What Went Before: Local Water Utilities Administration (LWUA)
In July 2013, Ombudsman Conchita Carpio Morales formed a five-member team of lawyers to handle the case against several individuals, including former Surigao del Norte Rep. Prospero Pichay Jr. and members of the Gatchalian family over the acquisition of an insolvent thrift bank by the Local Water Utilities Administration (LWUA).
A resolution issued on March 16 last year by Morales said that the Gatchalians made more than P80 million in windfall profits from the sale of Laguna-based thrift bank Express Savings Bank Inc. (Esbi).
On April 17 last year, the Ombudsman recommended the filing of criminal charges against Pichay and several other incumbent public officials and private individuals—including five members of the Gatchalian family—for allegedly illegally funneling nearly P80 million of the LWUA’s funds to the insolvent thrift bank.
Also ordered indicted were Valenzuela City Rep. and Senator-elect Sherwin Gatchalian and his brothers, Kenneth and Alay Buhay Rep. Weslie Gatchalian, for graft and malversation.
The brothers’ father, plastics tycoon William Gatchalian, and his wife, Dee Hua, were also ordered charged with violations of the country’s banking laws.
The case originated from the acquisition by the LWUA board, under the leadership of Pichay, of Esbi despite the bank’s precarious financial standing.
The Gatchalians are the executives and owners of Wellex Group and Forum Pacific Inc., which owned and operated Esbi when LWUA bought it in 2009.
Records show that the LWUA board, then headed by Pichay as LWUA administrator, approved Resolution No. 56 on March 24, 2009, to acquire 60-percent equity of the shuttered bank by buying 445,377 of its shares worth P101.4 million from the Gatchalian group.
The water utility agency also released P780 million to help beef up the bank’s authorized capital stock without the approval of the Bangko Sentral ng Pilipinas (BSP).
The Ombudsman also said that Pichay proceeded with the buyout even without the approval of the BSP Monetary Board, the Department of Finance and the Office of the President.
In July 2011, Philippine Deposit Insurance Corp. placed Esbi under receivership.
The bank, which had four branches in Laguna, had 2,673 deposit accounts worth P608.36 million four months before it was closed. Inquirer Research
Sources: Inquirer Archives
