SENATOR Sherwin Gatchalian has asked the Sandiganbayan to dismiss the criminal charges of graft, malversation and violation of bank manual filed against him.
Gatchalian filed a motion for judicial determination of probable cause, maintaining his innocence in the anomalous 2009 buyout by the Local Water Utilities Administration (LWUA) of his family’s insolvent bank.
In his motion, Gatchalian said he could not be charged with graft and malversation because he did not receive unwarranted benefits from LWUA following the sale of his shares in Express Savings Bank Inc. (Esbi) to LWUA.
In connection with his graft charge, Gatchalian said he did not receive unwarranted benefit from LWUA in the 14 shares he sold at P179.63 per share for a total amount of P2,514.82.
He said his shareholdings in ESBI comprised only 0.001886 percent of ESBI’s subscribed shares of 742.296, adding that the Ombudsman failed to prove that he conspired with LWUA to sell the bank and save it from bankruptcy.
“It is clear from all the foregoing that the Office of the Ombudsman’s conclusion of conspiracy has no basis. There was no unbroken chain of circumstances that could lead to a fair and reasonable conclusion that accused committed a corrupt act by receiving benefits from LWUA,” Gatchalian said.
Gatchalian denied the Ombudsman’s claim in its resolution that he and other respondents were “undue beneficiaries of the sale of the ESBI shares” because “a private bank struggling to keep itself afloat was removed from their hands by a government agency that was certainly not in the business of bailing out financially distressed banks.”
Gatchalian said he had no “controlling interest” in the bankrupt bank.
“It was, to be sure, misleading to say that the accused was ‘bailed out’ of ESBI or that the bank ‘was removed from’ his hands,’” Gatchalian said.
Gatchalian added that the Ombudsman had no basis to claim that he was liable for malversation for misappropriating for themselves P80 million in connection with the LWUA’s anomalous purchase of ESBI shares.
Gatchalian said the P2,514.82 he received for selling his shares in ESBI to LWUA comprised only 0.003143 percent of the aggregate 445,377 shares or an aggregate price of P80.003 million.
Gatchalian said the government’s disapproval of the LWUA acquisition of 60 percent ESBI equity does not convert to the criminal charge of misappropriating public funds for personal use punishable under the Revised Penal Code.
He said he was unaware of the findings of the Department of Finance that the LWUA’s purchase of ESBI equity was inconsistent with the government’s thrust and policies. He also said he was unaware that the Monetary Board denied the request of ESBI to transfer its shares to LWUA.
Gatchalian said he could not be held liable for violating the Manual Regulations for Banks in connection with the purchase of ESBI without the approval of the Monetary Board.
This is because, Gatchalian said, he was neither a director nor an officer of the ESBI and had no involvement in the management and affairs of ESBI.
“He had no hand in the approval of the sale of the shares of even in the negotiations that preceded it. Accused was no more than a stockholder of ESBI who agreed to divest his shares,” he said.
Senator Gatchalian and members of his family face charges in connection with the anomalous deal – his father, so-called “Plastics King” William Gatchalian, mother Dee Hu Gatchalian, and siblings Kenneth Gatchalian and Weslie Gatchalian.
READ: Senator Gatchalian posts bail in bank buyout case
Each of them stands accused of one count of violation of Section 3(e) of Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act, one count of Malversation of Public Funds as defined under Article 217 of the Revised Penal Code, and one count of violation of the Manual of Regulation for Banks (MORB).
They were charged as executives of Wellex Group Inc., which owns the ESBI with Forum Pacific Inc. (FPI).
The principal accused in the case is Surigao Del Sur Rep. Prospero Pichay as then LWUA chair. He was charged with three counts of graft, three counts of malversation, one count of violation of MORB and one count of violation of Republic Act 8791 or General Banking Law of 2000, for leading the purchase by LWUA of the insolvent bank to save it from the brink of bankruptcy.
READ: Gatchalian, Pichay face criminal raps over bank buyout
According to the Ombudsman, Pichay and other LWUA officials approved the acquisition of the insolvent bank in 2009 despite audit findings that show that the bank suffered net losses and capital deficits for five straight years from 2005 to 2009.
The acquisition took the effect of 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 LWUA funds to the bank to increase its authorized capital stock.
The Gatchalians of Wellex and other owners of the bank were also paid P80 million in the acquisition.
READ: Gatchalians say raps a political vendetta
The LWUA made the acquisition and transactions despite warnings by the Bangko Sentral ng Pilipinas (BSP), the Monetary Board of the BSP, and the Department of Finance (DOF) about the ESBI’s fragile financial condition following a due diligence review that showed high liquidity and credit risks.
The acquisition was also made without the requisite regulatory approvals from the BSP, its Monetary Board, the DOF and the Office of the President.
In ordering the filing of charges to the Sandiganbayan, Ombudsman Conchita Carpio Morales said “in view of the bank’s precarious financial standing at the time of the sale, the windfall received by herein private respondents must be deemed unwarranted benefit, advantage or preference.”
READ: Winning senator Gatchalian indicted over anomalous bank deal