World Business: Assault on the Powerful

In the Philippine Republic, where political power and economic power are closely intertwined, few have ever played the double game so well as the brothers Lopez —Eugenio, 61, and Fernando, 58. The older and dominant brother, wizened, unsociable Eugenio. presides over “the Molasses Fund.” the war chest out of which the Philippines’ potent handful of big sugar planters underwrite the politicians of their choice. Personable Brother Fernando, the team’s working politician, served as Vice President in the sleazy administration of President Elpidio Quirino (1948-53), and is currently president protem-pore of the Philippine Senate.

Wrong Bet. With easy access to government credit as their prime instrument, the Lopez brothers have parlayed their family’s 3,700-acre sugar plantation on Negros Island into one of the Philippines’ biggest business empires. In 1947, Eugenio bought Manila’s morning Chronicle (circ. 44,750), and by adding to it a string of 25 TV and radio stations soon emerged as a communications king. In 1951, with a generous loan from the state-owned Philippine National Bank, he bought Asia’s largest sugar refinery, the Binalbagan-Isabela Sugar Co., Inc. Last year, after expanding the Lopez holdings to include more sugar mills, a cement company and a jute-bag plant, the brothers pulled off their biggest coup. Worried by a campaign against foreign ownership of Philippine utilities that was sparked by the Lopez-owned Chronicle, the U.S.-owned General Public Utilities Corp. decided to sell off its big, well-run Manila Electric Co. Head of the government-underwritten Philippine syndicate that bought Manila Electric: Eugenio Lopez.

Just at this triumphant point in their careers, however, the brothers made a bad political bet. They backed the unsuccessful efforts of President Carlos Garcia to win a second term for his discredited regime. When crusading Winner Diosdado Macapagal moved into Manila’s presidential palace last January, he went after politically entrenched businessmen in general, and the Lopez brothers in particular. The Lopez group, Macapagal bluntly told the nation, “is using political power and influence to promote the interests of its business empire.”

Unfinished Business. In the past, when confronted with reform administrations, Philippine businessmen have pulled back a little and waited for normalcy to return. Adhering to this tradition, Eugenio Lopez agreed to sell off for $9,000,000 the Philippine Planters Investment Co., the holding company that controlled the Lopez sugar, cement and jute interests. Buyers: a syndicate of Philippine and U.S. investors headed by Vincent Checchi, a Washington, D.C., management consultant. The Philippine government gave its approval. But President Macapagal was not finished with the Lopez brothers. Fortnight ago, the government brought charges of personal income tax evasion against both brothers and accused Fernando of illegal interests in government contracts. Last week Macapagal ordered a probe of the profits the Lopez brothers made in the sale of Philippine Planters, and levied a $347,580 back-tax assessment against the company, which the Lopez brothers are to challenge in court. To the wonderment of Manila, wealth and influence no longer seemed to be an automatic guarantee of immunity in the Philippines.