Thank You Professor Donaldson

Closing remarks delivered by retired Chief Justice ARTEMIO V. PANGANIBAN during the Corporate Governance Enhancement Session on the theme “Navigating the New World of Business” held on November 19, 2012 at the Meralco Headquarters, Ortigas Avenue, Pasig City, sponsored by the First Pacific Group of Companies.

On behalf of the members of the boards of directors and other officials of the First Pacific-MVP Group attending this Corporate Governance Enhancement Session on “Navigating the New World of Business,” I thank most sincerely Professor Thomas Donaldson of the Wharton School of the University of Pennsylvania for his illuminating presentation. Palakpakan po natin siya muli.

Thank you Dr. Donaldson teaching us that managing operational risks is a matter of strategy, although sometimes luck helps as demonstrated in your example of two lions who happened to be in the right place when the deer fatally bumped its head on a large tree. Thank you for showing us that it is not enough to be a formidable and profitable business group; it is as important to be, as I believe we truly are, a values-based and ethics-oriented conglomerate. Thank you for stressing that we are not just pursuing a business to make money; we are also evolving a corporate culture that reflects our convictions and principles. Thank you for strengthening our faith in our ability to create wealth for the present as we prepare for an even more prosperous and fulfilling future for our companies, families and communities.

Thank you for reminding us that even well intentioned individuals and companies can stumble especially when dangerous currents like mesmerizing goals haunt us. And thank you for affirming that our tenacious adherence to ethics is our real and ultimate source of strength as we navigate the huge ocean of business and avoid the shoals of misdirection and shipwreck.

Many times, the response to failures is to point fingers and to blame others as you pointed out in the parable of the shadu. And many times too, the knee jerk reaction is to pass legislation and to create new regulations. But we know also that too many regulations penalize the law abiding and make it more difficult for them to recover and to succeed. Laws tend to punish past wrong doings; they rarely address future witchcraft of the unethical and the undisciplined. For lawbreakers do not care; they simply invent new ways to steal, to beguile and to metamorphose because they know that no law and no regulation is perfect.

Just as there were calamities that befell the triple A rated companies in America like Lehman Brothers and AIG, there are also similar schemes in the Philippines, like pyramiding scams that from time to time victimize the still gullible. Only a few days ago, our authorities stumbled on yet another of these scams that vowed incredible 50 percent rewards monthly, only to encourage the hapless victims to reinvest and eventually to lose both their principals and earnings. When will people ever learn that when something is too good to be true, it is indeed never good and never true?

Also, when will our policy makers, and some businessmen too, learn that “paying for peril” which Professor Donaldson defines as the “phenomenon of rewarding short and suffering long” produces only momentary illusions and never enduring solutions. Entities that borrow short term on fluctuating rates and lend long term on fixed rates will never stabilize and will always be at risk.

To close these closing remarks, let me say my personal thanks to all of you, especially to our Group Chair Manuel V. Pangilinan, for giving me the opportunity to be an independent director or independent adviser in some of the leading companies of this conglomerate. As a retired jurist and as someone who is used to working in an environment of independence and integrity, I have found fulfillment and contentment in the high standards of ethics and corporate governance that characterize our undertakings in the First Pacific Group. Maraming salamat po.

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