The Philippine Deposit Insurance Corporation (PDIC) filed a criminal case against executives of the closed Banco Filipino Savings and Mortgage Bank, Inc. (Banco Filipino) for alleged criminal acts that caused the bank to incur losses amounting to PhP789.46 million.
In a statement released Wednesday, the state deposit insurance agency said Banco Filipino’s Chairman/President, Vice Chairman, four Directors, Corporate Secretary and Executive Vice President and other high ranking officers conducted business “in an unsafe or unsound manner in violation of Republic Act No. 3591, as amended, or the PDIC Charter.”
PDIC has lodged the complaint before the Department of Justice (DOJ) Task Force on Financial Fraud.
The PDIC said Banco Filipino executives paid more than PhP700 million in legal fees to various legal firms without any contracts or supporting documents during the period Banco Filipino was in dire financial difficulty.
Banco Filipino, a 62-unit thrift bank, was ordered closed by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) and placed under the PDIC receivership on March 17, 2011.
Upon PDIC’s takeover of the bank, the agency discovered that payments to these legal firms were made without the required “pass upon” review of the then BSP Comptroller. It also discovered that a partner of the law firm that was paid PhP225.87 million in fees was a director of the closed bank.
“The disbursements of legal fees without written contract and the BSP Comptroller’s ‘pass upon’ review are contrary to the duties and diligence required from them as Directors and officers of a banking institution and constituted conducting business in an unsafe or unsound manner,” it said.
Under the PDIC Charter, the offense of “conducting business in an unsafe or unsound manner” carries a penalty of imprisonment from six years to 12 years, or a fine of not more than P10 million, or both, at the discretion of the court.
PDIC had earlier filed three criminal complaints with the DOJ involving a total amount of PhP5.2 billion against the former directors, officers and employees of Banco Filipino due to other irregularities and anomalies discovered by the PDIC as receiver of the closed bank.
“The filing of cases against erring bank officials is in support of PDIC’s efforts to bring to justice parties that engage in fraudulent, irregular and anomalous acts that pose risk to depositors and the Deposit Insurance Fund, PDIC’s main fund source for payout of deposit insurance claims. PDIC continues to pursue legal actions against bank officials and personnel who engage in unsafe or unsound banking practices that threaten the stability of the country’s banking system. PDIC is mandated by its Charter to generate, preserve, maintain faith and confidence in the country’s banking system, and protect it from illegal schemes and machinations,” it said.
In August, former Foreign Affairs Secretary Perfecto Yasay, a former director of Banco Filipino, was arrested for an alleged conspiracy to secure a ₱350-M loan for a real estate company in the early 2000s which is in violation of Republic Act No. 8791 or the New Central Bank Act
In 2011, the BSP filed a case against Yasay and nine other bank officers for allegedly approving “self-serving” loans worth ₱2.192 billion.
Yasay posted bail and insists that the closing of Banco Filipino was illegal. (Rommel F. Lopez)