Malakas at mahina

Blogger Imperfect Hush makes a unique comparison: says Winston Garcia’s like cartoon supervillain The Red Skull! o_O

While the corporate drama that played out last Tuesday was quite riveting (leaving reporters like Iris Cecila Gonzalez exhausted; for reportage, see When smallest to biggest owners become electric), it was the following blog entries were responsible for my column for today, which is ‘Malakas pa si Lopez‘. Blogger myclique, who works for a Lopez company, and LeNdl VicENciO’s UseLEss MuLtipLy , who features an extremely detailed rebuttal from his elder sister, a Meralco employee, got me thinking about how more than the big players are invested, emotionally and even financially, in the Meralco fight: there are the employees, each of which has a family, and most of whom constitutes part of our shrinking middle class; and there are also the stockholders.

Blogger Vicoyski’s Eye (a shareholder) gave an eyewitness account of the proxy battle at the Meralco Theater:

I saw firsthand, corporate drama in real life. Obvious, but savvy, corporate raiding moves, that some would interpret as an underhanded attempt to subvert the proxy nominations under the name of recognized Meralco management representatives. A director from the Securities Exchange Commission (SEC) coveniently coming out with an order to remove the Asst. Corporate Secretary, Atty. Tony Rosete, and invalidate all proxies under Meralco management supportive directors, at the exact moment that Mr. Garcia made a signal by pulling-out a manila envelope and flashing its content. An order that was subsequently junked by a majority of the board on the grounds that it was undated, was signed only by a SEC Officer-In-Charge, didn’t have the official seal of SEC, and doesn’t even have the necessary docket number to be considered a legal order.

What I believe is the funniest (others would say scariest) part of the whole proceeding was when Mr. Garcia began losing his composure due to the heckling of a number of Meralco employee-stockholders. He began stating, as I remember it, “…I have more shares than all the (Meralco) employees here combined!” It is indeed something that is true… However, his seemingly childish outburst showed great arrogance, considering that he doesn’t own, but only represent the shares of government employees who have very little say as to where he invests their GSIS retirement money.

Fernando G. Gagelonia in his blog At Midfield quantifies the cost of the government campaign and Garcia’s bravura performance as follows: for all shareholders in Meralco, the stock’s value has shrunk by 24 percent; and for the government itself, book losses for state institutions that “now exceed 6 billion pesos.”

Returning to the Meralco stockholder’s impressions of the proxy battle, something New Philippine Revolution said in his postmortem of the proxy fight-

That scene showing Garcia standing up and shouting at all those stockholders show you how a member of Gloria’s mafia gang thinks about himself as an overlord of this country.

Suggests to me that something interesting is going on that hasn’t been widely commented on. And that is, the posturing wasn’t aimed at one specific audience, but many audiences. You would think the Lopezes, having encountered Garcia up close and personal in the boardroom, would have known his propensity to come across as a boor, and welcomed the opportunity to have him do their work for them.
But perhaps they knew as well as Garcia does, that his bluster wasn’t meant to impress serious stockholders, much less potential foreign investors, but rather, the broader public. And that is what separates the present management of Meralco from Garcia’s gang: the management had specific shareholders and investors to keep happy, while Garcia and the President are playing to the gallery (which is not to pass judgment on either side: businessmen will obsess over calming investor and shareholders’ nerves while politicians can and must play to the gallery). blog@AWBHoldings says that prior to the proxy showdown, other kinds of political proxies were being solicited by the government:

Last Sunday, I came from church, and my mother reported that a barangay kagawad (councilor) was making the rounds, asking people to sign a piece of paper. It was supposed to be a petition calling for lower electricity rates. But when my mom scanned the document, she found a list of reasons, and number one referred to the Lopez family. My mom refused to sign, knowing it was political in nature, most likely concocted by a local official allied with the current regime. My mom refused to be used by this regime for its political games.

Which brings me to one final extract from New Philippine Revolution’s entry:

This gambit of Gloria backfired. First, it showed how powerful the Lopezes are compared with the Garcias, the Aboitizes, the Alcantaras, and the Arroyos of this land. Second, it showed how teethless the SEC is. And third, it shows how inept and foolish government becomes when the people allow it to continually perpetuate its proto-dictatorial powers especially on businesses.

Pinoy Observer had a similar reaction:

At around 2 pm, GSIS President and “coup plotter” Winston Garcia went out of the Meralco building with his tail between his legs. He has been heckled and jeered at by Meralco employees. Last minute dilatory tactics by the government through the SEC has been rebuffed…

Garcia should blame his publicist for this image fiasco. He lost twice today. He lost his power because Meralco stockholders rebuffed him and he lost his dignity.

Or, as you might have heard from people following the news, “Ay, mahina pala si Garcia!”
This was the main theme of my column: the public posturing of both camps to prove to the public that one was more malakas than the other. This was a concept Filipino historian Mina Roces introduced in her book, Kinship Politics In Postwar Philippines: The Lopez Family 1946-2000.In many ways an effort that arose out of dissatisfaction with the anthology An Anarchy of Families: State and Family in the Philippines and Phoenix: The saga of the Lopez family, Roces puts forward two highly useful ideas for understanding politics and business:

One persistent theme in Philippine postwar political history had been the continuous charges of graft and corruption against an administration, foreshadowing its demise at the next election contest. Such fluctuations in Philippine politics have been an established pattern since independence was granted in 1946..How can one explain such “cycles” in Philippine postwar history?

This book proposes a framework for such an analysis. It argues that a contest between two competing discourses -traditional social idioms embedded in kinship politics or politica de famila and Western values (here interchangeably used with the term “modern”) inculcated in the colonial period- accounts for these political oscillations. Traditional, or pre-European, political organization is seen as being based on the politica de familia or kinship politics. This concept is used here to mean political process wherein kinship groups operate for their own interests interacting with other kinship groups as rivals or allies. Politica de famila thrives in a setting where elite family groups and their supporters compete with each other for political power. Once political power is gained by one family alliance, it is used relentlessly to accumulate family wealth and prominence, pragmatically bending the rules of the law to gain access to special privileges.

She then goes on to specify what these “Western idioms” are:

The colonial period introduced a number of Western idioms (the term Western idioms or Western institutions is used for lack of a better term to refer to non-indigenous influences introduced externally into the society from the West from the 16th century onwards) which were eventually incorporated into the cultural milieu and thus of political behavior. Some of these values were in direct conflict with the traditional elements of kinship politics. The set of Western idioms which penetrated and influenced Philippine political culture may be classified into three categories. First, a new set of ethics and morals, introduced in the Spanish period through the vehicle of Catholicism, provided a novel standard with which to conduct and judge behavior, often intruding into the established methods of comport. (This does not imply that there was no “morality” before the Spaniards arrived in the 16th century). Secondly, bureaucratic professionalism inculcated in the American colonial period emphasized a different method of participating in politics and business -that of utilizing impersonal norms, the assessment of people on the basis of achievement, and maintaining objectivity in major decisions involving personalities. Finally, the concept of loyalty to a nation-state, an entity far surpassing the specific confines of the family or village, began to emerge as nationalist ideas spread throughout the archipelago from about the second half of the 19th century to the movement for independence in the 20th century…

And then, how it comes together:

With independence, Filipinos assumed full political leadership and the tensions between these two opposing discursive practices surfaced. This unreconciled tension explains the peculiar behavior of postwar politics that saw the cyclical rise and fall of governments as each administration was voted out of office for graft and corruption. Families who operated in the traditional style found themselves exposed and criticized in the free press by rivals who used the rhetoric of Western values to attack those families in power. Having been shown to have neglected the national interest in favor of familial concerns, these families failed to retain their power beyond one administration. In this framework, the Marcos regime (1972-1986) represents the epitome of pure kinship politics as one family alliance alone had monopoly of political power and owning most of the country’s major corporations…

This book argues that this unresolved tension was responsible for the ambivalent behavior exhibited by Filipino families who have used political power for familial ends. On the one hand, these individuals families sincerely believe the rhetoric they imbibed from their education -that corruption is bad, that the modern discourses of professionalism, ethics, and morals, and the concern for the national interest should override the familial interests in the political sphere. While these families use the modern idioms to criticize other families who in their eyes use political power to build a business empire, at the same time they remain blind to the same faults in themselves -almost oblivious to their own practice of kinship politics. In this manner they continue to apply one set of values (Western/modern) to their rival families, and one set of discourses (kinship politics) to themselves.

Another concept Mina Roces puts forward as deserving of further exploration, is that of palakasan:

Another Tagalog concept also used as in idiom in the discourse of kinship politics yet unexplored by social scientists is palakasan. The word malakas literally means “strong” and the word mahina designates the opposite -“weak.” In a political sense, a person who is malakas is one who is in a position of power and uses that power unscrupulously to benefit his/her kinship group…

One who does not want to his/her position or power to help his/her kin group is “mahina.” And to be branded “mahina ka” (you are weak) is pejorative. In the cultural value system, “malakas” is a virtue. One who is malakas is looked at with awe and it would enhance once’s position to work for such a “malakas” person. Thus, one’s being malakas or mahina becomes a culturally-defined yardstick of a person’s prestige, power, or influence. If a family is malakas, many would want to work for it or desire an alliance with it. The unabashed ability to display how malakas one is by using one’s power to give one’s family special privileges and concessions in business is received with great admiration.

Palakasan is a system wherein those in power compete with each other in obtaining special privileges and exemptions from regulations and beding the rules of law for their kinship group. For the palakasan system to function, there must be various groups of family rivals all attempting to exercise power in the pursuit of family wealth and privilege. Each family then tries to outdo the other in being “malakas.”…

And the assumptions on which such a system is based? A fundamental inequality among the people:

Malakas implies special status, blatantly stressing the inequalities in the social structure between those in power and those out of power. But malakas status is not dependent on social or economic class (although one could argue it represents the current political class, a position far from being static, as family alliances constantly move in and out of political office). Since the criterion for malakas status is solely political power, a wealthy person can lose out to a relatively poor but more influential family alliance. A group of squatters in a Manila slum area may be malakas because they have close ties with the mayor and therefore feel no threat of eviction. The person who owns the land illegally occupied by the squatters though wealthy, has no hope of retrieving his/her land or of evicting the squatters as long as these squatters maintain their malakas status vis-a-vis the mayor…

It is true that, generally, wealthy families have more chances of attaining malakas status: politicians are willing to receive financial assistance from a wealthy family at election time in exchange for ties of utang na loob. Wealthy families are also financially capable of employing someone who is malakas in order to speak in their favor. For example, rich families can pay influential malakas lawyers, or malakas judges to favor them in court. A poor person who is mahina would not have the financial materiel to approach a malakas person for help. But it is important to note that even families from low social classes, the poor peasants, may be malakas if they are close to the powers that be. Don Aflonso may be wealthy but he could be mahina in the municipality of Pasay City, whereas, Mang Pedro who is the bodyguard of Mayor Pablo Cuneta of Pasay City could be malakas in that municipality.

Because of this, Roces argues that being malakas isn’t always about the wallop of one’s wallet:

Malakas highlights inequalities not along socio-economic class lines but distinguishes between those who are exempted from all laws and rules that govern the rest of society (malakas) and those who have to follow the rules (mahina)… Those that follow the rules disadvantage themselves by sublimating themselves in a lower status while those who blatantly bend or break the rules of law gain prestige because they reveal their special status (they can break the rules without punishment, or they do not have to follow the rules that everyone else has to follow). And it is usually those who are in political positions who can exercise the malakas prerogative. An interesting point is that in order to show malakas status, one has to break the rules deliberately; one has to exercise status to show status.

Which brings me to suggest that Roces’s book provides a keen insight into what took place at the Meralco proxy battle. She pointed out that when it comes to powerful blocs duking it out, Western notions of the “rule of law” become a benchmark of success when one bloc manages to prove itself better at legal manipulation, in other words, malakas.
At the start, both the Lopezes and Winston Garcia had a default malakas position, the Lopezes by being the incumbent controlling interests and Garcia by being backed by the chief executive and having access to a big warchest; Blogger The Write Stuff zeroes in on what the potential political benefits for the President (and Garcia) going into the battle, were:

As a political move, this is probably the best time for Gloria’s administration to take over a highly unpopular power utility firm, or at least take it away from the Lopez family and earn pogi points from the public. Mind you, any Presidentiable making a statement of support to the Meralco Group right now would be taking a political suicide.

The showdown was in many ways reminiscent of the way datus retained or lost their authority by means of challenges from contending datu-wannabees. It seemed as if the fight -highly political because of the nature of both rivals as keen players of the power game (literally and figuratively)- would be old fashioned (think “politics is addition”).

The Inquirer editorial today says Garcia gets points for personal courage but zeroes in on the SEC’s attempt to stop the voting:

Above all, it depended on a master stroke and the element of surprise: an order from the Securities and Exchange Commission to exclude certain proxy votes solicited by the Lopezes from being counted.

The order, read before a stunned assembly by Hubert Guevara, director of compliance and enforcement at the SEC, could have handed Garcia either a strategic or a tactical victory: Either the Lopez proxy votes would have been invalidated or excluded, negating the Lopez family’s advantage, or the stockholders’ meeting would have been postponed, allowing Garcia more time to get more proxies.

Instead, after the board recessed and Meralco management consulted its battery of lawyers, the Lopezes and their business allies decided to ignore the SEC order. They gave a total of 10 reasons why they considered the order legally infirm – only one of which, the charge that GSIS was merely forum-shopping, could be considered invalid. (The GSIS petition for a temporary restraining order had already been withdrawn before the start of the meeting.) Not least, Meralco officer Monico Jacob, a former chairman of the SEC, emerged to explain to the public that intra-corporate disputes were not in fact within the jurisdiction of the SEC.

Indeed, of the many events that transpired Tuesday, it is the SEC order that provokes the most curiosity.

Was the order only the latest confirmation that the Arroyo administration was behind the GSIS attempt to shake up Meralco management? The timing of the order is suspect; it seems part of a script directed by someone in control of government resources.

But why was the order transparently flawed? Only one commissioner’s signature, no official seal of the SEC, no notice given: The list of errors goes on. It is as if the document was designed to be ignored.

It was after the board’s decision to ignore the order and resume the meeting that Garcia, a controversial man at the best of times, objected loudly and confronted members of the pro-Lopez audience.

Ricky Carandang on TV mentioned that one issue was that GSIS had accepted the validity of a quorum and so questioning the validity of proxies made no sense (if they were valid for determining a quorum, why would they suddenly be invalidated for the purpose of voting? Yet the Lopezes too, said Carandang, had contemplated postponing the election early on; it seems perhaps both sides were engaged in a real nail-biter as far as the proxy war was concerned), but like many observers steeped in Western idioms perhaps missed the point (something the editorial came closer to pointing out). The SEC order had nothing to do with law, or the rule of it; it had to do with palakasan and it was meant to be a coup de theatre for Garcia. See GSIS plan to lie low, spring surprise fails:

The Plan called for the GSIS to lie low and feign weakness in the days leading to the annual meeting, hoping that the Lopez family and its allies would lower their guard.

An official, who had knowledge of the plan to shake up the board of the country’s largest power distributor, said the “diversion” was important because the Lopez family was expecting a full frontal attack from the government led by the GSIS.

The plan coincided with recent pronouncements by Malacañang distancing itself from the boardroom brawl, and by leading industry observers that Garcia would back down without public Palace backing.

Also part of the plan was to float the idea that the GSIS would ask the courts to issue an injunction on Tuesday’s annual stockholders meeting, ostensibly because it had failed to gain access to “proxy votes” records…

The GSIS filed a motion to that effect on Friday in the Pasay City Regional Trial Court, but immediately withdrew it.

GSIS legal counsel Estrella Elamparo said the strategy was to divert the attention of the Lopezes away from guarding against requests for temporary restraining orders (TROs).

The Lopezes need not have looked far as the GSIS filed a complaint on Monday morning in the Securities and Exchange Commission (SEC) – only a few hundred meters from Meralco’s headquarters.

Despite filing the complaint earlier in the day, the GSIS called a press conference in the afternoon, where Elamparo denied having filed a petition for a TRO…

That very same day, SEC Commissioner Jesus Martinez signed the order favoring the GSIS motion to “set aside” the counting of all proxies gathered by the Lopez group. The order would be delivered by SEC representatives as a surprise during the Meralco stockholders’ meeting…

When SEC director Hubert Guevara read the “cease-and-desist order” on the floor, the entire assembly fell silent. The audience was clearly confused by its implications, and the Lopezes and their directors were stunned by Garcia’s deft maneuver.

“Without the Lopezes’ proxies, they would have only 33 percent [or Meralco’s total outstanding stock].” said another business ally of Garcia. “Winston has about 40 percent, including proxies. He will win.”

The plan – had it been successful – called for the GSIS to elect five board members, plus nominate one independent director who would be sympathetic to their side…

As it turned out, however, the Lopezes’ lawyers saved the day for the influential family, finding “infirmities” in the SEC order, including several technicalities like the absence of a docket number, date and official seal on the written order.

What looked like the SEC’s technical errors gave the Lopez group the courage to disregard the order and proceed with the stockholders’ meeting.

And so, the coup de theatre that failed added to the malakas reputation of the Lopezes -and again, let’s recognize that neither side was operating from the basis of subordinating themselves to the rule of law, but rather, tried to outfox each other in applying the law in as wily a manner as possible. What Garcia had hoped would produce shock and awe -the SEC order, incidentally widely-understood as being something of an unprecedented development- was blunted when the Lopezes survived the initial bombardment and sallied forth from their bunker.

So, if there’s one sector that’s unquestionably benefited from this fight, it’s corporate lawyers.

On to the point I first raised and the final point in my column. The administration’s skating on thin ice in playing the populist card but going after big businesses that have a reputation for cultivating their employees.

Think of the middle class, which has felt besieged for some time: subjected to the predations of politicians, and hostile to the masses because they’re viewed as land-grabbers, etc. When a government whips up mass sentiments, the instinct of the middle class is to throw its support behind the upper class, on which its own status is intertwined. the President, after reformist elements proved themselves powerless during Edsa Tres, realized that a combination of military support (generals, often having a subtantial net worth, have no real incentive to throw caution to the winds if regime change introduces more, and not fewer, variables into the political equation, for examply by possibly putting in power a fragmented opposition), and consolidating middle and upper class support by reassuring them the might of the state would mobilized to protect property, peace and order, etc: anyway, they’re “prepared to sacrifice their freedoms to move the country forward”, economically, etc.

But the President can’t ignore the broader public, which meant they had to be reassured things were really trickling down (“Ramdam na ramdam ko ang asenso!”) and if they didn’t feel it, well, tough luck, they would be denied avenues to express their dissatisfaction while those with a gift for organizing the discontented would be liquidated one by one. Meanwhile, those from the middle and upper classes inclined to show common cause with the broader public would be portrayed as hopelessly naive, dangerous class traitors -or simply, and most effectively, as possibly sincere but on the whole, mahina.

Much as the middle and upper classes express themselves in Western terms, in their breasts beat hearts that still palpitate to traditional notions. Hence the admiration for the President’s survival instincts and cat-like-grip on power. Hence the derision that greets her critics when they fail to dislodge her (after, mind you, initiial posturing when it seems they might just pull it off!). Hence the satisfaction with the arrests of anybody but themselves. Hence the relative tranquility with which big business greeted the events of 2005.

This only began to change when the President showed signs of wanting to stay in power, and of sending her cabinet to gun after certain corporations (remember Favila and his threats to the Makati Business Club), and how she’s gone beyond the usual saber-rattling all presidents indulge in: the attack on Meralco and possibly Smart, Globe and Sun (Pangilinan gave some cryptic criticisms of the President; the Palace mistrusts the Zobels; administration allies the Gokongweis have to wonder how they’ll wriggle out of this one) inspires the sort of instinctive panic that gets businessmen to mobilize faster than you can say “People Power.” As I mentioned in my column, Garcia’s saber-rattling against SGV might also antagonize another powerful bloc. And all these blocs have a big chunk of the middle class working for them, and in a sense, identifying with their bosses.

Meanwhile, as the news stories keep coming out, see Meralco shares face protracted beating and SEC intervention may scare away foreign investors and Garcia discloses gameplan when he takes over utility, there have been postmortems in the blogosphere:

Pilipinas, you need to work says if things drag out in court, it won’t help consumers. blackshama’s blog makes an interesting comparison to the dissolution of the monasteries in England:

It is not the first time that the King or in our case the Queen has tried to take over a private enterprise. Like Henry VIII who dissolved the Monasteries, Gloria I tried to “dissolve” Meralco by bringing up the spectre of high energy costs. While Henry had his Cromwell, Gloria has her Winston. The only similarities between them is that both royal subalterns are in their faces! But her Winston is no Churchill.

In a globalized economy, doing a Ferdinand I on the Lopezes is nigh impossible unless Gloria I declares martial law (which requires Congressional assent). So she had to do it by proxy. The stockholders saw through this and trooped to the meeting. When Winston queried if the people in the theatre were employees,not a few responded “I’m not an employee!”

And Ricelander’s Blog takes a karmic approach to the whole thing:

GMA’s decision to pick a fight with the Lopezes to score points from the public reeling from high power rates would be popular, but for her own past sins, it calls attention to herself. Like a mirror, it reflects. Take the issue of transparency. When Malacañang seconded Winston Garcia’s call for the Meralco management to be transparent with its records and transactions, it got sneered at instead: “look who’s talking?”. Look, indeed, who’s talking? The many scandals that have become her government’s trademark are known not just for their gravity but also for the groundbreaking lessons in naked cover ups and stonewalling that followed each. When Meralco management points its finger to ERC to justify corporate practices that at first glance appear unethical and immoral saying “hey guys, it’s legal says ERC”, you are at once reminded of the legalistic barrage popularized by Malacañang mostly by the frequency of their employment: “Respect the institutions!” “Go to the courts!” When the Lopez group went after proxy votes in a manner seemingly dubious, the Palace could have raised a howl in the name of fairness and goodness but how, without calling back to memory “Hello, Garci” and all the parallel backroom operations during the heat of her own series of crises.

She’s looking at a mirror; it’s herself she sees and it is ugly. Question is: is there any chance she’ll recognize the reflection?

As for the Lopezes, what’s the stuff this family made of exactly? Thanks to this ongoing power struggle, they’re out in the open finally for all to see, while being undressed. This family had successfully parlayed its “good guy” image as a victim of “bad guy” Marcos to earn sympathy and to get into the good side of society. It paid well; the Lopezes got their business empire back free, a compensation for the wrong done to the family by a “rapacious” dictator, supposedly. But now, it’s all coming back and people want to see documents to crosscheck with their claims of grieveous wrongs and if indeed sympathies were well-placed. Because if the Lopezes were/are indeed the “good guys”, some things here are in serious disconnect. Good guys don’t get this sneaky on people and their costumers. Good guys do not behave this way!

Review Roces’s book for a more detailed look at some of these allegations. But on a minor point, I don’t know that the younger are ever better than their elders, as Ricelander suggests; often the opposite; but the real point is, at a certain point one generation can’t be -or should be- held accountable for what their kids do. Parents, I think, should always get credit for whatever good things their kids do, but the blame, if they don’t do good, should stay with the kids, who are individuals and not clones.

And Pinoy Potter’s Chronicles reproduces a effort to trace back the Arroyo-Lopez konfrontasi to the 1920’s, but the real bad blood, if any, dates back to the Macapagal administration, but politicians on all sides are more pragmatic than to bear in mind old fights; it’s the new fights that interest them.