Subject: [NEXTEL-1] House of Representatives Investigation Into Nextel Starts This Week- Nextel in danger of losing franchise

From: Marcel <[email-masked]>
Date: Sat, 19 Apr 2003 17:00:13 -0400

House of Representatives Investigation Into Nextel Starts This Week-
Nextel in danger of losing franchise

By LENIE LECTURA
TODAY Reporter

Nextel Communications Philippines Inc., renamed Next Mobile, faces a possible
revocation of its franchise as the House of Representatives starts this week an inquiry
into
the trunk radio network operator’s alleged violation of the constitutional ban on foreign
ownership of public utilities.

Lakas Rep. Prospero Nograles of Davao City disputed the claim made by Nextel legal
counsel Justinian Adviento that the looming congressional investigation against Nextel is
“futile.”

Nograles said there is a strong case against Nextel which can become a basis for the
cancellation of its congressional franchise.

Besides the testimony of Antonio Urera, former chief executive officer of Nextel, Nograles

also has voluminous documents which suggest that the company has allegedly violated
the Constitution.

“I’ve read through the documents and it looks like there’s a prima facie case against
Nextel if we talk about the cancellation of its franchise,” Nograles said.

He revealed that the House Committee on Transportation and Communications has
scheduled an inquiry into allegations that Nextel used dummies and an intricate
corporate layering scheme to conceal its true state of ownership.

The House investigation will start after the Holy Week recess.

The inquiry was sought by Nograles and Liberal Party Rep. Harlin Abayon of Northern
Samar following reports that Nextel International Inc. (NII), a purely foreign-owned firm,

has taken full control of Next Mobile. If this is true, Nograles said, Nextel’s present
owners
violated the Constitution and other laws related to the country’s antidummy policy.

Apart from Nextel’s alleged manipulation of its corporate structure, Nograles said
Congress should also look into the involvement of Gloria Tan-Climaco, former
presidential adviser on strategic projects, into Nextel’s affairs.

Urera said that Climaco had a hand in NII’s buyout of the Gotesco Group owned by Jose
Go, one of the companies which previously owned 20-percent equity interest in the old
NCPI. Gotesco’s holdings went to Gamboa Holdings, one of the alleged dummy
companies of NII.

Urera said NII managed to wrest control of Nextel through a series of buyouts involving
the company’s original stakeholders. At present, he said Nextel is 87-percent owned by
NII.

But Climaco denied Urera’s allegation.

“At the time I was invited to be a board member of Nextel, the foreign group was already
a stockholder. Assuming that there were transactions resulting in violations of the
foreign
equity requirement, this occurred before my brief one-year involvement in Nextel,”
Climaco said.

Nextel was launched in 1996 after Nextel International Inc., a US-based company,
entered the telecommunications industry by purchasing a company called Top Mega, a
Hong Kong-registered company holding 30-percent interest of Infocom Network Inc.
(ICNI), a Philippine telecommunications carrier.

Another foreign-registered company called Joyce Link owned 10 percent of Nextel’s
equity and the remaining 60 percent belonged to Gotesco Group owned by Jose Go (20
percent), Jetcom Inc. owned by Bernard Asperin and Food Camp Industries represented
by Johnny Wong.

Urera, in a sworn affidavit, claimed that after securing 30-percent equity interest on
Infocom, which is supposed to be Nextel’s carrier, NII worked its way to gain control of
Infocom by buying out the 20-percent interest of Gotesco, using a company called
Gamboa Holdings Inc., with US$9-million paid in three installments.

Using what Urera describes as a “sophisticated scheme of indirect purchases,” the NII
managed to make it appear that a qualified, Filipino-owned third-party purchaser,
Gamboa Holdings, would acquire Gotesco’s share in Infocom.

Gamboa, which was incorporated by ACCRA Investment Corporation (ACCRAIN), was put
together days before the intended acquisition of Gotesco.

Strangely, 40 percent of Gamboa’s common share belongs to Top Mega, a corporation
wholly owned by NII.

According to Urera, after the Gotesco buyout, the NCPI ownership belonged to Top Mega
Inc. (30 percent), Joyce Link Inc. (10 percent), Jetcom Inc. (32.3percent), Gamboa
Holdings (20 percent) and Foodcamp Industry and Marketing Inc. (7.7 percent).

On July 28, 2002, the NII also acquired Joyce Link from the AIG Group while ACCRAIN,
the majority stakeholder of Gamboa, incorporated another company called Emerald
Investments Inc. in partnership with another company called Orient Holdings Ltd, another
NII subsidiary.

Emerald Investments was used to acquire the shares of Foodcamp Inc. which holds
7.7-percent equity on ncpi. Emerald Investments went on to acquire the 30 percent of
32.3-percent share of Jetcom Inc. for US$3.7 million.

“To date, NII, through it’s subsidiaries, has accumulated 40-percent ownership of the
capital stock of NCPI through the purchase of Top Mega and Joyce Link and roughly
19.08-percent indirect foreign ownership in the capital stock of NCPI through the shares
it
purchased in Emerald and Gamboa for a total of 59.08 percent in interest in the capital
stock of NCPI,” Urera added.

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