DOJ: Economic sabotage raps vs UBI execs

The Department of Justice (DOJ) has recommended the filing of economic sabotage charges against 10 former officials of failed Urban Bank Inc. (UBI) for allegedly conspiring to misappropriate P2.8 billion in depositors’ money.

State prosecutors had initially recommended no bail for the respondents. The recommendation was later modified by Chief State Prosecutor Jovencito Zuño, allowing the UBI officials to post bail.

Charges are set to be filed today at the Makati regional trial court.

UBI chairman Arsenio Bartolome and president Teodoro Borlongan, along with eight other bank officials, were found criminally liable for swindling after conspiring, in an unprecedented manner, to transfer UBI funds to the company’s investment house, Urbancorp Investments Inc. (UII).

The misappropriation of funds significantly contributed to the bank’s closure on April 26.

"When, for no apparent justification at all, funds belonging to UBI were converted and devoted to a purpose not being beneficial to its clients, the persons responsible therefor should be held accountable," prosecutors stated in an 18-page resolution.

Prosecutors, led by Senior State Prosecutor Archimedes Manabat, claimed that bank officials offered no logical explanation for the urgency of the fund transfer, "which was actually highly questionable and anomalous."

"We find it iniquitous and contrary to human nature and experience that respondents Bartolome and Borlongan negotiated and arranged for Central Bank assistance while at the same time busy orchestrating the purchase of the questioned receivables," the prosecutors said.

Those to be charged with Bartolome and Borlongan are UBI corporate secretary Corazon Bejasa, senior vice president Nida Santos, senior managers Milagros Santiago and Rowena Punsalan, managers Mark Ching and Chulla Formanes, UII assistant vice president Loida Payonga and manager Amalia Ordas.

In an earlier complaint, the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) claimed the respondents conspired to invest P2.8 billion in depositors’ money in "garbage transactions" a week before UBI declared a bank holiday.

"The P2.8 million proceeds were used to service the continuing massive withdrawals and pre-termination of placements of UII clients and investors, among whom are the relatives of Bartolome, thus sacrificing and betraying the interests of UBI," monetary officials said.

They added that UII had resorted to "heavy inter-bank borrowings" from February to April just to enable the company to meet its precarious liquidity requirements.

"The purchase of the sub-standard and/or doubtful receivables recklessly and mischievously included the accrued interest receivables of P267 million, contrary to sound banking practices, and which no prudent, sane and judicious officer would ever dare do," a portion of the complaint read.

The BSP and PDIC noted that Bartolome, Borlongan and Bejasa were at the helm at the time of the irregularity, and were in complete control of the day-to-day operations of UBI and UII, which are both housed in the same building in Makati.

Top executives, the BSP claimed, concealed the purchase of the questionable receivables from all concerned, including directors, major stockholders, depositors and creditors.

The medium-sized UBI declared a bank holiday due to massive withdrawals in April, and was later ordered closed by regulators. Thousands of depositors were left empty-handed after their money got locked up in the bank.