Ombudsman prosecutors appeal dismissal of Gatchalian’s LWUA case

Senator Sherwin Gatchalian. MARC JAYSON CAYABYAB/INQUIRER.net FILE PHOTO

State prosecutors appealed the dismissal of the graft, malversation and violation of bank manual charges against Senator Sherwin Gatchalian, noting that his role was crucial in the anomalous buyout by the government of the family’s insolvent bank

In a motion for partial reconsideration, the Office of the Special Prosecutor said that the consummation of the acquisition of the Express Savings Bank Inc. (ESBI) by the Local Water Utilities Administration (LWUA) would not have happened without Gatchalian’s role.

“Thus, Sherwin Gatchalian, like all the other individuals… should similarly be indicted,” the prosecution said.

READ: Gatchalian ‘vindicated, humbled’ by dismissal of LWUA cases

The prosecutors also appealed the dismissal of the malversation cases against all the accused, including Gatchalian and former LWUA chair and now Surigao Del Sur Rep. Prospero Pichay Jr.

The panel said Pichay as LWUA board chairman was in control of the LWUA funds used to buy 60 percent of ESBI’s shares, which means he should be indicted with malversation.

The panel also appealed the dismissal of the malversation rap against the bank officials—among them members of the Gatchalian clan—because of their role in the alleged misappropriation of the LWUA funds.

“The record is replete with proofs that they all contributed indispensable acts which led to the completion of the illegal transaction resulting in misappropriation of the LWUA funds,” the prosecutors said.

The prosecution also appealed the lack of probable cause for violation of Republic Act 8791 or General Banking Law of 2000, against Pichay and other officials.

The prosecution said Pichay paved the way for the takeover of the ESBI without seeking prior Monetary Board approval, an endorsement or clearance from the Department of Finance and approval from the Office of the President.

The panel likewise sought to reverse the dismissal of charges for violating the Manual of Regulation for Banks (MORB) against Senator Gatchalian and members of his family—his father William Gatchalian, mother Dee Hua Gatchalian and brothers Valenzuela Rep. Weslie Gatchalian and Kenneth Gatchalian.

This was because of their failure to seek the Monetary Board’s prior approval of the transfer of shares as officials of the ESBI.

The prosecutors urged the court to retain the finding of probable cause earlier found against the accused by the Ombudsman.

“Thus, in the main, with due respect to the Honorable Court, the findings of probable cause by the Office of the Ombudsman should have been left to stand,” the prosecution said.

READ: Raps lowered vs Pichay, Gatchalians

Meanwhile, Pichay filed a motion for partial reconsideration seeking to reverse the finding of probable cause against him for graft and violation of the MORB.

Pichay alleged that the MORB only covers banks and not the LWUA.

Pichay also said he could not be indicted for graft because there was no bad faith in the acquisition of the ESBI shares by LWUA in the amount of P400 million.

Pichay said the transaction was approved by the Monetary Board, which opted to remain silent and allowed it to happen.

“LWUA… merely relied in good faith on BSP’s orders and suggestions which gave the impression that LWUA could continue with the ESBI transaction,” Pichay said.

READ: Pichay seeks dismissal of bank buyout case

Pichay added that the his case should be dismissed over inordinate delay because the Ombudsman took six years in disposing the case—the Ombudsman started its fact-finding in 2010 and ended preliminary investigation May 2016.

Pichay said he was denied of his constitutional right to a speedy disposition of his case.

“What stood clearly from the records, rather, is the accused’s transparency in cooperating and coordinating with other government entities, totally inconsistent with any pretense of corruption,” Pichay said.

Meanwhile, Valenzuela Rep. Gatchalian, as then officer of Forum Pacific Inc. (FPI), appealed the finding of probable cause for graft, noting that FPI as a corporate shareholder of ESBI had no involvement in the LWUA takeover of 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 Gatchalian 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. RAM/rga

READ: What Went Before: Local Water Utilities Administration (LWUA)