DOJ files new estafa charges vs 11 Urban Bank officials

The Department of Justice (DOJ) has filed with the courts new charges of estafa involving P1.8 billion against 11 Urban Bank officers led by Arsenio M. Bartolome and Teodoro C. Borlongan, chairman and president of the bank, respectively.

As this developed, banking sources said the new charges hurled at Urban Bank have further eroded its chances of finding a ‘white knight’ to bail it out and implement a recovery program.

Charged before the Makati RTC, aside from Bartolome and Borlongan, are: Corazon M. Bejasa, director and corporate secretary of Urban Bank Inc. (UBI) and Urbancorp Investments, Inc. (UII); Nida S. Santos, senior vice president of UBI and UII; Milagros D. Santiago, senior manager of UBI and UII trust department; Rowena E. Punsalan, senior manager of UBI and UII trust department; Mark D. Ching, manager of UBI; Chulla M. Formanes, manager of UBI; Loida O. Payonga, assistant vice president and trust officer of UII; Amelia M. Ordas, manager for operations of UII trust department; and Cecilia M. Magugat, vice president of UBI and UII.

The DOJ said it filed two separate cases of estafa. One case refers to transactions of April 24, 2000, involving P7448.8 million which was raffled to Judge Cesar Santamaria. The other case pertains to transactions on April 25, 2000, involving about P1.049 billion which went to the sala of Judge Tranquilino Salvador.

These cases, according to the DOJ, are separate from another case involving P2.8 billion the DOJ filed last April 19 against the same persons, except for Magugat.

In its charge sheet, the DOJ accused respondents in both the P2.8 billion and P1.8 billion cases of complicity in "willfully, unlawfully and feloniously" misappropriating or converting money solicited from UBI depositors and the general public to purchase substandard or doubtful receivables from the trust department of UBI’s affiliate UII.

The DOJ said the accused did such acts without the knowledge of the UBI and UII board of directors and "knowing fully well that UBI was suffering from serious liquidity problems."

The DOJ said the accused knew the precarious financial condition of Urban Bank when they were buying doubtful receivables using depositors’ money to pay off clients of UII.

As a result, the DOJ said UBI’s non-performing loan ratios exceeding the industry average, its capital became deficient and had to resort to heavy interbank borrowings to keep itself afloat.

Worse, the DOJ said, "after siphoning off the much needed amounts from UBI, it unilaterally declared a bank holiday to the prejudice of UBI, its depositors, creditors and the public."