By Chanda Shahani Central Azucarera de Tarlac, Inc.

(CAT) is a company whose listing in the Philippine Stock Exchange (PSE) was suspended in 2010 and it had a fine imposed on it as well. As of June, 2011 CAT still remains delisted with the PSE The sugar refinery is controlled by President Benigno Aquino IIIs aunts and uncles, The refinery is within Hacienda Luisita in Tarlac and CAT failed to submit its annual report for the fiscal year ending June 30, 2010, as well as its quarterly report for the period ending Sept. 30, 2010. The delisting offers an opportunity to dig deeper into the management structure of CAT and determine how fully compliant CAT is with SEC Memorandum Circular No. 6-2009, which espouses the principles of corporate governance. More importantly, we take note that SEC Memorandum Circular No. 6-2009 is the framework of rules, systems and processes in the corporation that governs the performance by the board of directors and management of their respective duties and responsibilities to the stockholders. SEC Memorandum Circular No. 6-2009 was passed on June 18, 2009 Looking at Annex A, we can see that the company is compliant with the requirement that there be two independent directors. However, a more detailed scrutiny will reveal that one of the independent directors Georg Weber-Hoehl, has been with CAT since 1976, or for at least 33 years before SEC Memorandum Circular No. 6-2009 was passed by the SEC. An even more detailed look at SEC Memorandum Circular No. 6-2009 will show the requirement that the chairman of the audit committee be an independent director with the assumption that this provides a needed check and balance, has been met. However, further scrutiny will show that the Chairman of the audit committee is none other than Mr. Weber-Hoehl, whose independence of mind has to be precisely be called into question, due to his decades long affiliation with CAT. The other two directors are Mr. Jose Cojuangco Lopa and Ms. Josephine Cojuangco Reyes, who are members of the Cojuangco family which has controlling power over CAT. Thus the independence of the audit committee is already in question because it essentially represents an interlocking directorate with top management which is a conflict of interest. Additionally, the requirement is that at least one of the three members of the audit committee needs to have auditing experience but the brief biographies (please see Annex A) do not show any indication of professional auditing experience. The Chairman of the Nomination Committee is Josephine Reyes who is a Member of the Audit Committee and Member of Compensation & Remuneration Committee while Ernesto Teopaco is the Chairman of Compensation & Remuneration Committee and a member of the Nomination Committee. Both committees have two members each with essentially Teopaco and Reyes chairing and being members of each others' committees creating another interlocking directorate. SEC Memorandum Circular No. 6-2009 requires that both committees have independent directors as its members, but in each case there are no independent directors. This creates a problem of governance, because the chief job of the nomination committee is to create a formal and transparent procedure for developing a policy for remuneration, but under the circumstances, we do not know how much the directors compensated themselves in 2010 because they failed to submit their annual report for the fiscal year ending June 30, 2010, as well as its quarterly report for the period ending Sept. 30, 2010. Additionally, since a

committee of two relatives comprised the committee, there are no checks and balances. Moreover, the job of the nomination committee is to address the effectiveness of the board's process in the election and replacement of directors. At the very least, they should have found a replacement for Mr. Georg Weber-Hoehl, and found a director more independent than Mr. Weber-Hoehl who has been with CAT for more than 35 years. Mr. Renado Padilla, the other independent director is not a chairman of any committee either. Given the extensive labor dispute problems hounding CAT through the Central Azucarera de Tarlac Union which recently won a Supreme Court decision last July, 2010 wherein the Supreme Court (SC) declared that CAT acted in bad faith when it reduced the 13th month pay of its employees, following a strike in 2004 that ended in violence and killed at least seven people, it would make sense for CAT to open itself up the outside world and consider getting more independent directors, including entertaining the notion of bringing in independent directors from the union in order to make sure that the interests of its workers are also adequately represented. However, we will not discuss minority rights of the employees because it is beyond the scope of this paper. Lastly, the fact that CAT was not able to submit its reportorial requirements on time such as its annual report for the fiscal year ending June 30, 2010, as well as its quarterly report for the period ending Sept. 30, 2010 indicates that such a minor ministerial matter, which could have been easily handled by its accountants, could not be complied with due to the fact that once submitted to PSE and SEC, these documents become public documents which can be used in further court litigation against CAT. But of course the investing public is put at a disservice because the lack of such submitted documents makes the market less efficient and credible, so it was absolutely the correct thing for PSE to do to, which as a self-governing body, had to suspend the listing of Central Azucarera de Tarlac, Inc. (CAT), whethjer ot not its stockholders were close relatives of incumbent President Benigno S. Aquino III.

ANNEX A

Summary
Name Pedro Cojuangco Fernando Cojuangco Josephine Reyes Jose Cojuangco Ernesto Teopaco Addison Castro Wellerita Aguas Victoria Catherine Cochico Eufrocinio De La Merced Jose Manuel Lopa Georg Weber-Hoehl Renado Padilla Age 83 47 81 75 75 64 51 52 77 Since 1976 2009 1976 1976 1986 2009 2008 2009 2008 2002 1976 2010 Current Position Chairman of the Board, President Chief Operating Officer Vice President, Treasurer, Director Vice President, Director Vice President, Director Corporate Secretary Assistant Vice President, Assistant Treasurer Assistant Secretary Assistant Vice President Director Independent Director Independent Director

Biographies
Name Description Mr. Pedro Cojuangco serves as Chairman of the Board and President of Central Azucarera De Tarlac since 1976. He is also the Chairman and President of Jose Cojuangco and Sons, Inc.. Hacienda Luisita, Inc., Tarlac Development Corporation. Luisita Golf & Country Club, Inc., and Liberty Insurance Corporation. He was also the former President and Chief Operating Officer of First United Bank (now United Coconut Planters Bank). He graduated from New Yorks Manhattan College in 1949 where he earned Edward Dougherty Medal for Commerce (a special award for general and academic excellence) and completed his Masters of Business Administration from Harvard University, Boston, USA. Atty. Fernando C. Cojuangco serves as Chief Operating Officer of Central Azucarera de Tarlac, Inc. A lawyer by profession, he currently the Chief Operating Officer of Jose Cojuangco & Sons, inc. and its affiliates. He is the Corporate Secretary of Tarlac Development Corporation and Luisita Industrial Corporation and the Assistant Corporate Secretary of Luisita Realty Corporation. He is a holder of Bachelor of Arts degree in Economics from the University of California and a member of Omicron Delta Epsilon Honors Society. He obtained his Bachelor of Laws degree with honors from the Ateneo de Manila University. Ms. Josephine C. Reyes serves as Vice President, Treasurer and Director of Central Azucarera de Tarlac since 1976. She serves as Member of the Company's Audit Committee, Chairman of the Nomination Committee and Member of the

Cojuangco, Pedro

Cojuangco, Fernando

Reyes, Josephine

Compensation and Remuneration Commitee. She is also the President of Luisita Realty Corporation and Director in other JCSO affiliates. She was a former President of Far Eastern University and presently Chairman of FEU-Nicanor Reyes Medical Foundation. She is a graduate of Marymount College in Tarrytown, New York a part of Fordham University and a Masters Degree holder in Education and School Administration from Teachers College, Columbia University, New York. Mr. Jose Cojuangco, Jr. serves as Vice President and Director of Central Azucarera de Tarlac since 1976. He is also President and Director of Luisita Marketing Corporation, Cojuangco, Tarlac Distillery Corporation and Director of other JCSO affiliates. He is a Bachelo of Jose Science Economics graduate of Holy Cross College in New York. He was a former Congressman of the 1st District of Tarlac. Mr. Ernesto G. Teopaco serves as Vice President and Director of Central Azucarera de Tarlac since 1986. He serves as Member of the Nomination Committee and is Teopaco, Chairman of the Compensation and Remuneration Committee. He is also a Director Ernesto and Industrial Relations Officer of other JCSO affiliates. He is a Bachelor of Science Economics graduate of Ateneo de Manila in 1954 and Bachelor of Science Business Administration graduate of the University of San Francisco in 1956. Mr. Addison B. Castro serves as Corporate Secretary of Central Azucarera de Tarlac. Castro, He has held this post since July 16, 2009. He also serves as one of the Company's Addison Compliance and Corporate Information Officers. Ms. Wellerita D. Aguas serves as Assistant Vice President and Assistant Treasurer of Central Azucarera De Tarlac since February 21, 2008. She also serves as one of the Aguas, Company's Compliance and Corporate Information Officers. She is also Vice President Wellerita of Jose Cojuangco & Sons, Inc. She is a Bachelor of Science in Business Administration graduate of University of the East. Cochico, Ms. Victoria Catherine G. Cochico serves as Assistant Secretary of Central Azucarera Victoria De Tarlac. She has held this post since July 16, 2009. She aslo serves as one of the Catherine Company's Compliance and Corporate Information Officers. Atty. Eufrocinio C. De La Merced, Jr. serves as Assistant Vice President of Central Azucarera De Tarlac since February 21, 2008. A lawyer by profession, he currently the De La Merced, general counsel of Jose Cojuangco & Sons, Inc. and its affiliates. He is also the Eufrocinio corporate Secretary of Luisita Golf and Country Club, Inc. He has been the Assistant Corporate Secretary of Hacienda Luisita, Inc since 1988. He is a holder of a Bachelor of Laws degree from San Beda College. Mr. Jose Manuel C. Lopa serves as Director of Central Azucarera de Tarlac, Inc. since 2002. He is a Member of the Company's Audit Committee. He is President of TAO Lopa, Jose Commodities Trading, Inc.; Director of Renaissance Realty Corporation; Deputy Manuel Director for Australian Affairs of Philippines Sugar Millers Assn,, Inc. He is Vice President of ALRAC Inc. and Ralco Agricultural Corporation. He is a graduate of Bachelor of Arts Interdisciplinary Studies of Ateneo de Manila in 1978. Mr. Georg Weber-Hoehl serves as Independent Director of Central Azucarera de Tarlac Weber-Hoehl, since 1976. He also serves as Chairman of the Company's Audit Committee. He is the Georg President of Erray Inc. and a consultant of Tag Fibers, Inc. He used to be connected WI Tabacalera. Padilla, Renado