Gatchalian, Pichay indicted | Inquirer News
LWUA BANK DEAL

Gatchalian, Pichay indicted

By: - Reporter / @deejayapINQ
/ 04:50 AM July 14, 2016

Sen. Sherwin Gatchalian, Davao del Sur Rep. Prospero Pichay Jr. and 24 others were charged on Wednesday with graft and malversation in connection with the alleged fraudulent transfer of P780 million in Local Water Utilities Administration (LWUA) funds to an insolvent bank owned by the senator’s family.

The Office of the Ombudsman slapped charges against the 26 people, including Gatchalian’s father, plastics tycoon William Gatchalian, claiming their family made a windfall of P80 million when LWUA rescued Express Savings Bank Inc. (Esbi), a Laguna-based thrift bank in 2009.

ADVERTISEMENT

The Gatchalians are the executives and owners of Wellex Group Inc. (WGI) and Forum Pacific Inc. (FPI), which owned and operated Esbi at the time of the controversial acquisition. Pichay was the chair of the LWUA at the time.

Also indicted were the senator’s mother, Dee Hua Gatchalian; his brothers, Kenneth and Weslie, the newly elected Valenzuela representative.

FEATURED STORIES

WGI officials Elvira Ting and Yolanda de la Cruz; FPI executives Peter Salud, Geronimo Velasco Jr., Rogelio Garcia, Lamberto Mercado Jr., Evelyn de la Rosa, Arthur Ponsaran and Joaquin Obieta; Esbi officials George Chua, Gregorio Ipong, Generoso Tulagan, Wilfred Billena and Edita Bueno, and former LWUA officials Eduardo Bangayan, Aurelio Puentevella, Enrique Senen Montilla III, Wilfredo Feleo, and Daniel Landingin and Arnaldo Espinas, were also named respondents.

“I am ready to fully cooperate with court processes in the hope of obtaining a speedy acquittal from these baseless charges,” Gatchalian said in a statement.

Gatchalian said he had never been involved in the management of the bank, including the negotiations regarding the bank’s sale to LWUA in 2009. “My only involvement with Esbi was my ownership of 14 shares of stock, representing a measly 0.00001886062 percent of the total shareholdings sold to LWUA,” he said.

For the sale of those shares, Gatchalian said he received only P2,514.82.

According to the Ombudsman, Pichay and other LWUA officials approved the acquisition of the Esbi shares in 2009 despite audit findings that the bank suffered consecutive net losses from 2005 to 2009.

The acquisition effectively became a financial rescue, as the LWUA officials bought 445,377 Esbi  shares worth P101.363 million from the Gatchalian group that gave the agency 60-percent equity in the bankrupt bank.

Pichay and the other officials later injected P780 million of LWUA funds to the bank to increase its authorized capital stock. The Gatchalians and other owners of the bank were paid P80 million in the acquisition.

ADVERTISEMENT

The Ombudsman said the multimillion-peso worth of bank shares that LWUA bought from FPI and WGI became “worthless” after the bank was placed under receivership by Philippine Deposit Insurance Corp. in July 2011.

Thus, the state “effectively lost” at least P80 million from “this questionable acquisition alone.”

According to the Ombudsman, the LWUA board headed by Pichay approved the purchase  of Esbi without securing the mandatory approvals from the Monetary Board of the Bangko Sentral ng Pilipinas, the Department of Finance and Office of the President. It also went ahead with the takeover of Esbi “despite substantial negative audit findings uncovered during the due diligence stage.”

Read Next
Don't miss out on the latest news and information.

Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.

TAGS: Graft and Corruption, Local Water Utilities Administration, Nation, News, Ombudsman, Prospero Pichay Jr., Sherwin Gatchalian
For feedback, complaints, or inquiries, contact us.

News that matters

By providing an email address. I agree to the Terms of Use and acknowledge that I have read the Privacy Policy.



© Copyright 1997-2022 INQUIRER.net | All Rights Reserved

We use cookies to ensure you get the best experience on our website. By continuing, you are agreeing to our use of cookies. To find out more, please click this link.