My earlier post on “Rich (Gullible, Careless, Stupid?) Pinoys Lose Millions in new financial scandal (PIPC Scam)…” got a LOT of attention from readers. A lot. Not only did regular Marketmanila readers read that post, but many new readers were directed to it as soon as Google rated it high on the search list for PIPC SCAM. I also got a lot of new commenters on that post, the newest of whom, called himself/herself “Inquirer” and gave a false or non-functioning email address as “email@example.com.” Now I normally just DELETE comments which are a tad histrionic in nature, if they come from a first time visitor to the site, a first time commenter who obviously hasn’t followed the blog for some time AND, finally, someone who gives a false return email address. However, I occasionally relish the controversy raised in some of these comments and let them stay, only to respond to them, Marketmanila style. How can I resist this urge to clarify an issue raised by the erstwhile assistant of Mr. Scrooge, the anonymous Tiny Tim? Is Inquirer/Tiny Tim the Fishpan Lady of the moment? Only long-time readers will understand that jibe, and I say it lightly, as usual… At any rate, I had planned a follow-up post to the first PIPC post regardless, so here it is. And if you go back and read the initial post for the first time, make sure to read my follow-on comments (there are several lengthy comments, longer than the post itself) so you get a fuller flavor of the discussion at hand…
When you boil it down to the essence of the issue, even without the specific FACTS of the case, the whole thing would be made clearer if clear YES or NO answers were to be had for the following key questions:
1. Was the company legally registered to conduct the business it was engaged in??? At the moment, the answer seems to be NO. They did not seem to have the proper SEC registration and were not authorized to take investor funds. That according to quotes of the SEC personnel, a check of their corporate name against registered companies on the SEC website, and a check of the list of companies authorized to accept funds.
2. Was the company, with billions in funds under management, subject to the scrutiny of reputable and reliable auditors who did reasonable checks to ensure that they were doing what they said they were doing? Answer, I don’t know. But investors and company officials can answer that and should answer that in a flash, to allay the worst fears of their investors. Who were their auditors and where are the audited statements of account? And why aren’t these submitted to the SEC for file, or if they are, are they now publicly available? In fact, these could have been distributed the day after the dude guy allegedly absconded with the funds…
3. Were the proper taxes withheld on the gains from these supposed trading gains or investments? Were the appropriate government forms, taxes, remittances done and do each of the investors have proof that they paid taxes on the investment gains? Answer, I don’t know. But again, investors and company officials can answer this question in a flash. With so much money being made, they should have been paying hundreds of millions of pesos in withholding taxes per annum and the local BIR offices, company cancelled cheques to the BIR, records by investor, etc. should clarify this issue. Oh, and good audited statements would also point to this matter accurately.
4. Were there appropriate financial controls in place? Were there multiple signatories for large transfers or expenses? Blah, blah, blah…
So basically, if the questions above were all answered positively, in other words, they were a legitimate company, legally allowed to take investor money, were being audited by reputable auditors, and annually given clean bills of health, and paid huge sums of taxes to the Philippine government on huge gains made on investments, AND had reasonable financial controls in place, then the only major focus left for “investigators” would be the dude man who apparently disappeared with lots of company money…
So for all of you out there (particularly the people who lost money or work for PIPC) taking your anger out on Marketman because of my earlier post, use it positively and get answers to the four questions above. They are all things that can and should be confirmed. And if the answer to one or more of the above questions is a resounding NO (as I guess it is), then the issue may appear to be more closely associated with a SCAM. If I were one of the remaining managers of the company or one of its senior employees, I would simply gather the data/documents/proof to answer the four questions up above positively and make that plainly public…then a lot of heat, conjecture, ill will, second-guessing, ire and rumor would be put to a STOP AS SOON AS POSSIBLE.
Now, what is a SCAM, exactly? If you google a definition or refer to an Oxford dictionary, the following definitions are listed:
1. A ploy by a shyster (odd how this word is traditionally used to mean a lawyer in particular) to raise money.
2. A fraudulent business scheme
3. A Confidence Game (Con Game, also referred to as a SCAM)
4. To victimize: to deprieve by deceit.
And in case you are curious, according to the Oxford Dictionary:
Fraud – “criminal deception, a dishonest trick”
Fraudulent – “acting with fraud”
Swindle – “to cheat in a business transaction obtained by fraud”
gyp – “to cheat, swindle, defraud”
defraud – “to deprive by fraud”
So to me at least, it seems that the key word is FRAUD in almost all of the definitions of a SCAM. And since fraud suggest criminal behavior, criminal means someone guilty of a crime, a crime means a serious offense and one punishable by law… then a negative answer to the first question above of whether or not the company was duly registered to engage in the business it was pursuing, whether is was legally allowed to receive investor funds, whether it paid the taxes on gains made, etc. all point to some type of fraud… does that make sense? I know I have a lot of lawyer readers out there…help me out if you think my logic is poor…I would appreciate your input…
Now I realize there are just so many unknowns about this case that make it difficult to judge anything. But for me, if remaining company officials can tell their customers and employees the honest and actual answers to the four questions up top, that would be a huge step to really unraveling and bringing closure to this mess.
As for the latest information I have received in casual conversation and third-hand about PIPC, a banker based out of Singapore for one of the world’s top 3 banks said that:
1. PIPC was already on their “watchlist” for many months, and transfers of funds to PIPC’s accounts were already blacklisted from a while back…
2. It seems the person over at that other international bank that helped open the PIPC related deposit or transaction accounts has also allegedly disappeared as well…
As for Tiny Tim and your comment at the end of my first PIPC post, here are some direct answers to things you raised:
1. If there is nothing to hide, then current PIPC management should answer all questions posed by investors to them…that will help alleviate the tension and speculation. If there is nothing to hide, then the 4 questions up above would already have been clearly answered in the affirmative, in my personal opinion. A public press conference by any remaining management confirming the four questions would dampen speculation in a flash, so why haven’t they done that for the benefit of their customers?
2. If you have done the research yourself or because you work for the company you have proof that the company is legitimately registered, legitimately allowed to accept investor money, legitimately provided accurate and legal documentation for the funds, has legitimate and reliabe financial statements, have paid the legitimate taxes on investor gains, and had appropriate financial controls in place, and they STILL got nailed, then YOU owe it to the investors who are out the money to divulge this information, as full transparent disclosure is the first step on the road to clarity…
3. If and when Ferrier Hodson does solve the case of the disappearing dude and the $250MM he allegedly took with him, we will all be thankful and thrilled this sordid mess has come to an end.
Again, I strongly reiterate that I feel very badly for anyone who lost funds in the PIPC brouhaha, and I do personally know some of them, and I do hope that they retrieve some if not all of their money over time, but I also hope that other readers have learned something from this series of posts, and that they should be VIGILANT with their money so that they don’t have similar problems in the future!