DOJ approves raps against ex-LWUA chair Pichay

MANILA, Philippines - The Department of Justice (DOJ) yesterday approved the indictment of dismissed Local Water Utilities Administration (LWUA) chairman Prospero Pichay Jr. in connection with the anomalous purchase of the troubled Express Savings Bank Inc. (EXSBI).

In a 20-page resolution, the DOJ said there is probable cause to file charges of malversation of public funds and violations of the Anti-Graft and Corrupt Practices Act and New Central Bank Act against Pichay for LWUA’s purchase of shares of stocks of EXSBI in the absence of requisite approvals from the Department of Finance (DOF) and the Monetary Board (MB).

Aside from Pichay, also recommended charged for the same offenses was acting LWUA administrator Daniel Landingin.

After preliminary investigation last year, the three-woman panel of state prosecutors concluded that the transaction was “irregular and, at the same time, manifestly and grossly disadvantageous to the government” due to the unlawful procedural shortcuts. “Such acts of respondents Pichay and Landingin in exposing LWUA’s funds to great losses dissipated public funds as it chose to acquire the financially troubled bank of the Gatchalian family to the prejudice of LWUA’s resources and funds, and, in effect, to the prejudice of the government,” the resolution stated.

The DOJ probe showed LWUA paid over P80 million to acquire approximately 60 percent of the outstanding capital stock of EXSBI, the alleged actual book value of which at the time of the purchase was negative P31,060,447.96.

The DOJ said Pichay and Landingin had violated rules further by subsequently taking out P400 million from LWUA funds – again without approval from the MB – and deposited the amount with the EXSBI to cover up the bank’s long standing financial problems as confirmed by the Securities and Exchange Commission.

The investigating panel junked the defense of Pichay that the charges against him should be dismissed for forum shopping since the same were already filed with the Office of the Ombudsman. “A careful examination of and comparison between the two complaints readily shows that they are different,” the DOJ panel explained, pointing out the case was filed by DOF while the one in in the Office of the Ombudsman was filed by LWUA employees.

Prosecutor General Claro Arellano explained the resolution of the DOJ panel would still be subjected to review by the Ombudsman, which has exclusive jurisdiction over graft cases before the Sandiganbayan.

The DOJ, however, cleared other respondents in the complaint filed by DOF in April last year for lack of merit, including LWUA board members Renato Velasco, Susana Dumlao Vargas and Bonifacio Mario Pea Sr. 

The DOJ panel was composed of Senior Assistant State Prosecutors Rosalina Aquino and Aileen Maries Gutierrez and Assistant State Prosecutor Edna Velenzuela.

LWUA is a government-owned and controlled corporation as a specialized lending institution for the promotion, development and financing of local water utilities, and as depository of the reserves for capital improvement of local water utilities. EXSBI, on the other hand, has an authorized capital stock of P100 million divided into one million common shares. The bank has been suffering deficiencies since 2005 and by end of 2009, it posed a capital deficiency of more than P51 million. 

The bank was originally 86.7-percent controlled by the family of Valenzuela Mayor Sherwin Gatchalian.