California’s Attorney General Rob Bonta met with a group of concerned Filipino Americans last April 21, 2023 to discuss shareholder complaints against the California-based Chevron Corporation.
Loida Nicolas Lewis, national chair of US Filipinos for Good Governance, met with Bonta after being allegedly stonewalled by Chevron Corporation when she and other shareholders sought for documents regarding the sale of Chevron’s 45% interest in the Malampaya gas fields in the Philippines to Dennis Uy, a favored crony of former Philippine President Rodrigo Duterte, for a fraction of its value.
Chevron’s interests in the Malampaya gas fields were estimated to be worth several billions of dollars, but Chevron reported to its shareholders in their 2020 Annual Report, that it sold the company’s shares for only $565 million. The Philippine Senate’s Committee on Energy investigated alleged anomalies in the deal, with subsequent testimonies by officials of the Philippine Department of Energy disclosing that the actual amount that the buyer paid to Chevron was only $400 million.
“As a certified shareholder of Chevron Corporation, the discrepancies in the amounts are staggering. Since last year, I have been asking Chevron to provide me with documents about the Malampaya transaction to determine if Chevron lied to us, its shareholders, about the sale,” Lewis explained. “Since they have not given a substantive response, I felt compelled to ask for help from the State of California.”
Other leaders of the Filipino American community were also in the meeting with Bonta. Rodel Rodis, a concerned member of the California state bar and former president of the San Francisco Public Utilities Commission, also asked Chevron for an explanation about the discrepancies in Chevron’s reports.
In October 2021, Lewis and Rodis filed a complaint at the Office of the Ombudsman of the Philippines, against former Energy Secretary Alfonso Cusi, Dennis Uy, and several Chevron officials involved in the controversial sale. In February 2022, the Philippine Senate also gave the Ombudsman a resolution recommending the filing of charges against former Energy Secretary Cusi and other officials, because according to the Senate findings, the approval of the transaction between Chevron and UC Malampaya (owned by Uy) was indeed anomalous and disadvantageous to the Philippine government and its people.
“As concerned citizens, we raised this issue to the U.S. Securities and Exchange Commission, because Chevron claims it had disposed of its interests in the Philippines (referring to their Malampaya shares),” said Rodis. “However, during the hearing conducted by the Philippine Senate Committee on Energy, officials of the Philippine Department of Energy (DOE) asserted that Chevron’s deal with Udenna did not involve any transfer of rights. So what was the real deal then? Did Chevron lie in their reports, or did the Philippine government?” Rodis added.
Bonta responded, “Chevron is indeed based in California, so I will have my office look into this case as soon as possible.”
Chevron’s possible violations
According to Lewis and Rodel, Chevron may have possibly violated Federal Securities Laws. As it is a publicly traded company subject to regulation by the U.S. SEC, Chevron is required to be truthful in its representations and dealings with its shareholders. By misrepresenting the purchase price of the transaction, it has misled its investors and committed possible securities fraud. If proven that the misrepresentation was intentional and reckless, Chevron has thus harmed its shareholders as a result of its misrepresentations.
Remedies to the violations include voiding the transaction, and returning shareholders’ values to the status quo preceding the transaction. Chevron should also be required to adhere to its obligations of offering the Philippine Government the right of first refusal according to the tripartite agreement between Chevron, Shell, and the Philippine Government.
Should Chevron be found guilty also of breach of contract and fair dealing, as well as breach of fiduciary duties, they will be held liable and accountable to their shareholders, and the public, for any damages arising out of these breaches.
“The Filipino people are losing P50 million pesos EVERY DAY because of this disadvantageous deal that Chevron and Mr. Uy conducted,” remarked Lewis. “This goes beyond just shareholders, this affects the public, too. To put it simply, we want Chevron to return what rightfully belongs to the Filipino people.”
Rodis pointed out that the misrepresentation is still ongoing, as Chevron continues to allow its reporting to stand without correction or clarification. “We hope that this will be investigated at the least,” he remarked.