Flood control scandal sparks P1.7-T market meltdown
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The Philippine stock market has lost an estimated P1.7 trillion in value in just three weeks following the flood control project scandal as corruption eroded investor confidence despite strong corporate fundamentals.
Speaking at the 57th Annual Conference of the Financial Executives Institute of the Philippines on Tuesday, Securities and Exchange Commission (SEC) Chairperson Francis Lim warned that the scandal has “shaken public confidence” and triggered massive sell-offs that have little to do with company performance.
“The flood control project scandal has shaken public confidence, wiping out an extraordinary P1.7 trillion in market value of our publicly listed companies in just three weeks, despite rising corporate earnings,” Lim said.
“Investors aren’t fleeing because of weak fundamentals; they’re fleeing because of weak integrity. It’s a stark reminder that corruption is a weapon of mass wealth destruction.”
Lim said the SEC views compliance and good governance as critical to restoring trust and stability in the capital markets.
“This is not just a market issue. It’s a trust issue. Rebuilding that trust is one of the SEC’s most urgent missions… When trust breaks down, capital dries up, and everyone—government, business, and the public—pays the price,” he added.
To help restore market confidence, Lim said the SEC is rolling out reforms to make compliance “simpler, fairer, and smarter.”
These include a 50-percent cut in fees for corporate information access, discounts for micro, small, and medium enterprises and a rule that automatically approves certain applications if the regulator fails to act within the prescribed period.
He added that the SEC has expanded its digital initiatives, including OneSEC, which now allows company incorporation in under two hours, alongside measures to streamline capital-raising procedures.
Lim said the commission’s upcoming Strategic Plan will also help widen access to capital, deepen investor trust, modernize regulation through digital innovation, and strengthen the SEC’s institutional capacity.
On Wednesday, the Anti-Money Laundering Council (AMLC) secured its fifth freeze order from the Court of Appeals in connection with the ongoing investigation into irregularities in flood control projects.
The order covers additional bank accounts linked to persons of interest, including an entity allegedly used in the implementation of ghost projects.
“Every freeze order matters. Each freeze order secured strengthens the evidentiary trail, ensuring that illicit funds cannot be concealed or dissipated,” AMLC Executive Director Matthew M. David said in a separate statement.
The AMLC has so far frozen over P4.4 billion in assets, including 1,632 bank accounts, 54 insurance policies, 163 vehicles, 40 properties, and 12 e-wallet accounts. The total is expected to increase with the latest order.
