How Roberto Ongpin got ‘inside information’

ENRILE’S INSIDE INFO. Senate President Juan Ponce Enrile based his grilling of ex-DBP president Reynaldo David on his own inside information about the alleged DBP behest loans. LYN RILLON

Was it a case of businessman Roberto Ongpin being smart or Development Bank of the Philippines (DBP) officials during the Arroyo administration being stupid?

Investigating senators on Friday focused on the “inside trading” angle as they tried to come to grips with how Ongpin was able to acquire a block of Philex Mining Corp. shares which he immediately turned around and sold at a huge profit to another businessman, Manuel V. Pangilinan, two years ago.

The answer, according to Senate President Juan Ponce Enrile, is that Ongpin had “cornered the market” on Philex shares “based on his inside information.”

“Mr. Ongpin was actually buying shares from DBP, and from others, to accumulate a block of shares to be sold to some particular person,” he said.

According to Enrile, Pangilinan and Ongpin had closed the deal for the sale of DBP’s Philex shares to Pangilinan in a meeting at the Shangri-La Hotel in Makati City sometime “between June and December 2009.”

“He shook hands with Manny Pangilinan at the price of P21 (per share) before he was able to accumulate (DBP’s Philex shares) and he never shared this information with DBP and with other stockholders,” Enrile told the joint inquiry being conducted by the blue ribbon committee and the committee on banks.

“It’s very obvious that Mr. Ongpin took advantage of inside information that he alone knew,” Enrile said.

According to Enrile, the meeting took place before Ongpin’s Delta Ventures Resources secured a second loan from the DBP, which was worth P550 million. The Ongpin company earlier obtained a first loan amounting to P150 million.

Ongpin later used the second loan to purchase the DBP’s 50 million Philex shares at P12.75 per share. He then sold these shares, along with other Philex shares he had acquired, as a block to Pangilinan at P21 a share. This enabled Pangilinan to gain control of Philex, the country’s largest gold and copper mining firm.

Commission on Audit officials claimed at a hearing last week that had the DBP not sold the 50 million shares to Ongpin, it would have earned some P400 million owing to the subsequent market behavior.

No need to call Pangilinan

However, he saw no need to summon Pangilinan to the inquiry as “he was only the buyer.”

So far, there was also no evidence that would show that Jose Miguel Arroyo, the husband of former President Gloria Macapagal-Arroyo, was instrumental in the DBP’s grant of the loans to Ongpin.

Ongpin failed to attend the Senate investigation for the second week in a row. But he sent word to the committee that he would show up as soon as he returns from a business trip in Europe on Oct. 25.

Grilled for 6 hours

REYNALDO DAVID stands his ground during six hours of intense grilling maintaining he knew nothing about Ongpin’s deals even if he and Ongpin sat in the Philex board at the time DBP Philex shares were sold to the latter. LYN RILLON

In his absence, it was former DBP president Reynaldo David who was grilled for six hours and took the blows from a phalanx of senators and administration officials claiming that there was something irregular in the DBP’s grant of P660 million in loans to Ongpin.

But David, who showed his exasperation and frustration at different points during the hearing, kept his ground, maintaining he knew nothing about the supposed Ongpin-Pangilinan deal referred to by Enrile.

In fact, the DBP realized “trading gains” from the sale of its Philex shares to Delta Ventures, he said.

Positive for bank

In this, David was backed by Nestor Espenilla Jr., deputy governor of the Bangko Sentral ng Pilipinas, the central bank.

“From the standpoint of a regulator, that’s positive for the bank,” Espenilla said.

David pointed out that the previous DBP board that he headed was being criticized on the basis of market information which became available on “hindsight.”

Still, Enrile expressed disbelief that David knew nothing about Ongpin’s plans, noting that both of them sat in the Philex board at the time that the DBP shares were sold to Delta Ventures.

The senator said Ongpin had recommended David to the board.

“Are you telling me that Mr. Ongpin is smarter than you?” he asked David, who, looking frustrated, replied: “Of course, he’s older than me.”

‘Babes in the woods’

Told by David that he did not know that Ongpin and Pangilinan were engaged in talks, Enrile said: “C’mon, we’re not babes in the woods.”

“You know, Mr. David, my impression of your testimony is to the effect that when you sold the DBP shares to Golden Media (also owned by Ongpin), paid for by a borrowing of Delta Ventures, you feigned ignorance about the activity of Mr. Ongpin with respect to accumulating shares of Philex for the purpose of building up a block of shares to be sold to somebody,” he later said.

“I didn’t realize that he was accumulating. I didn’t know. I thought he was trading,” said David, who pointed out that he was an “independent” director of Philex at that time.

David said he did not have reason to question when Ongpin approached the DBP and offered to buy its Philex shares, using loans coming from the same government bank.

“I didn’t care. We were making our money. We were making our profits. We were already fixated in a disposition mode. We did not want to take speculative risks anymore. We already recovered all our costs,” he said.

Why investigate now?

At the hearing, Sen. Francis Escudero also questioned current DBP officials for investigating the Ongpin loans, which happened during a year when the bank posted a P6-billion net income.

DBP president Francisco del Rosario said the 2009 income was considered a “bleep,” considering that the bank earned only between P1 billion and P3 billion in the preceding years.

Escudero said the DBP should have investigated as well the P2.5-billion loss it suffered due to exposure to investment bank Lehman Brothers, which collapsed in 2008.

“So the year that you earned (big), that’s when you decided to investigate? And when you lost money, P2.5 billion to Lehman, that’s when you did not investigate?” the senator asked.

Ongpin-Neri conflict

The hearing on Friday also uncovered an incident wherein “a shouting match” ensued between Ongpin and Social Security System president Romulo Neri. As a Philex director representing the SSS, Neri was reportedly blocking the takeover of Philex by the Pangilinan group.

Enrile said he learned about the incident because Neri “called me up and asked, ‘What am I going to do? I’m being ousted.’”

Enrile said he advised Neri to stay put, reminding him that he had been picked for the board seat by stockholders.

First posted 1:07 am | Saturday, October 15th, 2011