Closed bank’s execs got funds, charges trader

Former officials of the shuttered Urban Bank, the forerunner of the now insolvent Export and Industry Bank (EIB), allegedly made off with some P73 million in kickbacks from the bank’s acquisition of prime property in Pasay City in 1994, a businessman has told the Supreme Court.

In an affidavit, Enrique Montilla said the money that the dissolved bank’s officials purportedly withheld included a  P25-million fee that Urban Bank was supposed to pay lawyer Magdaleno Peña for “clearing” the property of tenants.

Montilla submitted his sworn statement to the high tribunal in support of Peña’s bid to collect the P25 million from the officials of the defunct bank.

Montilla said he was then president of Isabela Sugar Co. Inc. (ISCI) when the sugar manufacturing firm agreed to sell the 8,628-sq-m property to Urban Bank for almost P242 million in a “buy-back shares” agreement.

“Of the original (P241.6 million) allocated for the purchase of the property, they only released (P169.4 million) to the legitimate stockholders of ISCI and the balance of (almost P73 million) was ‘pocketed’ by the (Urban Bank) directors/officers/representatives,” Montilla claimed.

“(N)ot only did the Urban Bank (officers) defraud (the bank) and its depositors and stockholders, they also defrauded the innocent legitimate stockholders of ISCI,” he said.

‘Greed overtook them’

Among those who purportedly benefited from the scheme were former Urban Bank president, the late Teodoro Borlongan, and former bank directors Eric Lee, Marilyn Ong, Art Manuel, Ben Lim, Delfin Gonzales, Corazon Bejasa and Benjamin de Leon.

“Originally, they were only supposed to make P42 million, but greed overtook them,” he said, adding that he himself contacted Peña to lead the clearing project for the P25 million.

“Peña was able to do the job, but he was never paid by Urban Bank,” Montilla said.

He said the group also made another P6 million from “unreturned” shares of stocks in connection with the land deal.

On Dec. 11, 2011, the Supreme Court ruled that Peña should only receive P4 million for his services “because the full amount of P25 million would be a new/additional obligation” from the closed bank.

However, Peña had said that Montilla’s revelation and other documentary evidence would show that the amount was “not an additional payment because it was already computed and indicated in the contract to sell.”

EIB acquired Urban Bank in 2001 after the Bangko Sentral ng Pilipinas (BSP) ordered its rehabilitation over liquidity problems.

On Thursday, the BSP placed EIB under receivership of the Philippine Deposit Insurance Corp. after its officials admitted that it could no longer service maturing time deposits.