When corporate governance fails, it’s not just the numbers that suffer — it’s trust, transparency, and the very integrity of the market. The troubling situation that unfolded at Liberty Flour Mills requires immediate attention — especially the issues of accountability, conflict of interest, and minority shareholder protection.

More than financial oversight, the Securities and Exchange Commission (SEC) should look into the issues raised to uphold fairness and ethical business practices that may impact the integrity of capital markets and their regulatory framework.

Cherry Bernaldo, a lawyer and forensic accountant representing former LFM management and directors, had sought the SEC’s intervention, asking the commission to investigate company transactions with Parity Values Inc. (PVI), saying the deals were “grossly disadvantageous” to LFM.

In a letter to Atty. Francis E. Lim, SEC chairperson, and the Bernaldo Po Presto & Poblador Law Office, representing former LFM officer Stella Uy and former director Sandra Uy, exposed the “mounting and longstanding receivables” from PVI, which had reached P804 million as of 2024.

According to the law firm, LFM has provided PVI with exceptionally generous credit terms of 180 days — and even up to 360 days — for these transactions. The firm claims the LFM board failed to enforce prompt collection, allowing the debt to balloon without any collateral or interest.

But when Stella Uy and Sandra Uy raised these issues, they were reportedly “eased out” of their positions and were “intimidated, threatened, and forced to retire” from the company.

In seeking the SEC’s help, the law firm said the complainants stressed the importance of stronger related-party transaction oversight and improved transparency “as these measures align LFM with best practices-listed companies.”

The concerns were brought up during LFM’s annual stockholders meeting on 27 August 2025. While LFM Corporate Secretary and Director William L. Ang acknowledged the extended payment terms and said that there was a plan to reduce receivables by 40 percent next year, no specific recovery or collection measures were presented.

The law firm further noted that there are interlocking directors between LFM and PVI, including John Carlos Uy, Willy G. Ng, and William L. Ang.

Ang, for example, serves as both LFM’s Corporate Secretary and PVI’s Treasurer, roles that the law firm argues create a “serious conflict of interest to the detriment of LFM and its minority stockholders.”

The lawyers have sought the SEC intervention as “necessary and urgent,” due to the irregularities in the company.

The law firm also requested an investigation into the arrangement between LFM and PVI in light of SEC Memorandum Circular No. 10, Series of 2019, on Related Party Transactions and to examine the conflict of interest arising from the interlocking directors of LFM and PVI.

In addition, the law firm wants the SEC to assess whether the board and management’s inaction in enforcing the collection of PVI receivables amounts to corporate abuse and proves the existence of a conflict of interest, to the detriment of LFM and its minority shareholders.

As a Poll Starter, if the allegations are true, the board’s silence and inaction are not only discouraging but also dangerous. The SEC should view this case not as an isolated incident, but as a crucial reminder for stronger enforcement of related-party transaction rules and corporate ethics.

When governance is compromised, it’s not just the shareholders who suffer — the credibility of the entire system and the regulatory framework is at stake.