Tobacco and Flue Curing Corp.
Progressive Farms Inc.
Rim Printing and Marketing Corp.
Roldan Inc.
Shareholdings Inc.
Sipalay Trading Corp.
Spartan Inc.
Surrey Development Corp.
Tanduay Distillery
Trans Union Cigarette Manufacturing
Twin Ace Holdings Corp.
Virgo Inc.
OVERSEAS
Oceanic Bank, San Francisco and Guam
Western Pacific Bank, British Columbia
Sterling Carpet Corp., Alberta
Mercury Drug Co., Alberta
Mercury Energy Resources, Alberta
Micronesia Shopping Center, Guam
Bakery Monopoly, Guam
Melanesian Tobacco Pty., Ltd., Papua New Guinea
PNG Atlas Steel, Papua New Guinea
Eton Properties, Hong Kong >>>>>>>
Not bad for for an emigre, who started off with scraps, huh?
Pusong Pinoye2
frankdel...@my-deja.com
ibex...@aol.com (Ibex Intl) wrote:
>Not bad for for an emigre, who started off with scraps, huh?
I read another book about the riches people in Asia and Lucio Tan is
listed among them. In his biography, it said that he was born in China
on that year '30's and joined his relatives in Cebu City at the age of
14. He learned the rope of business, got a college education in Cebu,
and married a Tsinay. He is worth something like $1.2-B. On the other
hand, your article stated that he grew-up in Naga City and became
associated with Marcos through Tobacco business (I think this is not
the real story). This could be a twisted stuff of journalism similar to
the guessing of an anthropologist about the color of the Dinosaur.
Whatever, but the overseas Chinese are only interested in the
Philippines as Merchants and don't like to be involved in Politics or
be elected as Public officials. The reason is that there is no need for
them to do that and just a waste of time especially in the Philippines.
Their objective is to accumulate wealth, all of them around the Pacific
Rim such as Malaysia, Indonesia, Singapore, Southern Japan, South
Korea, Taiwan, Hongkong, etc. They have a certain kind of unified goal
in preparing to return to China. At present, the Chinese government is
luring them as investors that may contribute to Globalization. The
progress of China may also affect also the Philippines in prosperity
and be free from the tyranny of the west. It could be good but the only
problem is we could not predict the temperament of the Chinese
government. We just hope.
Sent via Deja.com http://www.deja.com/
Before you buy.
Pusong Pinoye2
>Date: 5/6/00 3:57 AM Pacific Daylight Time
>Message-id: <8f0tqn$c7u$1...@nnrp1.deja.com>
>
>In article <20000506022039...@ng-bk1.aol.com>,
> ibex...@aol.com (Ibex Intl) wrote:
>
>>Not bad for for an emigre, who started off with scraps, huh?
>
>I read another book about the riches people in Asia and Lucio Tan is
something like $1.2-B. On the other
>hand, your article stated that he grew-up in Naga City and became
>associated with Marcos through Tobacco business (I think this is not
>the real story). This could be a twisted stuff of journalism similar to
Title of the book? Author? Publisher?
It is always a good practice to check these details out when verifying the
accuracy of any report. I would like to follow up on your source, too.
If you wish to double check mine, you can visit: http://www.pcij.org The
Philippine Center for Investigative Journalism is a non-profit organization
whose primary charter is to conduct "investigative journalism" as against plain
"newsreporting.
>Whatever, but the overseas Chinese are only interested in the
>Philippines as Merchants and don't like to be involved in Politics or
>be elected as Public officials.
This may have been the case, back when...but if you do even a cursory check of
the roster of politicians in government right now, it is quite evident that the
Chinese (Businessmen) have become not only reactive but proactive as well in
politics and running of the government....
i.e., Alfredo Lim, for one. A few mayors, congressmen, and even baranggay
captains and members of councils are
all of Chinese ancestry.
>Their objective is to accumulate wealth, all of them around the Pacific
>Rim such as Malaysia, Indonesia, Singapore, Southern Japan, South
>Korea, Taiwan, Hongkong, etc. They have a certain kind of unified goal
>in preparing to return to China. At present, the Chinese government is
>luring them as investors that may contribute to Globalization.
Interesting theory. This view was more popularly held during the 50's. With
globalization and the millenium years, I do not believe that this theory is as
germane and in-step with world politics, as it was, a long time ago.
> The progress of China may also affect the Philippines in prosperity
>and be free from the tyranny of the west. It could be good but the only
>problem is we could not predict the temperament of the Chinese
>government. We just hope.
I am not sure I understand your precise meaning here. But my view about China
is based on its current behaviour. And from all indications, China is on an
"expansion" mood.
I shudder to think what would happen if China should become the next dominant
foreign power who will violate our sovereignty.
Indications are all there. Overpopulation. Under production of food and
agricultural goods. Internal government conflict. Society torn by temptations
of the West and the habits and discipline of their culture....China is a
"graveyard of still-born desires...." I do not particularly care to have
anything to do with them at this point.
We have enough problems in the Philippines, as a country, and a nation of
peoples with "conflicting interests", and probably just as hungry to survive.
Pusong Pinoye2
frankdel...@my-deja.com
pusong...@aol.com (Pusong Pinoye2) wrote:
> Title of the book? Author? Publisher?
> It is always a good practice to check these details out when
verifying the
> accuracy of any report. I would like to follow up on your source,
too.
Here is the portion of the book that I read;
Lucio Tan, Philippines
Estimated net worth: US$1.7 billion
Chairman: Philippine Airlines, Fortune Tobacco, Asia Brewery, Allied
Bank
Born: 1934 in Xiamen, China
Educated: Cebu City, the Philippines
Marital Status: Married, son Michael is heir apparent
BEER, TOBACCO, BANKING, PROPERTY, AN AIRLINE – THESE ARE JUST THE MOST
visible pieces of the empire that Lucio Tan has built in the
Philippines, Hong Kong and North America in the past three decades.
Apart from Philippine Airlines, none of his companies is listed and Tan
likes to keep it that way. No stranger to controversy on his way to
great wealth, Tan sees no reason to go public if he can avoid it.
For many years Tan was regarded as the wealthiest ethnic Chinese in the
Philippines until it appeared that banking tycoon George Ty had surged
past him in the mid-1990s. Then again, Lucio and his brothers may have
other assets that are not in the public eye. Eton properties in Hong
Kong, for example, has blue-chip office, hotel, retail and residential
property in Causeway Bay, Wanchai, Kowloon Bay and on the Peak. Other
sites held by Tan are in nearby Shenzhen and Guangzhou.
Tan, born in Xiamen, in China’s Fujian province, moved to Cebu with his
parents while still a boy, labouring away at different jobs until he
found himself in cigarette factory. Using the knowledge he gained
there, he began his corporate career in the Philippines when he set up
his Fortune Tobacco Corp. in 1966. In the net three decades, despite
his love of privacy, his name was never from headlines. He was regarded
as a crony of the late Ferdinand Marcos, and was alleged to have won
tax concessions in return for campaign funds during the Marcos era. In
the 1980s and 1990s, he faced a flurry of courtroom jousts – first with
Corazon Aquino’s government over whether his companies were secretly
held for the Marcos family, and later with Fidel Ramos administration
over allegations of tax evasion by Fortune tobacco.
Through it all, Lucio Tan and his brothers kept on taking care of
business, building Fortune Tobacco Corp into the country’s major
cigarette producer, with a two-thirds share of the domestic market,
acquiring General Banking & Trust in 1977 and renaming it Allied
Banking Corp, and establishing Asia Brewery to tackle front-running San
Miguel Corp in Beer. Today Asia Brewery, run by Tan’s brother Harry,
has about 20 per cent of the US$1 billion beer market, plus it is
heavily involved in breweries on the Chinese mainland.
In September 1996, Tan finally won the prize he had been
seeking since 1992 –control of Philippine Airlines. The four-year
battle culminated in victory when stockholders formally agreed to
double the ailing airline’s capital to 10 billion pesos (about US$380
million), leaving Tan with 57 per cent.
Tan had started with an undisclosed stake of 40 per cent in PR
Holdings – the company that successfully bid for control of Philippine
Airlines when it was privatized in March 1992. Tan increased his stake
in PR Holdings to just over 50 per cent in February 1993, precipitating
a bitter battle with over shareholders (including the Ayala family)
that dragged on until the Supreme Court and the Securities and Exchange
Commission resolved it in Tan’s favor in May 1996. When it was all
over, Tan announced a US$4 billion re-equipment plan designed to
restore the airline to profitability, then abruptly cancelled the plan
in November 1996 when pilots won salary increases. Getting PAL into the
black may be the toughest challenge yet for the man from Xiamen.
Source: ASIA’S WEALTH CLUB by Geoff Hiscock
Published in 1997
> If you wish to double check mine, you can visit:
http://www.pcij.org The
> Philippine Center for Investigative Journalism is a non-profit
organization
> whose primary charter is to conduct "investigative journalism" as
against plain
> "newsreporting.
I know that already and read a lot.
> This may have been the case, back when...but if you do even a cursory
check of
> the roster of politicians in government right now, it is quite
evident that the
> Chinese (Businessmen) have become not only reactive but proactive as
well in
> politics and running of the government....
>
> i.e., Alfredo Lim, for one. A few mayors, congressmen, and even
baranggay
> captains and members of councils are
> all of Chinese ancestry.
These Chinese you mention are either illegitimates or products of
intermarraige. I have lots of relatives whose wives and husbands are
that and they already Filipinos in heart.
> Interesting theory. This view was more popularly held during the
50's. With
> globalization and the millenium years, I do not believe that this
theory is as
> germane and in-step with world politics, as it was, a long time ago.
In the next few days, I will also forward the book that I read about
the overseas Chinese in the entire Pacific rim that perhaps I can share
it to all of you and understand the realities of their behaviours. Just
stop me if you oppose.
>
> I shudder to think what would happen if China should become the next
dominant
> foreign power who will violate our sovereignty.
I think that might not happen for this millenium. China is still very
chaotic country and has a problem with Russia.
>
> Indications are all there. Overpopulation. Under production of food
and
> agricultural goods. Internal government conflict. Society torn by
temptations
> of the West and the habits and discipline of their culture....China
is a
> "graveyard of still-born desires...." I do not particularly care to
have
> anything to do with them at this point.
You may be right, and China relies heavily now with those overseas
Chinese. This is the event that we have to watch out.
> We have enough problems in the Philippines, as a country, and a
nation of
> peoples with "conflicting interests", and probably just as hungry to
survive.
Every country has a problem but let us be thankful that our citizens
are more advance now than the colonial days. We can tackle all these
madness inch by inch. As long as the freedom of speech and the press
still on then every problem we have has its own solution. Hey, that
Federal system is really enticing...I buy that. Check it out.