The Dante Tan – BW Resources scandal
April 15, 2009
There’s an interesting subplot brewing in the investigation of the murder of public relations man Salvador “Bubby” Dacer and his driver Emmanuel Corbito.
The Dacer-Corbito double murder case, according to the Department of Justice, may be linked to Dante Tan and the Best World (BW) Resources stock scandal that almost put the Philippine stock market into collapse in 1999.
Who is Dante Tan and what is this BW Resources controversy? Read on.
Dante Tan, a friend of former Pres. Joseph Estrada and contributor to the latter’s presidential campaign, formed Best World Gaming and Entertainment Corporation (BWGE) in 1998.
In 1999, Tan became a majority shareholder of a tourism and leisure company called BW Resources and BWGE became a wholly-owned subsidiary of BW.
Allegedly due to Tan’s close relation with Pres. Estrada, Tan’s companies were able to secure gambling licenses from the Philippine Amusement and Gaming Corp. (PAGCOR).
In December 1998, BWGE won the exclusive contract to operate a nationwide online bingo franchise as well as the jueteng-like Quick Pick-2 gambling game.
Alice Reyes, then chair of PAGCOR, later told a congressional hearing that BWGE got the online bingo license because “it had the endorsement of the Office of the President.”
In 1999, BW and BWGE was also able to co-borrow P600 million from the Philippine National Bank (PNB), then a government-owned bank.
These developments triggered massive interest in the BW stock from stock traders and analysts. Rumors that Macau’s gambling mogul, Stanley Ho, was coming in as BW Chairman also fueled further stock-buying.
Although the stock market was still in a bearish trend following the 1997 financial crisis, the BW stock bucked the trend with its price continuously rising.
Within one year alone from October 1998 to October 1999, BW’s stock price jumped an astounding 18,025% — from Php0.80 (US$0.0166) to Php145.00 (US$3.01).
At one point, it even became the most traded stock in the Philippine Stock Exchange, beating perennial blue chip stock TEL (Philippine Long Distance Telephone Co.)
Stanley Ho visited the Philippines in late 1999. However, the plan to operate gaming casinos was opposed heavily by the Catholic church, with Ho being accused as part of the triad gangsters.
The plan eventually did not materialize and a week after Ho’s visit, BW’s stock price dropped to below Php30.00. The price continued falling weeks later and thousands of stock traders and investors lost millions in the process.
The Philippine Stock Exchange then stepped in and investigated the company. It uncovered several stock price manipulation strategies supposedly conducted by Tan and his cohorts.
One such strategy was Tan’s sale of his shares to friends and clients at discounted rates. These transactions were then reported to the PSE as twice the amount actually paid. This was made to create an impression that the stock was being traded actively. It was also found out that the daily turnover of the BW Resources stock circulated among 10 brokerage firms only.
In March 2002, charges were filed against Tan and his co-accused before the Pasig RTC. Tan filed a motion to quash on the ground that the Revised Securities Act had already been repealed with the passage of the Securities Regulation Code. The lower court granted Tan’s motion on August 15, 2007.
The other accused subsequently sought the dismissal of the complaints against them considering that they were charged with the same offenses as those filed against Tan. On November 21, 2007, the Pasig RTC granted the motion, prompting the government to elevate the case before the Court of Appeals.
On April 13 2009, the Court of Appeals (CA) reversed the ruling of the lower court dismissing the criminal cases filed against Tan and seven other co-accused. The CA upheld the charges filed against Tan, Federico Galang, Eduardo Lim Jr., Hermogenes Laddaran, Raul de Castro, Emmanuel Edward Co, Mario Juan and Jimmy Juan in connection with the insider trading and stocks manipulation of BW Resources.
The BW company changed its name to Fairmont Holdings Inc. in 2000. A year later, it changed its name again to Suntrust Home Developers Inc. (Stock Code: SUN) to supposedly reflect a change in the company’s line of business from a holdings firm to real estate development.
As of March 2009, major shareholders of Suntrust Home include Megaworld Properties and Holdings Inc., Hong-Kong based investment firm Emerging Market Assets Limited, Megaworld Corp., and Stanley Ho.
The SUN stock closed at Php0.26 (US$0.0054) on April 8, 2009.
Peso-Dollar exchange rate used = $1 : P48.15
Sources: Inquirer.net, GMANews.tv, NewsBreak.com.ph, PSE.com.ph
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