Pichay, Gatchalians’ arraignment for LWUA cases deferred anew

Senator Sherwin Gatchalian and former LWUA Chair Prospero Pichay Jr. INQUIRER FILE PHOTOS

The arraignment of Surigao Del Sur Rep. Prospero Pichay Jr. and members of the Gatchalian family was deferred anew after the Sandiganbayan gave them time to file an appeal on the ruling finding probable cause to hold them on trial for graft and violation of bank regulations.

Pichay and the mother, father and siblings of Senator Sherwin Gatchalian attended their arraignment before the Sandiganbayan Fourth Division on Thursday, which ordered both the defense and prosecuting panels to file a motion for reconsideration  within 10 days.

The court reset the arraignment for Nov. 17.

Both panels admitted before the court that they were only “partially happy” with the resolution that dismissed all malversation cases as the multiple charges of graft and violations  of the Manual of Regulation for Banks (MORB) were sustained.

Among the accused, only Senator Gatchalian was cleared of all charges.

READ: Sandigan dismisses LWUA cases of Sen. Gatchalian | Sandigan reduces charges vs Gatchalians, Pichay

In an interview after the hearing, Pichay said he is glad the heavier charge of malversation was dismissed.

“I’m glad that the cases like malversation were dismissed so only four cases is with probable cause. I’m sure that there is no strong evidence against it.. After all these hearings and appeal, we’ll be vindicated because we did not really do anything wrong,” Pichay said.

He said he remains confident the dismissal of his malversation case weakens his remaining charges of graft and violations of bank manual regulations.

“The fact that malversation was dismissed, that would weaken the case of the Ombudsman,” Pichay said.

Pichay, and the members of the Gatchalian family patriarch “Plastics King” business magnate William Gatchalian, the matriarch Dee Hu Gatchalian, and siblings Valenzuela Rep. Weslie Gatchalian and Kenneth Gatchalian – were charged over the anomalous buy-out by the Local Water Utilities Administration (LWUA) of an insolvent bank the Gatchalians co-own.

Pichay as then LWUA chair was charged with three counts of graft, and 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.

Meanwhile, the Gatchalians each face the remaining charges of one count of violation of Section 3(e) of Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act, and one count of violation of the Manual of Regulation for Banks (MORB).

They were charged as executives of Wellex Group Inc., which co-owns the insolvent bank  Express Savings Bank Inc. (ESBI).

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  |  Gatchalian, Pichay face criminal raps over bank buyout

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.” IDL

READ:  Winning senator  Gatchalian  indicted over anomalous bank deal.