Read Part 1: Legacy banks? double-money scheme
Read Part 2: Nograles invited banks? prober to dinner
(Third of four parts)
MANILA, Philippines?The man at the center of the Legacy Group of financial institutions is no stranger to controversy.
A report prepared by the Philippine central bank Bangko Sentral ng Pilipinas (BSP) in early 2003 said Celso G. de los Angeles Jr. was already involved in the banking industry, via three small banks, almost three decades ago.
He was once connected with the defunct Thrift Savings and Loan Association, Federated Thrift Bank, and Rural Bank of Calumpit. All three were ordered closed by the central bank in 1984.
?Mr. De los Angeles has been allegedly involved in one way or another, in the commission of unsound banking practices that contributed to the failure of these banks,? the BSP report said.
Because of this, he was placed on the central bank?s watch list to prevent him from further getting involved in other banks.
The failure of the three banks spawned at least 28 cases of estafa (fraud) through falsification of public and commercial documents filed against De los Angeles in the courts of Bulacan, Makati, Aklan and Tabaco, Albay.
Like most complaints against financial malfeasance nowadays, however, the cases did not prosper.
?All the cases against Mr. De los Angeles have been either provisionally or permanently dismissed,? the BSP said in the report. ?Most of these cases were dismissed for failure of the witnesses to appear in court despite proper notices.?
Removal from watch list
In 2002, De los Angeles asked the BSP to remove him from its watch list to allow him to return to the banking industry.
Officials familiar with discussions at that time said vigorous debate followed within the central bank on whether De los Angeles should be taken off the list.
One faction argued aggressively against acceding to his request, with one senior official reportedly pointing out that bankers tainted with fraud usually repeat their misdeeds, given the opportunity.
The Philippine Daily Inquirer has repeatedly tried to reach De los Angeles?who is now mayor of Santo Domingo, Albay?through his lawyer, political allies, and offices to allow him to air his side, to no avail.
Double-money scheme
Even before De los Angeles was taken off the central bank?s watch list, however, he had already returned to the banking scene when his Legacy Scholarship Pension Plans bought a controlling interest in Rural Bank of Parańaque Inc. (RBPI) in 1999, making him its board chair.
The BSP said De los Angeles? chairmanship of RBPI was highlighted by the launch of the ?Legacy Savings Program??a five-year, double-your-money time deposit scheme with additional come-ons such as free insurance.
?RBPI also started soliciting deposits outside its bank premises using Legacy?s offices nationwide without BSP approval,? the central bank said.
Unauthorized solicitation
It was a prescient description of the scheme that the entire Legacy Group of rural banks has been accused of.
?[This] practice did not only violate internal control standards, but opened the opportunity for breaches in the confidentiality of deposits,? the BSP report said.
?The bank has allegedly been implementing corrective measures ... but it appears that it has not completely disengaged [from] the unauthorized solicitation of deposits through Legacy, notwithstanding the time given to comply with the directive,? the central bank added.
When De los Angeles was informed of his disqualification from holding any position in any financial institution, he immediately resigned his chairmanship of RBPI ?without awaiting the directive of the BSP.?
Cash advances
Despite this, central bank examiners noted that the involvement of De los Angeles in RBPI ?had not ceased entirely despite his supposed resignation as its chairman.?
?He is reportedly the chairman and COO of Legacy which owns 67.35 percent of RBPI?s common stock,? the report said. ?His influence over RBPI is evident ... [through] cash advances ... aggregating P15.193 million [which] were booked as receivables from Legacy, but the proceeds of which were made to De los Angeles.?
By the time the transfer of RBPI ownership was approved by regulators two years later, however, De los Angeles? name was no longer on the bank?s list of stockholders, directors or officers.
Name not on banks? roster
The dismissal of the cases against De los Angeles?and the fear of getting sued, so soon after the landmark legal victory of Banco Filipino against the central bank?also left regulators with no basis to keep him on the watch list.
When the Legacy Group of rural banks collapsed in December 2008?all 13 voluntarily closing within days of each other?his name was nowhere on the banks? roster of stockholders.
To the regulators, it looked like he had controlled the banks without owning a single share in them.
Or, so it seemed. (To be continued)
