Should media companies like Rappler be allowed to circumvent foreign ownership restrictions imposed by the Philippine constitution just by utilizing some creative financial engineering i.e. a loophole? This was a question likewise raised by Tiglao in his article in Manila Times last October 28, 2016.
Philippine Depository Receipts (PDRs) have allowed Rappler to receive capital from foreign funds Omidyar Network and North Base Media to the tune of an estimated 100 million pesos. In effect, Rappler Inc. became 100% foreign-owned in 2015, as the local investors’ capital (represented by parent company Rappler Holdings) was wiped out by the several years of operating losses. (According to its 2015 SEC filings shared by TP, Rappler Holdings had a negative equity of some 35 million pesos.)
So the use of PDRs has effectively disguised the “takeover” of foreign shareholders. Voila! Rappler is a 100% foreign-owned media company–in clear contravention of the nationalist spirit of the Philippine constitution that feared foreign meddling and control of local media.
What is more concerning, as TP points out, is that both Omidyar and North Base have links to Soros, who has advocated regime change in other countries he deems to be “undemocratic’. Maria Ressa’s claims that the foreign funding will have no influence on editorial decisions can be believed, if only because their interests were already aligned to begin with.
My google search says the SEC had already put out draft rules back in 2012 that it would not allow PDRs to mask foreign ownership. Does anyone know whether this was later adopted formally? If so, Omidyar and North Base Media will have to sell.
I am passing the hat around –we can all buy Rappler collectively. It may not be profitable but think of it as your contribution to nation building. Wink.
Charles Englund (Facebook Post – Feb 2, 2017)