Ombudsman starts probe on DBP behest loan case

MANILA, Philippines - The Office of the Ombudsman has found “enough basis” to proceed with the preliminary investigation of criminal charges filed against Roberto Ongpin and former officials of the state-owned banking institution who are being accused of questionably granting P660-million behest loans to a small firm in 2009.

In an eight-page order, Director Nellie Boguen-Golez of the anti-graft agency’s Preliminary Investigation and Adjudication Board (PIAB) also found sufficient basis to look into the administrative case filed against Reynaldo David, former president of the DBP; former board chair Patricia Sto. Tomas; and senior executive vice president and chief operating officer Edgardo Garcia.

The complaint for graft and violations of the banking laws against Ongpin, David, Sto. Tomas, Garcia and 22 other DBP officials and two other private individuals was filed by incumbent DBP board chairman Jose Nuñez and president Francisco del Rosario Jr. last month.

“Finding enough basis to proceed with the preliminary investigation of this case, the respondents are hereby required to file their counter-affidavit/s and other controverting evidence/s to the said complaint... within 10 days from receipt hereof,” Director Boguen-Golez said, in her order.

The Office of the Ombudsman said that “no motion to dismiss or bill of particulars shall be entertained” as such pleadings are not allowed by the Office of the Ombudsman during investigation.

Aside from Ongpin, David, Sto. Tomas, and Garcia, also ordered to file their counter-affidavits in the criminal case were private individuals Josephine Manalo and Ma. Lourdes Torres; former DBP directors Ramon Durano IV, Alexander Magno, Floro Oliveros, Joseph Pangilinan, Miguel Romero and Renato Velasco; DBP director Franklin Velarde; senior executive vice president Armando Samia; former senior executive vice presidents Rolando Geronimo and Perla Soleta; executive vice presidents Benedicto Ernesto Bitonio Jr., Jesus Guevara II and Benilda Tejada (also chief legal counsel); senior vice president Cresenciana Bundoc; vice presidents Josephine Jaurigue and Ma. Teresita Tolentino; former assistant vice president Justice Lady Flores; managers Arturo Baliton and Marissa Cayetano; assistant managers Rodolfo Cerezo and Warren de Guzman; and chief accounts management specialist Nelson Macatlang.

They are charged with alleged violations of the Anti-Graft and Corrupt Practices Act in relation to the 2000 General Banking Act under Republic Act 8791 and the rules and regulations of the Bangko Sentral ng Pilipinas and the DBP.

Those charged administratively were accused of serious dishonesty, gross neglect of duty, grave misconduct and conduct prejudicial to the best interest of the service in relation to the provisions of the General Banking Act and the rules and regulations of both the BSP and the DBP.

In a separate order, Boguen-Golez also stressed that there was “enough basis to proceed with the administrative investigation of the case.”

In their complaint, Nuñez and Del Rosario charged that the past board of directors of the DBP extended two “behest” loans of P150 million and P510 million to Delta Ventures Resources, Inc. (DVRI) despite its having only P625,000 in paid-up capital and despite its latest financial statements indicating a net loss of P98.76 million and retained earnings of negative P2.35 million.

The firm allegedly used the DBP loan to buy shares of stock from Philex Mining at P12.75 a share, which were later sold to Two Rivers Pacific Holdings Corporation for P21 per share.

“Clearly, therefore, these anomalous lending transactions enabled respondent Ongpin, who acted in connivance with respondent Reynaldo David and other DBP officers, to borrow funds from DBP for the purchase of Philex shares,” the complainants said.

At the time of the sale, respondents Ongpin and David were all directors of Philex and “it is highly probable that they had access to information regarding the impending appreciation of the value of Philex shares,” the complainants said.

“That the [second] P510-million loan applied for by this puny company was approved by the risk management committee, the executive credit committee, and the board all in one day makes it doubly suspicious,” the complaint said, noting that, “at that time, Ongpin’s DVRI was an undercapitalized company with a paid-up capital of only P625,000.”

According to the Commission on Audit (COA), the transaction deprived the bank of an opportunity trading gain of P412.4 million.

The complaint also accused the past DBP board members and officers of violating banking laws, exposing the bank to high lending risks and favoring certain private individuals, who profited from these loan and trading transactions.

Iloilo Rep. Niel Tupas Jr., chairman of the House committee on justice, has filed a resolution calling for an investigation of the alleged “wrongful lending and unsound banking practices” by the former DBP officials.