Senate may end DBP behest loans probe today

MANILA, Philippines - The Senate is likely to wrap up its hearings today on the alleged behest loans and sweetheart deals involving the Development Bank of the Philippines (DBP) and the group of businessman Roberto Ongpin.

Sen.Sergio Osmeña III, the chairman of the Senate committee on banks, financial institutions and currencies, said that after wrapping the hearing – its 10th on the issue – the committee may likely move on to another issue involving the previous board members of the state-owned DBP.

He said his committee is poised to look into the $180 million loan by DBP and Landbank to Global Air Services, a British Virgin Islands company with a paid-up capital of only $2, for the purchase of shares of the Metro Rail Transit Corp. (MRTC) in 2008.

He said the approval of the loan was highly irregular considering that the borrower had such a small paid-up capital and its identity still unknown when the bank approved its loan application.

He said MRTC shares eventually were delivered to DBP and Landbank in an apparent dacion en pago arrangement. Osmeña said that the dacion to DBP and Landbank was vastly overpriced.

The committee on banks, together with the committee on accountability of public officers and investigations (blue ribbon), conducted nine hearings so far on the issue of DBP’s loan to Ongpin through Delta Ventures Resources Inc. (DVRI).

It started with a P150 million loan granted by DBP to DVRI in April 2009, which was used to purchase shares in Philex Mining.

Osmeña pointed out that the DBP was also accumulating Philex shares at that time and by October 2009, it managed to buy 109 million shares of the mining firm at an average price of P5.89 per share.

On Oct. 30, 2009, DBP sold 10 million of its Philex shares through the Philippine Stock Exchange at P11.50 per share.

The group of Ongpin also purchased 50 million shares of Philex owned by DBP at P12.75 per share.

However, Osmeña noted that just a few days later, on Nov. 3, Philex shares closed higher at P13 per share.

The Ongpin group took out another loan from DBP amounting to P510 million and in all those loans, Osmeña noted that a total of 10 requirements in standard banking practice were waived by the bank in favor of the borrower.