3 agencies probing DBP anomalies

Lawmakers asked where the gold mine is that I wrote last week to be illegally run by two Chinese nationals. It’s in the little town of Bayog, Zamboanga del Sur. From latest news, heavily armed guards enable it to flout orders from the provincial capitol and the municipal hall to stop.

Regulators and village heads raided the mine last April. Allegedly it lacked three crucial documents to operate. One, it had no registered mineral claim, as basis for the Mines and Geosciences Bureau to grant a mining permit. Two, no environmental compliance certificate, in which the Environment Management Bureau stipulates anti-pollution measures. Three, no certificate of precondition from the Commission on Indigenous Peoples, attaching the signed consent of affected tribal chiefs. The mine couldn’t have secured the papers because aliens supposedly control it, with a Filipino miner as partner. The Constitution forbids foreigners from extracting natural resources, except as financial or technical assistance.

The mine also had no business license from the municipal mayor, or a small-scale mining permit from the provincial governor. Reportedly it has paid no taxes from at least a year of operation.

Days after the padlocking of the mine, armed men arrived to drive away the protesting local folk. Trucks resumed hauling ores to the ports. “Tribesmen” were “imported” from faraway places to make it look like the mine reopening had the nod of the original Subanen tribal settlers. The authorities returned to confiscate the trucks’ engine keys and warn the guards to disband. The guards have defied them, and heavy equipment restarted extracting gold and iron.

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The Development Bank of the Philippines is presently under close scrutiny by three state agencies. Allegedly the past board of directors under the Arroyo administration misused funds for billion-peso behest loans and personal pay increases. Separately discovering these, the Commission on Audit, the Bangko Sentral ng Pilipinas, and the National Economic and Development Authority moved to conserve the DBP’s assets. President Noynoy Aquino reportedly expects his present appointee-directors to render a complete report on the matter.

Among the findings supposedly was a hush-hush account in a private bank branch in Makati to pay out the old directors’ extra pay. The account apparently was opened as far back as 2006 or prior. Also in the confidential payroll were at least eight top DBP executives in loan screening, risk assessing, and finance reporting. One of its beneficiary execs closed the account in November 2010, apparently to avert detection by the new directors.

By then, however, the COA state auditor for the DBP already had issued a “qualified opinion” on financial statements for 2008 and 2009. Such an opinion points up fraud or blatant errors in financial reports, or inapt accounting policies or projections. Creative accounting seemingly was employed to justify fat bonuses. The execs were included to get their cooperation, insiders suspect. That the adverse COA report necessarily was appended to the old board’s financial statements for 2008 and 2009 stained the DBP’s reputation.

Among the behest loans was P500 million to an unknown entity, to trade mining shares in late 2009. This is one of several reasons why the BSP supposedly placed the DBP under Prompt Corrective Action. A PCA alert lights up when a bank engages in unsafe, unsound activities that imperil its depositors and creditors. Or due to repeated flouting of banking laws and Monetary Board directives. Or, significant reporting errors and misrepresentation.

As pieced together in a recent ABS-CBN News special report, the old DBP board lent P510 million to Delta Venture Resources Inc. DVRI is a unit of Golden Media, led by Marcos ex-trade minister Roberto Ongpin and diversifying at the time into mining. DVRI used the loan to buy half of DBP’s 109 million shares in Philex, the country’s biggest listed miner, but assigned these to Golden Media. Since the DBP acquired the shares at P5.50 apiece, it earned from the sale at P12.75. But suspicions of insider trading and favoritism arose when, four weeks later, Golden Media unloaded its shares for a heftier P21 apiece. Since the DBP had a man in the Philex board, it presumably knew of forthcoming events and prices.

Under the law, no bank may lend a single cent to a borrower with no collateral or track record. The old DBP board allegedly committed a parallel malpractice in its $1-billion purchase of Metro Rail Transit bonds worth only $760 million. This illusorily benefited the government, and is muddling the “privatization” of the already private MRT.

The NEDA, for its part, noted seeming mismanagement of official development assistance, or concessional credit from rich lands. The DBP is the principal disburser of the ODA, but its releases declined markedly under the old board. Allegedly this was due to diversions of the ODA into behest loans and bond purchases, which again tainted the DBP’s reputation. Because the President chairs the NEDA, the new DBP board is being urged to compile the findings for Aquino’s full awareness.

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