Was P500-M Velarde account used by Estrada pal in purchasing Davao hotel?

DAVAO CITY – Was the P500 million from the account of "Jose Velarde" at Equitable-PCIBank which was lent last February to presidential friend and "plastics king" William Gatchalian actually used to buy the famous Davao Insular Hotel?

This is one of the questions that now surround the purchase of the sprawling 250-room resort-hotel, considered one of the city’s major landmarks.

Former Davao City Rep. Prospero Nograles, who is among the private lawyers of the prosecution panel in the Estrada impeachment trial, raised the possibility that the money from the controversial account was used to acquire the now struggling hotel from the Ayala Group of Companies.

"The story on the purchase, however, remains a speculation. This has still to be proven," Nograles said in a recent television talk show aired over a cable channel.

Due to heavy financial losses, the Davao Insular Hotel unceremoniously closed down last Dec. 6 in the midst of the jueteng scandal involving President Estrada.

Nograles pointed out that it was highly coincidental that the hotel was acquired by the Gatchalians from the Ayalas for the exact amount of the loan.

Equitable-PCI Bank senior vice president Clarissa Ocampo testified last week that she was a foot away from the President when he signed as "Jose Velarde" a P500 million loan to the Gatchalian-owned Wellex Corp.

Nograles said the timing of the purchase and the hotel’s subsequent closure were something to think about.

Negotiations for the purchase of the Davao Insular Hotel actually began as early as July last year. A 10 percent down payment was reportedly made by the Gatchalians in September 1999, and soon after the hotel was formally turned over by the Ayalas last Jan. 1.

Caught by surprise were the many local residents, who could not believe the famous landmark had closed down. They likewise could not understand why the Ayalas chose to let go of the resort-hotel.

"We refused to believe that the Ayalas could just let go of a prime property like that for only P500 million," a local tourism industry leader said.

Following the turnover of management, the hotel was renamed the Davao Waterfront Insular Hotel to identify it as part of the Waterfront chain of hotels owned by the Wellex Group.

Sources from the company said Gatchalian had intended to transform the Davao landmark into a casino-resort-hotel.

However, the renovation never materialized as the presidential friend reportedly ran out of money. The hotel had been operating solely on its own income with no infusion of additional capital from Wellex.