DOJ indicts bank exec for perjury

MANILA, Philippines - The Department of Justice (DOJ) has indicted an executive of Standard Chartered Bank (SCB) for lying under oath in a lawsuit filed by Philippine Investment Two Inc. (PI II), the former local unit of the defunct American investment firm Lehman Brothers Holdings Inc. (LBHI).

Kathrina Sebastian, SCB’s associate director for origination and client coverage, was ordered charged before the Makati regional trial court (RTC) with violating Article 183 of the Revised Penal Code after the DOJ found probable cause in the complaint filed by PI II in December last year.

The case was originally filed before the Makati City prosecutor’s office but Justice Secretary Leila de Lima issued a department order for the transfer of the case to the DOJ.

Prosecution Attorney Caterina Isabel Caeg, after a preliminary investigation, found probable cause to charge Sebastian for “willfully and deliberately making a false statement” by claiming that PI II “was not able to furnish adequate guarantees or security in exchange for the inadequate LBHI guaranty.”

She did so by withholding the fact that SCB had already received more than enough collateral for a loan that it gave to PI II, Caeg said.

The finding was approved by Senior Deputy State Prosecutor Richard Anthony Fadullon.

The SCB in 2007 lent P819 million to PI II. After LBHI filed for bankruptcy in New York in 2008, the Makati RTC Branch 149 under Judge Cesar Untalan became the rehabilitation court to ensure the payment of PI II’s debts to creditors.

But PI II and another creditor, Metrobank, filed urgent court petitions against SCB upon discovering that SCB had received some $90 million in bonds as collateral from LBHI, and was negotiating a settlement in New York for the same loan that it was already being paid for under PI II’s local rehabilitation plan. In effect, they said SCB was seeking payment twice for the same loan, here and in New York.

Last Aug. 30, Untalan ordered SCB to return P233.6 million to PI II upon finding that SCB had signed a settlement agreement in New York for the entire P819-million loan. SCB sold the $90 million in bonds, and returned the $64 million in excess proceeds to LBHI.

The judge said SCB’s failure to divulge the collateral prejudiced PI II and its other creditors and “deprived the rehabilitation court of making an informed evaluation and assessment.”