Pichay gets 18 years imprisonment in P780-million graft case

By: Dempsey Reyes - 2 years ago

Surigao del Sur 1st Dist. Rep. Prospero Pichay Jr. INQUIRER FILE PHOTO/LYN RILLON

Surigao del Sur Rep. Prospero Pichay Jr. has been convicted of three counts of graft and sentenced to at least 18 years of imprisonment for the misuse of P780 million in funds of the Local Water Utilities Administration (LWUA) in 2009, when he was its chair, in connection with the buyout of a thrift bank.

Wilfredo Feleo Jr., Pichay’s then deputy administrator at the LWUA, was also found guilty of three counts of graft in the same case: the irregular acquisition of a 60-percent stake in Express Savings Bank Inc. (Esbi) for P80 million.

The Office of the Ombudsman originally sought eight counts in the case it filed in 2016. The 66-page decision promulgated on June 7 was written by Associate Justice Lorifel Lacap Pahimna of the Sandiganbayan’s Fourth Division, and concurred in by Associate Justices Alex Quiroz (the division chair) and Edgardo Caldona.

According to the Sandiganbayan, the LWUA under Pichay deposited P300 million into its Esbi savings account and made an advance payment of P400 million to subscribe to the increase in the bank’s authorized capital stock “despite the absence of necessary approvals.”

Undeniable

The antigraft court said the actions of the former top LWUA officials had not complied with the requirements of government agencies, including the Office of the President (OP), the Department of Finance (DOF), the Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP), and the Office of the Government Corporate Counsel under Republic Act No. 8791, or the General Banking Law of 2000 and Administrative Order No. 59.

This caused undue injury to the government, the court said. Per the court’s decision, Pichay wrote a letter on June 30, 2009, formally notifying the BSP that the LWUA had entered into an agreement for the acquisition of 60 percent of the bank’s voting stock as a LWUA-owned and -controlled banking institution.

The central bank informed Pichay that such acquisition would result in a change in Esbi’s majority ownership, therefore requiring prior approval of the OP and MB, and clearance from the DOF.

“Thus, it cannot be denied that accused Pichay and Feleo knew of this requirement as they have been in consultation with the Office of the President, DOF and BSP,” the Sandiganbayan said. “They were specifically advised to secure prior approval of the Monetary Board.”

Adding “to the growing undue injury to the government,” the court said, Pichay and Feleo “brazenly infused” an additional P400 million as advance payment for stock subscription to the increase in Esbi’s authorized capital.

“Ultimately, the absence of the requisite MB approval resulted in losses on the part of the government in the total amount of P780 million,” the court said. “This amount could have been used for other endeavors to help local water utilities.”

The transfer of LWUA funds without the approval of the appropriate bodies also exposed the funds to “visibly potential risks,” the Sandiganbayan said.

Penalties

“As it later turned out, the risks led to losses, as Esbi was eventually closed, and there was no showing that LWUA was able to recover the full amount it spent in relation to the acquisition of Esbi,” it said.

Pichay and Feleo were each sentenced to six years and a month to 10 years of imprisonment for each of the three counts of graft, or a total of 18 to 30 years, and perpetually disqualified from holding public office.

At the same time, they were acquitted on a separate charge of violating the Manual of Regulation for Banks in relation to Republict Act No. 7653, or the New Central Bank Act. The court explained that the offenses only applied to bank officials.

Among the coaccused in the case were two other LWUA executives—Enrique Montilla III, a member of the agency’s board of trustees, and acting administrator Daniel Landingin, both since deceased and the charge against them dismissed. The other coaccused, the brothers Valenzuela City Rep. Weslie Gatchalian and Sen. Sherwin Gatchalian, whose family’s Wellex Group Inc., along with Forum Pacific Inc., had owned Esbi, were earlier cleared of the charges.