(Eagle News) – The chair of the Securities and Exchange Commission (SEC) which revoked online news site Rappler’s certificate of incorporation, said Rappler was trying to divert the people’s attention from the real issue – its violation of the Constitution and other Philippine laws.
SEC chair Teresita Herbosa, an appointee of former President Benigno Aquino III and chair of the Anti-Money Laundering Council, also hinted that Rappler has its own agenda in trying to divert the people’s attention from its violation of the Constitution regarding mass media ownership in the country.
“Whoever didn’t get what they wanted from us, maybe they wanted us to say the PDRs were legal, then maybe they have their own agenda,” Herbosa told reporters referring to the Philippine Depository Receipts issued by Rappler and Rappler Holdings Corporation to foreign entities North Base Media and Omidyar Network.
“They have to resort to things like that in order to divert people’s attention to what is the real issue,” she said commenting on Rappler’s much publicized claim that the SEC decision was a “blow to press freedom.”
Herbosa, who was appointed by former President Benigno Aquino III in 2011, was a former co-managing partner of the ACCRA law (Angara Abello Concepcion Regala & Cruz), a top-tier law firm where Liberal Party chairman and opposition senator Franklin Drilon had also worked as a managing partner.
Herbosa also chairs Credit Information Corporation, a GOCC whose primary purpose is to act as the national aggregator of credit data.
She graduated with the degrees of Bachelor of Arts cum laude and Bachelor of Laws cum laude from the University of the Philippines. She obtained her Master of Comparative Law degree from the University of Michigan Law School in Ann Arbor, Michigan. In 2014, she received the UPAA Distinguished Alumna Award for Public Service.
SEC dares Rappler to prove accusation ruling was politically-motivated
The SEC chair challenged Rappler to prove that the SEC’s decision was politically-motivated. She said accusations that the SEC’s ruling was politically-motivated was “unfair” to the SEC which was only doing its job as national government regulatory agency charged with supervision over the corporate sector.
“You know, if they have proof that that’s the case, they better present it. It’s so unfair to us. We’re only doing our job and you know, without fear or favor, we just come out with whatever the law would require us to do,” SEC chair Herbosa told reporters in an interview.
After Rappler issued public statements about its investors in 2016 was when the SEC began looking into Rappler’s ownership structure.
“And I think that’s when the Solicitor General’s office had to refer it to us because the PDR being a security is our jurisdiction,” she said.
SEC: Rappler violated PHL Constitution, also committed securities fraud
THE SEC revoked the incorporation certificates of Rappler and Rappler Holdings Corp. primarily because they violated a provision in the Philippine constitution reserving media ownership to Filipinos.
The SEC cited the Foreign Equity Restriction enshrined in the Philippine Constitution that bars any form of ownership or control by foreign entities of Philippine mass media.
“The Foreign Restriction is very clear. Anything less than one hundred percent (100%) Filipino control is a violation. Conversely, anything more than exactly Zero Percent (0%) foreign control is a violation,” the SEC decision read.
The Foreign Equity Restriction is found in Article XVI Section 11(1) of the Constitution which provided that: “The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or associations, wholly-owned and managed by such citizens.”
The SEC also cited Section 2 of the Presidential Decree 1018, Limiting the Ownership and Management of Mass Media to Citizens of the Philippines.
In its investigation, the SEC found that Rappler and its holdings company, Rappler Holdings Corporation, issued Philippine Depository Receipts (PDR) to the foreign entities North Base Media (NBM) thru NBM Rappler, LP, and Omidyar Network.
The investigation showed a certificate of Registration of Expanded Limited Partnership, issued in the Cayman Islands to NBM Rappler, L.P.
The SEC investigation also found a certification of partnership interest issued in the Cayman Islands to NBM Rappler, LP, as well as a Certificate of Formation issued in Wilmington. Delaware, USA to Omidyar Network Fund LLC.
In 2015, Rappler Holdings Corporation issued 264,601 PDRs to NBM Rappler, LP on May 29, 2015; another 11,767,117 PDRs to NBM Rappler, LP on July 29, 2015; and more than 7 million PDRs (7,217,257 PDRs) to Omidyar Network Fund LLC.
SEC said Rappler also violated Section 1 of the Commonwealth ACT 108, or the Anti-Dummy Act, which penalizes any citizen of the Philippines who allows his name or citizenship to be used for the purpose of evading constitutional or legal provisions whoch require Philippine or any other specific citizenship as a requisite for the enjoyment of a right, franchise or privilege.
“This may include a situation where a person allows disqualified foreigners to obtain a derivative that grants a measure of control over corporate matters, especially where the Constitution is very clear that there must be no foreign control whatsoever,” the SEC noted in its ruling.
“Anything less than one hundred percent (100%) Filipino control, as stockholder or through any other means, is a violation,” it explained.
It accused Rappler of committing what may be considered “a species of Securities Fraud” when it circumvented the foreign equity restrictions enshrined in the Constitution through a sale of securities to foreign entities, the Omidyar Network and North Base Media.
(Eagle News Service)