The BENECO Surrender 2

Some people were alarmed upon reading my last article where I suggested that NEA can now act in behalf of BENECO without having to obtain the consent of its 138,000 member consumers.

All I did was just to state the obvious and verifiable. The law itself directly deputizes NEA to act as agent of an “ailing cooperative” when it begins to explore any of the eight (8) modalities enumerated in the IRR of RA 10531 for “privatizing” BENECO.

No prior consultation required–what is so surprising about that?

That has ALWAYS been the case. Go ahead, ask yourself. When was the last time NEA consulted you and sought your consent about ANYTHING?

BENECO is a microcosm of the whole of the Philippine government and society. BENECO is NOT a direct democracy, just like our system of government is NOT a direct democracy, either.

Ours is a republican (nation-wise) and representative (BENECO-wise) democracy. The direct voice of the people is always inaudible. The ONLY way the people can be heard is through their elected representatives.

This is why majority control of Congress is crucial. The most popular President would still be a lameduck chief executive if his political party failed to secure the controlling vote in both chambers of Congress. This is also why the first thing a President GONE BERSERK must do is to abolish Congress.

Similarly, this is also why control of the BENECO Board of Directors is crucial. It also follows that the first thing a NEA gone berserk must do is abolish the Board—perhaps not by extraordinary regulation but, at least, in practical terms like terminating ALL directors en masse.

Paradoxically, in our nation’s history people actually greeted the abolition of Congress in 1972 with ignorant glee. Marcos media did a wonderful job demonizing Congress that by the late 60s and early 70s the most popular cartoonization of congressmen and senators was that of a voracious crocodile. So the public shed crododile tears on its untimely demise.

When NEA practically abolished the BENECO Board last January 12, 2023 and embarked on its scorched-earth policy of reorienting the coop–terminating the Magnificent Seven directors Esteban Somngi, Jeffred Acop, Mike Wayway Maspil, Peter Busaing, Jonathan Obar, Josephine Tuling and Robert Valentin and rolling back all management and policy initiatives they instituted—some member consumer owners (MCO’s) actually greeted it also with glee but of the kind that is not so ignorant but, rather, scheming and calculated.

They had caught wind of the surprisingly loosely-available information that the Number 1 agenda of Antonio Mariano Almeda was the privatization of BENECO even before he was appointed NEA Administrator.

Within the inner circles of the BBM administration it was a popular talking point, this wide-scale shedding of bureaucratic fat by getting rid of burdensome non-performing assets or “Return-of- Investment (ROI)-poor” government equities in private institutions.

BENECO is one such private institution. Its loan repayment remittances to the government is paltry, at best, because its public utility profile entitled it to “assistance grade” interest rates really intended for the “poorest of the poor” in all state lending programs.

Worse, it had a maverick General Manager Gerry Versoza who was starting a brave effort to wean BENECO away from state loans and towards aggregated power sector credit resources, such as the Rural Electrification Financing Corporation (REFC).

And even “worser” than that, all of BENECO’s loan portfolios project timelines ranging from 10, 15 some even 20 years repayment—way longer than the six-year duration of a “normal” (non-martial law) presidential term.

So with literally billions of government equity sunk into BENECO (a premise I personally dispute) earning only trickles, and time fast running out, it’s time to cash in the government’s chips. And there’s no better “closer” for this kind of deal than Almeda.

There is no better explanation for him personally taking charge after January 12, 2023 as BENECO’s “Project Supervisor.” It’s a transition he cannot delegate to anyone—and the illustration of “Acting General Manager” Ramil Rafani’s experience proves it. The guy is as useless as a wallflower décor in South Drive right now, even though on paper he’s supposed to the most powerful BENECO official today.

The “Interim Board” is a different story. Indeed, they are far from inutile. They are KEY to supplying the missing complement of Section 21-C of RA 10531’s IRR.

While the law DOES deputize NEA as the sole agent of BENECO, it’s one-sentence expression does NOT define the scope of its powers.

In the absence of an express definition of those powers, you have to apply the “master-servant” criteria in agency relationships. That doctrine holds that the agent can only act within the limits of authority granted to it by the principal (BENECO).

And here’s the crux of the issue: BENECO only acts THROUGH its regularly elected Board of Directors.

An “Interim Board” (a term as non-existent in the law as “corporate secretary”) can only perform contingent administrative acts intended to address an “emergency” as it were. It cannot carry out CONSTITUENT FUNCTIONS.

For example, even though under Section 20 of PD 269, as few as three directors (the “clear majority” in a 5-man board) can propose and adopt amendments to the By-laws (not the Articles of Incorporation!) can this “Task Force BENECO” amend the By-laws then?

Of course not.

The law uses the term “board”—not INTERIM BOARD or TASK FORCE—and when the law does NOT distinguish, you cannot introduce a distinction either, just to suit the interpretation that you want.

So an Interim Board cannot author a resolution granting specific powers to an agent (NEA) so that it may carry out a CONSTITUENT FUNCTION—one that will affect the very nature of BENECO as a legal and juridical entity.

Such as? Such as “privatizing” BENECO because that alters the constituency of BENECO, from being owned by its members pro indiviso (constructively EQUALLY) to being owned by several equity-holders pro rata.

NEA is tight-lipped about this, of course. Eliminating the Magnificent Seven did not solve their problem. NEA may have muscled its way into the slot for “sole agent” of BENECO. But they inadvertently killed the only regular board that could cloak them with the power it needs to put BENECO on the auction block.

THAT is a disaster because even Duterte crony Dennis Uy discovered the hard way that if you acquire ANYTHING from the government (Malampaya) with tangled issues, it will always backfire and blow up in your face.

So I’m pretty confident NEA will not even attempt to use the “Interim Board” to greenlight any deal—the congenital defect that it would stamp on a contract would only spook a seriously-interested investor, learning from the Udenna Corporation’s “privatization” debacle in Malampaya.

The only strategic value of the Interim Board is to set up the district elections which they should NOT DO until NEA is good and ready.

“Good and ready” means when it has attained 100% assurance that it has loaded all the dice and can confidently predict—even control as much as practicable—its outcome.

The Magnificent Seven would NEVER have cloaked NEA with the power to lead BENECO into harakiri. So NEA does not want a new regular board that would be a clone of the Magnificent Seven.

But what NEA can definitely use is the manufactured clout of the MCO’s who—like the Filipinos who celebrated the abolition of Congress in ’72—also shed crocodile tears on the demise of the Magnificent Seven.

But NEA is still in wonderland, wondering if these MCO’s REALLY have the clout they claim to possess, not to mention their reliabity as allies is highly suspect. When you’ve turned your back on your “ka-struggle” friends at least once, NEA only knows too well you are perfectly capable of an encore.

To this day, I am still appalled at the total lack of more ACTIVE EMPATHY for the “massacred” board. Not even a single case in any court, tribunal or forum was filed by any third-party consumer, stakeholder, association (limited, unlimited or even “united”) or special advocacy group to “fight ladta” against NEA’s daytime broad daylight raid of South Drive.

There’s not even a decent petition for the reinstatement of the Magnificent Seven—how strange is that?—when no less than NEA itself realizes HOW CRUCIAL those regular directors were all along. So crucial, in fact, that now their headache is how to produce a passable-enough fake elected versions of them.

As far as the MCO’s are concerned, the most prominent and most cantankerous of them, you cannot count on anymore. They all drank the KoolAid.

Now there’s less than three weeks—21 days—to quickly mount a countermove.

But that’s another post (if I don’t run out of days.)*