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US law firms probe PLDT over budget overrun losses

Ralf Rivas
US law firms probe PLDT over budget overrun losses

TELCO. A PLDT store in Manila.

PLDT

American Depositary Receipts of telco giant PLDT is down by 22.8% since the budget overrun fiasco

MANILA, Philippines – Several shareholder rights litigation firms in the United States announced separate probes on behalf of investors of PLDT amid its budget overrun and violations of securities laws.

PLDT shares are traded at the New York Stock Exchange through American Depositary Receipts with a ticker symbol of PHI.

Schall Law said that its investigation focuses on whether the telco giant led by Manuel V. Pangilinan “issued false and/or misleading statements and/or failed to disclose information pertinent to investors.”

John Fistel LLP issued a similar announcement and encouraged PHI shareholders with losses to contact the firm for a class action investigation.

“The investigation focuses on investors’ losses and whether they may be recovered under federal securities laws,” John Fistel said.

Securities fraud law firm Glancy Prongay & Murray LLP published a press release in the Wall Street Journal, urging shareholders to pursue claims to recover losses and contact them regarding the probe.

PHI fell 22.8% since PLDT’s budget overrun fiasco. Year-to-date, it is down by 41.6%.

Meanwhile, the Philippines’ Securities and Exchange Commission is probing suspicious trading behavior after several brokers were able to sell PLDT shares last Friday, December 19, ahead of the company’s announcement of a budget overrun and led to a sharp 4% decline. PLDT announced the news after trading hours.

On Monday, PLDT shares fell 19.4%, wiping out P61.8 billion in market value.

In a media release on Wednesday, December 21, PLDT said it is “cooperating and will continue to cooperate fully” with government agencies involved in the probe.

A budget overrun, by textbook definition, are unexpected incurred costs. These can be common especially for big infrastructure companies, but these are usually caught by auditors and accountants and get reported in financial statements.

In PLDT’s case, the budget overrun amounted to P48 billion, 12.7% of the total capital expenditure spend of P379 billion for the last four years.

However, various PLDT and other corporate sources have noted that the budget overrun may involve assets that are currently in use but have not been recorded in its books.

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PLDT noted that their probe so far has not uncovered any fraudulent transactions, procurement anomalies, or loss of assets.

The company is undergoing management reorganization to “address weaknesses” that allowed such budget overruns to occur.

Tycoon Pangilinan faced investors and analysts in a closed door briefing on Wednesday. – Rappler.com

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author

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.