The Securities and Exchange Commission (SEC) filed criminal charges yesterday against presidential friend Dante Tan, two of his associates in the Best World (BW) Resources Corp., and five broker firms for alleged stock price manipulation and insider trading.
As this developed, outgoing Press Secretary Rodolfo Reyes said President Estrada will not lift a finger to help Tan.
"I think we will just have to follow the President's announcements that he will let the ax fall where it may," Reyes said. "I think the Palace will let the wheels of justice take its course."
The SEC said it has sufficient basis to prosecute Tan and Jimmy Juan, a BW stockholder, for violating the Revised Securities Act. In particular, the two were found by the SEC to have manipulated the price of BW stocks at the bourse.
Also charged was Eduardo "Moonie" Lim Jr., former BW president who went on leave from his post last Feb. 15 at the height of the scandal, for violating the so-called broker-director rule.
Among the companies charged for allegedly conspiring to manipulate BW prices were the Aurora Securities Inc., SEC 2000 Inc., PNB Securities Inc., Mark Securities Corp. and Belson Securities Inc.
In filing the charges before the Department of Justice, SEC Chairman Lilia Bautista said the number of people they have charged could go up in the next few days because "more names are cropping up" as the SEC's prosecution and enforcement department continues with the probe.
"What we have submitted to the DOJ is just a partial report," she said. "No one is off the hook yet."
Separate investigations were launched by the SEC, the Philippine Stock Exchange (PSE) and the Senate after BW shares shot up close to 5,000 percent during 1999, before crashing.
The PSE probe alleged it had found prima facie evidence of price manipulation initially against Tan and eight brokers. Tan has denied any wrongdoing.
A petition by Juan led to an order by the appellate court which said the SEC could not use its probe in any criminal proceedings, if it was based on the evidence gathered by the exchange.
The petition said the exchange probe was "null and void" since it was "in total disregard of due process requirements."
However, the court said the SEC could still investigate the case as long as it does not use the exchange's findings.
Lawyer Agnes Maranan, spokesperson for Tan, questioned SEC's move despite the court's order.
In a statement, she said it is highly improbable for the SEC to file such charges this early if it has not reviewed the PSE report.
"The SEC began its investigation only in the first week of March. How could they have examined the voluminous documents and analyzed and audited all of the (BW) transactions in just one short month?" she said.
"Even lawyer Ruben Ladia, chief of the SEC's prosecution and enforcement department, had said that just the collation of data would take two years, yet they magically reduced this to one month," she added.
The SEC document showed that Tan, through several broker companies, committed several violations such as a wash sale, where the buyer and seller of stocks are the same or there is no change in beneficial ownership.
Tan was also cited for several done-through transactions, where the buying and/or selling broker places its stock orders through another broker.
While this is not prohibited by law, it becomes a manipulative device when it tends to show that there is a public demand for such a stock, the document said.
Regarding Lim, the SEC said violated the law when he bought a number of shares while being an executive of BW.
A person who violates this law could be penalized of up to P500,000 and a jail term of up to 21 years.
Justice Undersecretary Regis Puno said they have yet to determine if the complaint is "complete in form and substance."
The complaint will be reviewed by a five-member panel headed by Assistant Chief State Prosecutor Nilo Mariano, with State Prosecutors Gregorio Arizala, Susan Dacanay, Ma. Emilia Victorio and Jafar Dimaampao as members.
Puno said that if the complaint is sufficient in form and substance, a preliminary investigation would follow. -- With Delon Porcalla, Marichu Villanueva