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01/26/2012
Filing of criminal and graft charges has been ordered by the Department of Justice (DoJ) against former Surigao del Sur Rep. and chairman of Local Water Utilities Administration (LWUA) in connection with the alleged anomalous purchase three years ago of a cash-strapped bank using state funds.
In a 20-page resolution approved by Prosecutor-General Claro Arellano the DoJ ruled that aside from violations of the provisions of the Anti-Graft and Corrupt Practices Act, likewise recommended was the filing of malversation of public funds and violation of banking laws, rules and regulations against Pichay for his actions in taking over Express Savings Bank Inc. (ESBI) in 2009 which resulted in government losses amounting to P480 million.
Acting LWUA Administrator Daniel Landingin was also included in the charges of the DoJ which also cleared LWUA board members Renato Velasco, Susana Dumlao Vargas, Bonifacio Mario Pea Sr.
Also members of the three-man panel were Senior Assistant State Prosecutors Rosalina Aquino, Aileen Marie Gutierrez and Assistant Prosecutor Edna Valenzuela.
They noted that as early as 2008, the the Department of Finance (DoF) informed Pichay that it was still evaluating LWUAs subject proposal to establish its own bank or acquire a subsidiary corporation. It added that before LWUA could implement the proposal, it must first be reviewed by the DoF and subsequently be approved by the Office of the President.
Also, in another letter dated April 17, 2009, the Bangko Sentral ng Pilipinas (BSP) informed Pichay of the requirements necessary in acquiring an existing bank such as the approval of the Monetary Board.
Despite the advisories from the DoF, OP and the BSP, the LWUA board of trustees approved on May 26, 2007 the acquisition of 445,337 shares of stocks of the ESBI which comprised 61.35 percent of the outstanding capital stock of ESBI, in the amount of P80 million and through Landingin subsequently executed a deed of absolute sale dated June 3, 2009 with ESBI without obtaining the requisite prior approvals of the DoF, OP and BSP.
In further defiance of the regulations, the respondents subsequently allowed to take out LWUA funds in the amount of P400 million and deposit the same with the ESBI to increase its capital stock and cover up its severe capital deficiency without the approval of the MB and the BSP.
Despite the financial condition of ESBI, which was alarming if not dangerous in terms of investment, respondents Pichay and Landingin still clang to the acquisition of ESBI. Such acts of respondents Pichay and Landingin in exposing LWUAs funds to great losses dissipated public funds as it chose to acquire the financially troubled bank of the Gatchalian family to the prejudice of LWUAs resources and funds and, in effect, to the prejudice of the government, the resolution stated.
On the other hand, the panel said Vargas, Velasco and Pea cannot be held liable for the anomalous transactions since they were appointed as board members of the LWU only after the acquisition of ESBIs majority shares.
They had no participation, therefore, in the questioned transactions and were not privy thereto, the resolution stated.
The case stemmed from the complaint filed by Finance Secretary Cesar Purisima accusing the respondents of violating central Bank Act, Anti-Graft and Corrupt Practices Act and malversation of public fund for the purchase of the Laguna-based bank. Purisima said the LWUA board set its eyes on acquiring ESBI, despite drawbacks in investing in the thrift bank.
The DoF said such acquisition by LWUA of a majority stake in ESBI and infusion of additional capital in the bank caused undue injury and is manifestly disadvantageous to LWUA and the national government, in patent violation of the Anti-Graft and Corrupt Practices Act.
LWUA is a government-owned and controlled corporation as a specialized lending institution for the promotion, development and financing of local water utilities, and as depository of the reserves for capital improvement of local water utilities.