Gatchalian clan attends arraignment in LWUA case

Senator Sherwin Gatchalian and his family attended their scheduled arraignment on Monday as the clan faces criminal charges of graft, malversation and violation of bank manual for the anomalous buyout of the family’s insolvent bank.

Gatchalian sat behind his father, so-called “Plastics King” William Gatchalian, mother Dee Hu Gatchalian and sibling Weslie Gatchalian during their arraignment at the Sandiganbayan Fourth Division.

The court deferred the arraignment pending its resolution of Gatchalian’s motion for judicial determination of probable cause, where he maintained his innocence in the anomalous 2009 buyout by the Local Water Utilities Administration (LWUA) of his family’s insolvent bank Express Savings Bank Inc. (Esbi).

The court reset the arraignment on Oct. 5.

In an interview after the hearing, the neophyte senator said he is confident he and his family would beat the criminal charges filed against them.

Gatchalian said in his 15 years as representative of the family’s turf Valenzuela City, he had led the fight against and had never been involved in corruption.

Gatchalian said the worth of ESBI shares he sold to LWUA was only P2,514.82.

“Actually, sa humble experience ko in 15 years sa Valenzuela nilalabanan namin ang korupsiyon. Hindi ako kinasuhan in any corruption sa Valenzuela. And now, for P2,500, nakasuhan tayo. So confident naman ako na malalampasan naman natin ito (Actually, in my humble experience of 15 years in Valenzuela, I fought against corruption. I wasn’t charged with any corruption in Valenzuela. And now, for P2,500, we were charged. So I’m confident we could beat these criminal charges),” Gatchalian said.

Former LWUA chair and now Surigao Del Sur Rep. Prospero Pichay Jr. in an interview criticized the Ombudsman for targeting him in this case.

“It seems like the favorite of the Ombudsman even if you know there is really no case. They’re just filing cases left and right. Obviously it’s politically motivated, it’s political persecution,” Pichay said.

In his motion to dismiss the case for lack of probable cause, 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 ESBI to LWUA.

READ: Gatchalian seeks dismissal of LWUA case

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.

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.

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.

READ: Senator Gatchalian posts bail in bank buyout case

Gatchalian and his family members stand 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).

Pichay 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.” RAM/rga

READ: Winning senator Gatchalian indicted over anomalous bank deal