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MANILA, Philippines—The Sandiganbayan has found two former officials of the Government Service Insurance System (GSIS) guilty of graft and corruption for their involvement in a $10-million insurance mess in March 1998.
In an Oct. 11 decision, the antigraft court’s First Division sentenced former GSIS General Insurance Group senior vice president Amalio Mallari and Marketing and Support Service vice president Alex Valencerina to six years and one month to 10 years in jail for issuing a questionable surety bond to Ecobel Land Inc.
Aside from Mallari and Valencerina, also accused were Fernando Campana, vice president for international operations (London); Leticia Bernardo, then department manager III of the surety department and chair of the GSIS underwriting committee (bond reinsurance treaty), and private defendants Josephine Edralin Boright and Estela Edralin, incorporators of property developer Ecobel.
Still at large
Bernardo and Edralin were acquitted for lack of evidence while a warrant of arrest was issued for Boright, who remains at large.
According to the Sandiganbayan, the two former GSIS officials were responsible for the release or issuance of Surety Bond GIF No. 029132 amounting to $10 million to Ecobel then chaired and represented by Boright as the principal, and Philippine Veterans Bank (PVB) as the supposed obligee.
The court said the transaction was full of infirmities such as the absence of a counter-bond prior to issuance as an underwriting requirement to protect the interest of the GSIS; the lack of sufficient collateral as an underwriting safety requirement; nonpayment of premium prior to issuance and approval of the GSIS Board of Trustees required for high-risk bonds regardless of the amount, and the absence of a loan agreement between Ecobel and PVB.
It was only a year after the issuance of the surety bond that a premium was paid but it was discovered that one of the two titles submitted as collateral was spurious.
Despite being advised of the cancellation of the surety bond, Ecobel, then chaired by Edralin, with the help of the accused GSIS officials, was able to obtain an actual drawdown of $10 million from Bear and Stearns International Ltd., resulting in “extreme prejudice to the interest of the government.”