MANILA, Philippines—The Department of Finance (DoF) filed a criminal complaint before the Department of Justice (DoJ) against members of the board of trustees of the Local Water Utilities Administration (LWUA) in connection with the questionable acquisition of a thrift bank that cost the government P480 million.
Facing a case for violation of the Manual of Regulations for Bank in relation to the Central Bank Act, Anti-Graft and Corrupt Practices Act and the Revised Penal Code are former Congressman Prospero Pichay Jr., Renato Velasco, Susana Dumlao Vargas, Bonifacio Mario M. Pena Sr. and Daniel Landingin.
They were slapped with a criminal complaint for their alleged “direct and willful participation in facilitating the highly irregular and anomalous takeover and acquisition of the shares of stock of Express Savings Bank Inc. (Exsbi), a financially troubled bank undergoing rehabilitation.”
Exsbi is a Laguna-based thrift bank with an authorized capital stock of P100-million divided into one million common shares. The bank had been suffering deficiencies since 2005 that by the end of 2009, it posted a capital deficiency of more than P51 million.
In the 35-page complaint filed April 5, the finance department stated that despite drawbacks in investing in Exsbi and without the prior approvals from the DoF, Office of the President and the Monetary Board, LWUA pushed through with the acquisition of the 485,337 shares of stock constituting approximately 60 percent of the outstanding capital stock of Exsbi worth P80 million.
Further, LWUA made additional capital infusion to Exsbi worth P400 million in cash for future subscription.
“This…was apparently intended to address Exsbi’s capital deficiency,” the complaint stated.
“Acting with manifest partiality and evident bad faith, or at the very least, gross inexcusable negligence amounting to fraud, the LWUA Board caused undue injury to the Government and gave the Gatchalian family unwarranted benefits and advantage by directing the acquisition of and authorizing payment for the subject shares at a total price of P80 million when the actual book value of the same subject shares at that time was approximately P31 million,” the complaint said.
The DoF, through Finance Secretary Cesar Purisima, pointed out that the law requires that acquisition of banks must be subject to the review of the DoF and the approval of the Office of the President and the Monetary Board.
Purisima asked the DoJ for the immediate preventive suspension of respondents to prevent them “from exerting undue influence by intimidating subordinates and tampering with documentary evidence” in the course of proceedings at the DOJ.