Inside Stories: “The Lolo Files” – Would You Trust Him With Your Money?
Lolo is a stockbroker who owns several listed mining companies. Lolo is on a roll! In the past 2 years he was able to raise additional capital from new and existing investors. If my numbers are correct, close to P2.0bn was raised. I guess Lolo really knows how to play the market to the hilt.
What puzzles me is why investors continue to be gullible despite the fact that Lolo has a spotty track record in creating shareholder value. One “Lolo-operated” company located in the Northern Philippines has a “remarkable” track record of reporting dismal earnings despite the fact that gold is trading at 25 year high. Based on its latest fillings, this “Lolo-operated” company has a forward hedge for his gold output at US$330!
But this earnings boo-boo is nothing compared to the scam he pulled with his other mining company. This story came from the horse’s mouth.
Last year, Lolo started buying out the overdue payables from its suppliers at 50% discount to face value. Lolo used a Cayman Island (or a British Virgin Island) registered company to buy the payables. Naturally, the suppliers could not have been happier since these payables are 3-5 years overdue! Most of these suppliers are based in Binondo.
But Lolo has a bigger plan for his supposed generosity. Recently, his other mining company raised new capital. This is perfectly fine except that part of the proceeds was earmarked for payment of advances and overdue payables. To put 1 and 1 together, you will see how skimming Lolo is. In effect, Lolo who already bought out the payables at 50% discount is now being paid in full. Amazing, how Lolo can play such a trick. If my computations are correct, Lolo easily pocketed P250 – 300m from the move. In other words, the company was “plundered” by Lolo. Had he been forthright, the discount from the buyout of the payables should have benefited the company and not him. I wonder why it’s auditors continue to sign-off the financial statements without doing proper due dilligence.
This situation sounds like the Enrons, Worldcoms and TYCOs of the past. Unfortunately, we cannot expect anything from our local SEC. They are clueless on how to "properly" enforce governance and transparency amongst listed company. Also, the current bull market will most likely bury this as a mere footnote in the overall boom of the mining sector. However, as an investor, it pays to know where you put your money.
So will you trust Lolo with your money? Think twice!
What puzzles me is why investors continue to be gullible despite the fact that Lolo has a spotty track record in creating shareholder value. One “Lolo-operated” company located in the Northern Philippines has a “remarkable” track record of reporting dismal earnings despite the fact that gold is trading at 25 year high. Based on its latest fillings, this “Lolo-operated” company has a forward hedge for his gold output at US$330!
But this earnings boo-boo is nothing compared to the scam he pulled with his other mining company. This story came from the horse’s mouth.
Last year, Lolo started buying out the overdue payables from its suppliers at 50% discount to face value. Lolo used a Cayman Island (or a British Virgin Island) registered company to buy the payables. Naturally, the suppliers could not have been happier since these payables are 3-5 years overdue! Most of these suppliers are based in Binondo.
But Lolo has a bigger plan for his supposed generosity. Recently, his other mining company raised new capital. This is perfectly fine except that part of the proceeds was earmarked for payment of advances and overdue payables. To put 1 and 1 together, you will see how skimming Lolo is. In effect, Lolo who already bought out the payables at 50% discount is now being paid in full. Amazing, how Lolo can play such a trick. If my computations are correct, Lolo easily pocketed P250 – 300m from the move. In other words, the company was “plundered” by Lolo. Had he been forthright, the discount from the buyout of the payables should have benefited the company and not him. I wonder why it’s auditors continue to sign-off the financial statements without doing proper due dilligence.
This situation sounds like the Enrons, Worldcoms and TYCOs of the past. Unfortunately, we cannot expect anything from our local SEC. They are clueless on how to "properly" enforce governance and transparency amongst listed company. Also, the current bull market will most likely bury this as a mere footnote in the overall boom of the mining sector. However, as an investor, it pays to know where you put your money.
So will you trust Lolo with your money? Think twice!
posted by jack galt at
11:35 PM
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