Fil-Am critics alert U.S. SEC to Chevron’s ‘hand’ in PH Malampaya gas scandal

Complainants claim Chevron, via its Philippine subsidiaries, committed multiple misrepresentations and concealments to stakeholders when it allowed the transfer of Chevron Malampaya’s interest in a Service Contract, violating the anti-graft and corrupt practices act.

NEW YORK— Filipino American leaders in New York, Washington DC, California, and US Commonwealth of the Northern Mariana Islands (CNMI), filed a complaint in the U.S. Securities and Exchange Commission (SEC) against Chevron Corp. for deceptive practices when it transferred its interest in the Malampaya gas field in the Philippines to Udenna Corporation’s UC Malampaya subsidiary in March 2020.

The complaint alleges that the oil and gas corporation violated Section 10(b)(5) of the U.S. Securities and Exchange Act and other provisions against graft and corruption.

Two of the complainants, Loida Lewis and Rodel Rodis, also filed a criminal complaint at the Office of the Ombudsman in the Philippines against Chevron Philippines officials, Philippine Energy Secretary Alfonso Cusi, and businessman Dennis Uy (CEO of Udenna Corporation) last October 2021, for allegedly violating RA 3019 or the “Anti-Graft and Corrupt Practices Act.”

The SEC complaint was signed by eight Filipino American leaders from across the US, namely: Loida Nicolas Lewis, Arthur Medel, Rodel Rodis, Rocio Nuyda, Celia Lamkin, Eric Lachica, Ago Pedalizo, and Art Garcia.

The complaint states that “Chevron, through its subsidiaries CHEVRON PHILIPPINES and CHEVRON MALAMPAYA, together with PNOC-EXPLORATION Corporation (PNOC-EC), UDENNA CORPORATION (UDENNA) and its subsidiary UC MALAMPAYA, and all individuals named as Respondents… acted intentionally… to commit multiple misrepresentations and concealments to interested shareholders including Complainants, in facilitating and allowing for the transfer of Chevron Malampaya’s interest in a Service Contract in violation of an applicable Joint Operating Agreement (JOA)… The conduct of all Respondents including Chevron… constitute violations of Section 10(b)(5) of the U.S. Securities and Exchange Act…”

The complainants also alleged that Cusi and other respondents conspired to give unwarranted benefits and advantage to Uy’s Udenna Corporation and UC Malampaya, “causing undue injury leading to a minimum of over P21 to 42 billion in total losses to the Philippine Government.”

According to the complainants, the dubious transaction also violates Malampaya’s service contract executed pursuant to PD No. 87, which requires prior approval of the Department of Energy in the transfer and assignment of contractual rights and obligations.

“The assets in Malampaya belong to the Filipino people, and we hope our leaders will do their best to protect it for future generations,” said California-based lawyer Rodel Rodis, who is also the president of US Pinoys for Good Governance (USPGG).

The controversial transfer of the Malampaya gas field to an undercapitalized company owned by an alleged crony of certain government officials is the subject of a complaint in the U.S Securities and Exchange Commission against Chevron.

Quoting an article by Cliff Venzon (published by Nikkei Asia on January 7, 2022), Rodis emphasized that the CEO of Udenna Corporation, Dennis Uy, is “one of the major financiers to Duterte’s national campaign in 2016. Under Duterte’s presidency, Uy conducted an acquisition spree that stunned Manila’s commercial elite… The tycoon previously talked with China National Offshore Oil Corporation for a liquefied natural gas venture, although that plan was dropped in late 2019 as Uy’s group focused on buying Chevron’s Malampaya stake.”

Uy’s connection with Chinese companies are being questioned by opponents of the allegedly anomalous deal, who fear that Beijing might be using the Davao-based businessman to get into the West Philippine Sea.

Last February 4, 2022, Philippine Senator Sherwin Gatchalian, head of the Senate Committee on Energy, via a resolution, called for an official probe into criminal and administrative charges against Energy Secretary Alfonso Cusi and other officials over the allegedly anomalous Malampaya deal.

In a statement to the press, Gatchalian said that in “railroading the approval of the sale of participating interest of Chevron in Malampaya gas field, key officials of the Department of Energy (DOE) led by Secretary Alfonso Cusi are criminally and administratively liable for graft, gross neglect of duty, and grave misconduct and should immediately resign from their posts.”

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SIDEBAR: Timeline of Malampaya controversy

• November 14, 2019 – Chevron sells 45% stake in Malampaya to Udenna for $565 million [https://business.inquirer.net/283290/chevron-sells-malampaya-stake-to-udenna]
• March 11, 2020 – Chevron closes deal with Udenna’s subsidiary UC Malampaya [https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/chevron-closes-sale-of-45-stake-in-philippine-gas-to-power-project-8211-gma-news-57524948]
• April 15, 2021 – Dept. Of Energy approves deal, ONE YEAR LATER after Udenna said that its unit completed the acquisition of Chevron Malampaya’s 45% stake in the deepwater project [https://www.bworldonline.com/doe-clears-sale-of-chevrons-malampaya-stake-to-udenna/]
• May 20, 2021 – Udenna Corp. buys Shell Philippines Exploration’s (SPEX) 45% stake in the Malampaya gas field, giving Udenna 90% ownership of Malampaya, while state-owned PNOC has 10%. [https://www.rappler.com/business/dennis-uy-udenna-buys-shell-stake-gains-control-malampaya-gas-field/]
• October 18, 2021 – A criminal complaint was filed in the Ombudsman against Cusi, Uy, Chevron, et al. [https://www.manilatimes.net/2021/10/20/business/corporate-news/case-filed-over-malampaya-stake-sale-to-udenna/1818999]
• October 25, 2021 – The Philippine Senate Committee on Energy reveal that “there is enough evidence to show that the sale of Chevron’s 45 percent stake in the Malampaya gas project to the Udenna group was “defective and invalid.” [https://www.manilatimes.net/2021/10/25/news/national/sale-of-chevrons-malampaya-share-invalid-gatchalian/1819654]
• October 26, 2021 – The Philippine Competition Commission (PCC) issued a statement saying it was not notified of the deal between Udenna Corp. and Shell Philippines Exploration B.V. (SPEx). [https://www.bworldonline.com/competition-body-not-notified-of-udenna-spex-deal/]
• December 15, 2021 – PNOC-EC withholds its consent on the sale of Shell’s share in the Malampaya gas project to Uy’s Udenna Corp. [https://www.bworldonline.com/competition-body-not-notified-of-udenna-spex-deal/] According to Shell Philippines Exploration (SPEX) legal counsel Atty. Kiril Caral, Shell could not proceed with the sale of its 45% operating stake without the consent of PNOC-EC.
• February 4, 2022 – Philippine Senate transmits documents to Ombudsman, including a Senate resolution backing the call to file criminal and administrative charges against Energy Secretary Alfonso Cusi and other officials over the allegedly anomalous Malampaya deal [https://www.rappler.com/business/senate-transmits-ombudsman-proposed-raps-cusi-malampaya-gas-deal/]
• February 10, 2022 – Concerned Filipino American leaders file case against Chevron  at the U.S. Securities and Exchange Commission