"Memorandum of Eugenio Lopez Sr. to Mr. Alfredo Montelibano
dated March 4, 1973"

Annex E

(first line unreadable)
7227427 MEC PH
7227546 MEC PH
RCA 02652 1902

3/4/73

FOR MR. ALFREDO MONTELIBANO:

I AM SENDING YOU THIS BACKGROUND OF THE WHOLE SITUATION REGARDING ZALAMEA AND KOKOY:

CESAR ZALAMEA CAME TO MY OFFICE THIS MORNING TO EXPLAIN THE ROLE HE HAD BEEN ASKED BY KOKOY TO PLAY. THE FOLLOWING ARE MY NOTES OF OUR CONVERSATION. ACCORDING TO ZALAMEA, HE CAME TO THE UNITED STATES TO DISCUSS ABS-CBN. IN NEW YORK, TONY AYALA MET WITH HIM ON ABS-CBN. MOREOVER, AYALA EXPLORED WITH HIM THE FEASIBILITY OF THE TRUSTEESHIP APPROACH TO THE MERALCO CASE. (AYALA HAD A MEMORANDUM DESCRIBING THIS APPROACH, WHICH WAS PREPARED IN MANILA BY OSKIE, OZAETA, MONSOD AND AYALA. I LIKED THE GENERAL FEATURE OF THIS APPROACH AND INSTRUCTED HIM TO SOUND OUT ZALAMEA.) ZALAMEA LIKED THE TRUSTEESHIP APPROACH AND BRIEFED KOKOY. ACCORDING TO KOKOY, HE CALLED UP THE PRESIDENT WHO TOLD HIM TO GET MY APPROVAL ON THE SPECIFIC FEATURES OF THIS APPROACH. KOKOY THEREFORE SENT ZALAMEA TO SAN FRANCISCO TO DISCUSS THE SPECIFIC FEATURES OF THIS APPROACH. I ASKED LEE AND JIM TO IMPROVE THE SPECIFIC FEATURES OF OUR APPROACH. THE RESULT WAS THE FIRST TELEX I SENT YOU YESTERDAY. KOKOY HAD INTENDED TO SEE ME AFTER MY MEETING WITH ZALAMEA IN SAN FRANCISO BUT UNFORTUNATELY, HE HAD TO RUSH HOME UNEXPECTEDLY BECAUSE OF THE SUDDEN DEATH OF HIS FATHER-IN-LAW.

IN VIEW OF OUR CONVERSATIONS YESTERDAY, WE HAVE NOT INFORMED ZALAMEA OF ANY PLAN. HOWEVER, TO NOW TURN AROUND AND PREVENT KOKOY FROM PRESENTING ANY PLAN, WOULD MOST LIKELY HURT KOKOY AND EMBARRASS ZALAMEA. THAT IS WHY IT IS VERY IMPORTANT THAT KOKOY SHOULD NOT BE HURT, LEST HE CONCLUDE THAT WE MISTRUST HIM. ZALAMEA WAS ABOUT TO EMPLANE TONIGHT FOR HONOLULU AND STAY THERE FOR ONE-AND-A-HALF DAYS, BUT NOW IN VIEW OF THE DEVELOPMENTS, HE DECIDED TO CANCEL HIS HONOLULU TRIP AND PROCEED IMMEDIATELY TO MANILA, SO HE IS ARRIVING THERE TUESDAY MORNING.

GOING BACK TO THE PROJECT, IT MUST BE BORNE IN MIND THAT NEITHER KOKOY NOR ZALAMEA PROPOSED THIS TRUSTEE PROJECT. IT WAS A PROJECT PUSHED BY US. IT SEEMS UNFAIR FOR KOKOY AND ZALAMEA TO BE HURT AND EMBARRASSED AT THIS STAGE FOR A PROJECT WHICH WE OURSELVES CONVINCED THEM TO BE A GOOD ONE AND WHEN THEY WERE SET ON IT, WE SHOULD TURN AROUND AND TELL THEM WE ARE SORRY WE HAVE ANOTHER PLAN.

UPON THE UNANIMOUS SUGGESTION OF ZALAMEA, GARDNER, AND LIBERMAN, AYALA HAS BEEN REQUESTED TO STAY A COUPLE OF DAYS MORE AND TO AWAIT DEVELOPMENTS IN MANILA. MOREOVER, BEFORE KOKOY LEFT SAN FRANCISCO, HE TELEPHONED TO SUGGEST AYALA STAY HERE FOR A WHILE SINCE KOKOY HAD NOT YET HAD THE OPPORTUNITY TO SEE ME PERSONALLY AND THERE MAY BE NEED TO DISCUSS CERTAIN TECHNICAL QUESTIONS.