Rappler PDR investor hits Tiglao, questions SEC ruling

MANILA, Philippines – One of Rappler's foreign investors criticized former journalist Rigoberto Tiglao for saying that their company's investment in this social news network violates Philippine laws. 

Marcus Brauchli of North Base Media (NBM) also questioned the ruling of the Philippine Securities and Exchange Commission (SEC) to revoke Rappler's license for allegedly violating foreign equity restrictions.

"Why would the SEC rescind the business license of a truly innovative, viable, and popular media company?" Brauchli asked. 

He also said of the SEC ruling, "Could it have to do with the subtle pressure arising from misguided, high-level complaints that foreigners control Rappler? Could the judgment of the SEC have been clouded by recklessly inaccurate journalism from jealous know-nothings in the newspaper world?" 

Brauchli is managing partner and co-founder of NBM, a global venture-capital firm supporting independent media, founded by a triumvirate of top journalists from around the world.

He is also the former executive editor of the Washington Post and former managing editor of the Wall Street Journal.

The NBM co-founder wrote a letter in response to Tiglao, who sought his comment "on SEC's ruing (sic) that Rappler violated our Constitution's ban on foreign equity in a media firm."

Tiglao, once the spokesman of former president Gloria Macapagal Arroyo, a Duterte ally, also asked Brauchli, "What are your plans now regarding Rappler?"

Tiglao wrote Brauchli in the evening of Monday, January 15, soon after SEC released its ruling and Rappler called it a blow to press freedom.

Here is Brauchli's response to Tiglao on Wednesday, January 17:

Dear Rigoberto,

The first thing I'd say is you should go back and read what you wrote about North Base Media’s involvement in Rappler. You accused NBM of trampling the constitution. You said, "PDRs patently defy the Constitution's limits on foreign investments."

Next go read the SEC ruling. You may notice that it specifically allowed the PDR structure NBM used to invest in Rappler. Far from trampling the Constitution, we at NBM worked with Rappler to make every effort to abide by it and respect its provisions. I'm sure the diligent, if few, readers of the Manila Times, would be interested to know that their columnist erred in some of his earlier, righteously framed assertions.

Now, it is true that the SEC concludes that another foreign investor in a different form of Rappler PDRs had not properly structured its investment. But, as the SEC’s lawyers know full well, Rappler and that other investor have consistently said that they are prepared to alter that instrument to comply with the constitution. Indeed, Rappler and its investors at every junction made clear they respect and want to abide by the law of the Philippines.

That's why we are perplexed that the SEC didn't do the obvious and simple thing and order the PDR holder to immediately amend its investment terms to ensure full compliance with the law. Why would the SEC rescind the business license of a truly innovative, viable and popular media company? Filipinos we know are proud of the fact that the first successful digital-media company in Southeast Asia took root and flourished in their country. And, to judge by Rappler’s audience size and loyalty, it provides a service many Filipinos want — more, by far, than want what some long-established, politically obsequious newspapers produce.

So why, again, would the SEC decide that it was in the best interests of its countrymen to shut down such a popular, responsible news source, rather than order an amendment to the investment terms, another measure entirely within the SEC's rights? Could it have to do with the subtle pressure arising from misguided, high-level complaints that foreigners control Rappler? (The record in the SEC proceeding is clear that not once has any holder of PDRs ever exercised control of or managed Rappler's journalism or business.) Or might it perhaps be deference to the absurd insinuation in some quarters that Rappler's foreign backers, Pierre Omidyar and North Base Media, were agents of the CIA? Could the judgment of the SEC have been clouded by recklessly inaccurate journalism from jealous know-nothings in the newspaper world?

Of course, we recognize that countries are entitled to make and apply their own laws. As they do, though, they send signals. One signal the SEC is sending is that regulators in the Philippines may allow politics and petty populism to affect its judgments, that agencies designed to be independent may be more responsive to rantings and public pressure than to notions of balance and common sense, and that promoting foreign investment and domestic innovation may rank lower in the country's hierarchy of priorities than splashy nationalism. Nor are the implications of this only relevant to us, Rappler or the press: why couldn't any business in the Philippines suffer a similarly draconian penalty?

We admire and respect the people, laws, independence and accomplishments of the Philippines. That’s why we got involved with Rappler. It's an association we are proud of, not one we hide from. We always will be up front about our involvement with entrepreneurs that we support, in your country and any other where we’re fortunate to be present.

One final thing: take a look at what I wrote the first time we communicated, which you attached below. You dismissed it with a "Yeah, right," in your 2016 column. As the SEC now has affirmed, yeah, it is right.

When NBM invested in Rappler in 2015, Brauchli said the two companies were a perfect fit. 

"Rappler is a perfect alignment of our interests and the goals of the founders. Rappler is a company dedicated – as Maria Ressa likes to say – to redefining journalism, keeping the soul and spirit of journalism, but adapting to technology-driven changes that have swept our world," Brauchli said in an earlier interview with Rappler.

Brauchli called Rappler "one of the most innovative digital media companies we have seen in any market around the world." – Rappler.com

Paterno R. Esmaquel II

Paterno R. Esmaquel II, news editor of Rappler, specializes in covering religion and foreign affairs. He obtained his MA Journalism degree from Ateneo and later finished MSc Asian Studies (Religions in Plural Societies) at RSIS, Singapore. For story ideas or feedback, email him at pat.esmaquel@rappler.com.