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The Philippines => Philippine Laws => Topic started by: MIKELIGALIG.com on December 25, 2017, 08:01:19 PM

Title: LWUA Buys Thrift Bank Express Savings Bank Inc. (ESBI)
Post by: MIKELIGALIG.com on December 25, 2017, 08:01:19 PM
Ombudsman panel to investigate Pichay, Gatchalian, et al. over LWUA's questionable purchase of thrift bank
31 July 2013, Press Release Ombudsman

OMBUDSMAN Conchita Carpio Morales created a five-lawyer panel to hear the criminal and administrative charges arising from the alleged irregularities surrounding the Local Water Utilities Administration’s (LWUA) acquisition of and capital infusion in the now-defunct Express Savings Bank Inc. (ESBI) in 2009 involving around P800 million.

The panel was directed to conduct preliminary investigation and administrative adjudication of all related charges filed against former LWUA Chairman Prospero Pichay, Jr., other LWUA officials, and ESBI officers including now Rep. Sherwin T. Gatchalian.

The first criminal charge alleges violations of Section 3(e) and Section 3(g) of Republic Act (R.A.) No. 3019 (Anti-Graft and Corrupt Practices Act), Section X126.2 (c) (1) (2) and (3) of the Manual of Regulation for Banks in relation to Sections 36 and 37 of R.A. No. 7653 (New Central Bank Act), and Malversation under Article 217 of the Revised Penal Code.

Impleaded in this charge are Pichay, LWUA former officials Eduardo A. Bangayan, Aurelio O. Puentevella, Enrique Senen G. Montilla III, Wilfredo M. Feleo, Jr. and Daniel A. Landingin; ESBI’s individual shareholders S.T. Gatchalian, Dee Hua T. Gatchalian, Elvira A. Ting, Kenneth T. Gatchalian, and as well as directors of its corporate shareholders Forum Pacific, Inc. (FPI) and Wellex Group, Inc. (WGI); WGI directors William T. Gatchalian and Yolanda de la Cruz; and FPI directors Arthur R. Ponsaran, Geronimo Velasco, Jr., Peter Salud, Rogelio D. Garcia, Federico Puno, Lamberto Mercado, Jr. , Weslie T. Gatchalian, Joaquin Obieta and Evelyn De La Rosa.

The complaint alleges that LWUA purchased 445,377 ESBI shares from the bank’s individual and corporate shareholders at the acquisition cost of around P101,363,302.85 or representing a 60% equity in ESBI despite the non-approval and caution made by the Bangko Sentral ng Pilipinas, Monetary Board or Department of Finance in view of ESBI’s reportedly unstable condition in terms of liquidity and credit risk which was allegedly confirmed by a due diligence examination.

The second criminal charge cites two counts each for violation of Section 3 (e) of R.A. No. 3019 and for Malversation, in relation to two allegedly unauthorized capital infusions of P400 million and P300 million made by LWUA into ESBI, which the BSP reportedly found to be irregular and contrary to law.

Impleaded in this charge are LWUA employees George Chua, George Ipong, Wilfred Billena, Edith Bueno and Generoso Tulangan, along with Pichay, Bangayan, Puentevella, Montilla, Feleo and Landingin.

The third criminal charge involves a violation of Sections 19 and 66 of R. A. No. 8791 (General Banking Act) in relation to Section 36 of R.A. No. 7653 (New Central Bank Act) against Arnaldo M. Espinas, Pichay, Montilla and Feleo who served as ESBI directors and officers while they were LWUA officials despite the legal prohibition on government officials serving as members of the board of directors of private banks without authorization.

Espinas, Chua, Ipong, Billena, Bueno and Tulangan are also facing administrative charges for Grave Misconduct and Conduct Prejudicial to the Best Interest of the Service.

In 2011, Pichay, Landingin and Feleo were dismissed by the Office of the Ombudsman, after having been found administratively liable for Grave Misconduct in a related case.
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