Pichay suspended over bank purchase using LWUA funds

MANILA, Philippines–Local Water Utilities Administration (LWUA) Chair Prospero Pichay has been suspended for six months by the Office of the Ombudsman in connection with a grave misconduct case relating to the LWUA’s questioned acquisition of a financially troubled rural bank in 2009.

Acting Ombudsman Orlando Casimiro said the evidence against Pichay was strong and could be manipulated, hence the suspension order, dated May 18, which is immediately executory.

Casimiro, however, found no reason to suspend Pichay’s co-respondents and fellow LWUA officials: Daniel Landingin, acting administrator; Wilfredo Feleo, acting deputy administrator for investment and financial services; and Arnaldo Espinas, corporate legal officer.

The case stems from a complaint filed against Pichay and the other LWUA officials by a group of LWUA employees led by Rustico Tutol for the allegedly improper and disadvantageous investment by LWUA of P780 million in the Express Savings Bank of Cabuyao, Laguna in 2009.

Malacañang suspensions

In a related development, Malacañang yesterday placed under a 90-day preventive suspension three LWUA board trustees in connection with a separate complaint involving the same Express Savings Bank investment by LWUA.

Executive Secretary Paquito Ochoa Jr. yesterday released the suspension order against LWUA trustees Bonifacio Mario Peña, Susana Dumlao Vargas and Renato Velasco.

The case involves a criminal and administrative complaint filed by Finance Secretary Cesar Purisima and the finance department last April against the trustees and Pichay for the allegedly “highly  irregular and anomalous” infusion of P480 million of LWUA funds into the same financially troubled Laguna thrift bank.

Explaining why Pichay was not included in the suspension order, deputy presidential spokesperson Abigail Valte said “the respondents could have filed different pleadings.”

“Their case must have taken a different course (from that of Pichay),” she said.

The complaint filed in the Ombudsman’s office by the LWUA employees led by Tutol is separate from that filed by the Department of Finance, although both complaints stemmed from the same allegedly irregular acts of the LWUA officials.

The DoF filed its complaint in the justice department. It also filed an administrative case against the LWUA officials in the Office of the President.

‘Political harassment’

“This is political harassment,” Pichay yesterday said in a phone interview.

“I now have two orders from the Ombudsman. One says not to suspend me, and there’s this new one, which is suspending me for an alleged violation which I did not commit. This is highly irregular and confusing!” he said.

Pichay said there were already two orders from the Ombudsman, before this latest one, regarding the complaints filed by the “disgruntled employees” against him. Both orders were issued by now-resigned Ombudsman Merceditas Gutierrez denying the complainants’ motion to have him suspended.

One order was issued in November 2010 and the other last February.

Gutierrez recently resigned after being impeached by the House and just before her impeachment trial was to commence at the Senate.

Pichay disputed the basis for his suspension and claimed the procedure employed was irregular.

“The complainants should have elevated the case to the Court of Appeals when their motions were denied twice. Instead, there is suddenly this new suspension order which does not even refer to the previous orders of the Ombudsman. It looks like an entirely new order,” he said.

Another irregularity, he said, was the Acting Ombudsman citing his supposed violation of Administrative Order 59, which provides that all acquisition, creation or dissolution of government corporations by any government agency is subject to review and evaluation by the Government Corporate Monitoring and Coordinating Committee.

“The supposed violation of AO 59 being invoked now was not even in the original complaint. Besides, I did not even violate AO 59,” Pichay said.

Approval by Arroyo

He said there was no violation of AO 59 when the LWUA acquired 60 percent of ExpressBank, a private bank, in 2009.

“We were not creating a new bank or acquiring a government enterprise, so there was no need to get a recommendation from the Office of the President or the Department of Finance. Still, we got approval from the Office of the President at that time,” said Pichay, who was appointed LWUA chair by former President Gloria Macapagal-Arroyo.

He said the venture has been beneficial to LWUA stakeholders, although “that is beside the point.”

The former Surigao del Sur congressman, one of the staunchest of Arroyo’s allies, believes what he is going through is political persecution.

“If you ask me this is nothing but political harassment. I think Casimiro is being pressured by Purisima and others in this administration,” he said.

He said Purisima has filed several cases against him in the past.

“I also have a motion to dismiss his complaint against me in the Office of the President, for forum shopping,” Pichay said.

He said he would elevate the Ombudsman case to the Court of Appeals. He will also seek a nullification of the suspension.

“As far as I am concerned there are two orders from the Ombudsman. I am going to clarify this,” he said.

As to whether he will continue to report for work, Pichay said, “We will see. If you ask me which one I will follow, of course I am questioning this irregular order. I have the earlier order, which says I should not be suspended.”

Evidence strong

The acting Ombudsman’s order said the evidence of Pichay’s guilt was strong, and without his suspension, the evidence might be tampered with. It also noted that the offense he was accused of was punishable by dismissal from office.

It said that based on the evidence, the LWUA board of trustees, which is chaired by Pichay, established a subsidiary through the acquisition of  ExpressBank without the required approval from the President.

The LWUA also purchased the bank’s shares of stocks without the Monetary Board’s prior approval, it added. It also noted the findings of the Commission on Audit which stated that LWUA’s investments in the bank were contrary to the 2009 budget, which had restricted the use of government funds as investments or deposits in private banking institutions.

It said the “misplaced” decision of the LWUA board to establish the agency’s subsidiary, which it did through resolutions, constituted misconduct.

As for the other LWUA officials, the Ombudsman’s order said there was no proof of their participation in the LWUA board resolutions, hence the plea to suspend them was denied.

Not yet around

In the Malacañang case, Purisima sought the suspension of Vargas, Velasco and Peña for “alleged grave misconduct” arising from their participation in the acquisition of ExpressBank by the LWUA.

In their defense, the three said the acquisition by LWUA of the majority of shares of ExpressBank was never taken up in any of the board meetings they attended from the time they assumed office.

They supported their claim with a certification by the LWUA corporate counsel and board secretary that they were appointed only in 2010.

However, Ochoa said the complainants submitted documents showing that the Monetary Board in two resolutions had denied the request of ExpressBank for the approval of the transfer of shares to LWUA and authority to accept deposits from government entities.

Despite these resolutions, the shares were still transferred and the bank accepted and continued to accept deposits from government entities, he said.