A fund manager of Helsinki-based Evli Emerging Frontier Fund has publicly criticized an unnamed Philippine company after divesting its shares.
Burt Flynn, a managing partner of Evli’s Terra Nova Capital, said his company decided to unload a “Philippines-based land holding company” after conducting on-site meetings and forensic accounting by a local certified public accountant uncovered “significant corporate governance concerns”, including “strong evidence of price manipulation.”
“We never tolerate governance problems and are quick to act when we identify them,” said Flynn.
Flynn also highlighted several other red flags that led to Evli’s decision:
“The firm’s dependence on the governor, who is also the company’s founder and controlling shareholder, to acquire land in his province at undervalued prices using his political power.”
“The appointment of the governor’s wife as the CEO without direct involvement in the business”
“Selling shares to foreign investors at a 30 percent discount to market price while deliberately obscuring the details to prevent local retail investors from discovering the discount.”
“The founder and controlling shareholder acquiring shares for free several years ago and only paying for them when deemed necessary by the board, which is controlled by him.”
“Insufficient disclosures to verify intercompany and external deals.”
Although Flynn did not disclose the name of the company, he shared a photo with his feet on the desk in the office of Batangas Governor Hermilando Mandanas, whose family owns Abacore Capital Holdings, a company with extensive landholdings in Batangas.
Market Screener data revealed that Evli owned 20.2 million shares, equivalent to 0.5 percent of Abacore, valued at P52 million at current market prices.
Flynn deleted the post a few hours after posting it on LinkedIn when Rafael Consing Jr. of the Office of the Presidential Adviser on Investment and Economic Affairs criticized him as “daft and disrespectful” in the comments section.
Consing expressed his opinion, saying, “The fact that you bought the shares first and conducted your due diligence afterward raises questions about your investing style. Many of the points you allege should have been discovered during your initial research, except for the alleged subsequent non-disclosures following your acquisition.”
Consing also criticized Flynn’s behavior in Mandanas’ office, saying, “Regardless of my feelings toward an office or the person in charge, I never show disrespect or display arrogance by putting my feet on the Governor’s desk.”
