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"Actions were legal and proper" - John Wilson
Fenway Resources Ltd FWY
Shares issued 7,735,215 May 2 close $7.60
Thu 5 Jun 97 News Release
Mr H. John Wilson reports
In view of the action taken by the VSE in delisting the company's shares,
the directors would like to clarify the present status of the company and
its future activities.
Although delisted by the VSE, the company remains in good standing with the
Registrar of Companies and the BCSC. The directors steadfastly maintain
that the actions they carried out were legal and proper and in the best
interests of the company and the shareholders.
The VSE's action was taken based on allegations that Fenway had
transgressed several regulatory policies of the exchange. It should be
noted, however, that for the most part, all actions taken by Fenway while
developing the Palawan cement project were disclosed to the VSE in a timely
manner and explanations for the actions were given.
Two questions are:
First, were any actions or decisions made by Fenway's management damaging
to the company or its shareholders?; and
Second, why did the VSE suddenly decide that such draconian action was
required on their part, especially when the company was not even given a
reasonable opportunity to respond, as the officers and legal counsel of the
company were out of the country and the VSE refused a request for an
extension of the time allowed to respond?
The answer to the first question is that management acted in the best
interests of the company and the shareholders at all times. We can only
guess at the answer to the second question.
It is hard to believe that the VSE values strict adherence to their
policies so highly that they were prepared to severely damage the company
at this most inopportune time given the progress the company is making in
developing its cement mega-project.
For example:
Under the guidance of Dr Greg C. Weary of Kilborn/SNC Lavalin Environmental
Inc and GAIA South Inc, the Palawan cement project environmental impact
assessment was completed and submitted to the Palawan Council for
Sustainable Development (PCSD) on May 20 1997, as the EIS;
Fenway and Strategic Alliance Development Corp (STRADEC) have commenced
procedures to complete the Palawan cement project joint venture agreement.
Perhaps the answer to the VSE's precipitous action lies in the "Bre-X
Syndrome" where all regulatory exchanges are trying to ensure that they do
not get caught off base due to a lack of surveillance. If this is the
reason it is very unfortunate, because Fenway has nothing in common with
the Bre-X debacle.
In any case, the directors of Fenway strongly disagree with the severity
and the timing of the action taken by the VSE who we believe should have
shown more consideration for Fenway's shareholders. An appeal will be
filed.
Fenway believes that the VSE for their part did not always act in the best
interests of Fenway's shareholders. As an example, in several meetings and
numerous telephone calls, the VSE insisted Fenway inform the public that in
the Philippines an EIS must be submitted to the Department of Environmental
and National Resources (DENR) for a full review before the issuance of the
environmental compliance certificate (ECC). Fenway maintains that because
its project is in Palawan it must submit the EIS to the PCSD. The VSE says
Fenway is misleading the public and Fenway says not so! Here the VSE is
directly interfering with the business affairs of the company and are
forcing their interpretation of laws of a foreign country on the company,
Fenway obtained legal interpretation of the question, "Who can authorize
and issue the ECC in Palawan - the PCSD or the DENR?" The legal opinion
received was as follows:
Republic Act 7611 created the Palawan Council for Sustainable Development
(PCSD) which was tasked with the governance, implementation and policy
direction of the Strategic Environmental Plan (SEP). Among the powers
granted to the PCSD is the enforcement of RA7611 and "other existing laws,
rules and regulations similar to or complimentary with this ACT [within
Palawan]" and the performance of "related functions which shall promote the
development, conservation, management, protection and utilization of mutual
resources of Palawan." Such powers are broad enough to be interpreted to
mean that the PCSD has the power to issue an ECC and other related licenses
for projects within Palawan.
It is also reasoned that the law intends the two agencies to work closely
together and evoke a workable arrangement taking into consideration the
technical expertise of the DENR and the policy directions of the PCSD.
(Department of Justice Opinion dated September 26 1994).
It is generally accepted that while the PCSD does the review and approval
of any environmental submission on Palawan, the DENR physically issues the
ECC after receiving authorization from the PCSD.
Another area of disagreement between Fenway and the VSE relates to the
timely release of information. Confidential corporate information must be
in company control, not VSE control. On several occasions the VSE, reacting
to newspaper articles and/or Internet commentary, has insisted that Fenway
either issue a news release or amend a prior news release, despite protests
by the company that the true facts were other than those that were being
reported by known opponents to the Palawan project. The VSE interpreted
"timely disclosure" only in the narrow sense of immediacy. Fenway reasoned
it meant immediately upon knowing for certain that something significant
was really happening and was not just a topic for discussion. For example,
the PCSD requested Fenway to come to an agreement in a memorandum of
agreement with the Domadoway tribe of native people through the Domadoway
Foundation. Fenway drafted an MOA, presented it personally to Attorney
Alisito Alisuag, non-government official (NGO) and representative to the
PCSD and self-proclaimed representative and spokesperson for the Domadoway
tribe and the Domadoway Foundation and related Forest Stewardship
Agreement. Fenway did not get a response from Attorney Alisuag to the MOA.
The VSE insisted Fenway inform the public that this MOA was necessary
before the ECC could be granted, a position Fenway did not agree with.
Since Fenway believed the VSE could be reacting to information disseminated
by a Palawan environmentalist advocate, Redempto Anda editor of the Palawan
Sun newspaper, and possibly some Philippine cement manufacturers and other
parties who are all opponents to the new cement plant, it was thought a
dialogue may exist amongst them. Therefore, it was thought proper not to
disclose to the VSE why it was not necessary for the company to
aggressively proceed with the MOA. We felt we should adopt a "wait and see"
attitude so that any news release would be factual.
With the submission of the EIS, it has now been disclosed that there have
been false and misleading statements by Attorney Alisuag in opposing
Fenway's Palawan cement plant while agitating for the rights of the
indigenous people, notably the Domadoway tribe, namely:
There is no tribe named Domadoway;
The Domadoway Foundation, founded in 1984, had its registration cancelled
by the Securities and Exchange Commission (SEC) October 18 1994 and is no
longer a legal entity;
The Forest Stewardship Agreement established in 1986 between the Domadoway
Foundation and the DENR ceased to function in 1992 for breaching terms of
the agreement.
This is the same Attorney Alisuag who, on presenting his credentials before
a public meeting of the PCSD in January 1997, introduced Mr Tito Mata to
speak against the project. Mr Mata, purported chairman of the Domadoway
Foundation, perjured himself by claiming he could speak, read and write
only his native dialect and not Tagalog. However, at the February 21 1997
PCSD public meeting in Punang, he spoke fluently, even eloquently in
Tagalog.
Other patently false and misleading information attributed to Attorney
Alisuag often quoted in the Palawan Sun by Redempto Anda relate to the four
concerns of the "Domadoway" as expressed by Mr Tito Mata that Fenway's
quarrying of limestone will cause:
1. Relocation of their village:
The closest planned quarry to the local village, Sitio Suked, is 1 1/2
miles away and on the opposite side of the mountain ridge. In the EIS the
project proponents have pledged no relocation is planned or even necessary
or will be done.
2. Destruction of their water supply:
Current water supply for Sitio Suked is a contaminated open, hollow well
coming from Mount Abo-Abo and not from the quarry area. The project
proponents as expressed in the EIS will provide improved sanitary closed
deep wells for the village at no cost to the tribespeople.
3. Destruction of ancient burial grounds:
Many of the local tribespeople are not indigenous to the quarry area but
nomadic from the coast. They do not have ancient burial sites in the quarry
area, but if for their own reasons they did wish to move bones of the
deceased, they have specific customs for doing so.
4. Destruction of the forest.
They speak about protecting the forest rights of the indigenous people.
What forest in the quarry area are we talking about? The so-called pristine
forests of Southern Palawan that the environmental advocates, Haribon
Palawan, whose president is Attorney Alisuag, say they are protecting are
no longer there! In fact, because of the abuse of the forests by the
indigenous people, the Philippine government has imposed a total logging
ban in the quarry area. Of the 2,500 hectares of forest entrusted in 1986
to the Domadoway Foundation to protect and manage, only 162 hectares
remain. April 1997 aerial photographs of Tito Mata's homestead at the edge
of the disappearing primordial forest shows evidence of recent illegal
logging, slashing and burning.
The above examples illustrate the difficulty of trying to co-operate with
the VSE and not willfully trying to break any regulations of the VSE.
Fenway has always acted on the premise that the VSE should not be permitted
to influence corporate business decision making, especially when they
appear to be reacting to information such as that discussed above which is
both biased and limited. The directors would be irresponsible if they acted
in any other manner.
Fenway and STRADEC have been engaged in continuous cordial and constructive
negotiations to conclude the Palawan cement project joint venture
agreement. With the ECC expected reasonably soon, the parties are drawing
discussions to a conclusion. Since engineering has begun on STRADEC's
multi-billion dollar infrastructure projects in the Philippines,
construction will not be far behind. Their projects will require millions
of tonnes of cement. At a time when significant progress is being made in
all aspects of Fenway's program, the VSE has inappropriately and
unconscionably adversely affected the best interests of the company and its
shareholders. It would have been more constructive and to everyone's long
term benefit if the VSE had given Fenway more credit and its detractors
less.
The Palawan cement project represents an important step in the supply of
strategic materials from within the Philippines and directly impacts on
several multi-billion dollar infrastructure projects. It contributes
directly and positively to President Ramos' program of sustainable
development and as the EIS clearly shows, it does so while providing
economic benefit to all levels of government, social benefits to the people
and bio-physical benefit to the land. Clearly the land and its people will
be better off if the Palawan cement project is put into operation.
At this most important time in Fenway's corporate and project development,
the VSE could not have chosen a more harmful time to delist the company
shares. However, project financing does not depend on a VSE listing. Other
listing opportunities are available to the company and are being pursued.
From the intense corporate work in progress, Fenway management confidently
expects to receive the ECC, sign the STRADEC-Fenway joint venture agreement
and list the company shares for trading through an alternative venue.
We thank all those shareholders who have called and offered their
encouragement and support. Management appreciates the expressions of
concern about the effects from the VSE delisting, however, development of
the project continues as before with every expectation of ultimate success.
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