SEC to consolidate claims vs Legacy

MANILA, Philippines - The Securities and Exchange Commission (SEC) plans to consolidate all claims against the failed Legacy pre-need companies before the end of April to ascertain if their trust funds are enough to pay plan holders, its top official said. The Justice department, meanwhile, said it will hold hearings nationwide to gather as many complaints as it can against the Legacy Group. In a radio interview, SEC Chairman Fe B. Barin said records showed that the Legacy pre-need firms have a combined P300 million in their trust funds, with about half in cash while the rest had been invested in real estate and listed equities. "(The Legacy group) will have to... encash those shares of stock, receivables and [other assets, if the cash it has is not enough to pay the claims,]" she said. Earlier reports placed claims at over P1 billion. The Legacy Group’s pre-need firms — Legacy Consolidated Plans, Inc., Scholarship Plan Phils, Inc. and All Asia Plans Corp. — closed in January without SEC approval, blaming poor economic conditions. Ms. Barin said the commission is coordinating with the group’s trustee banks — Land Bank of the Philippines, Metropolitan Bank & Trust Co. and Asiatrust Bank — to check if the Legacy Group’s previous withdrawals were indeed used to pay clients as it had claimed. Ms. Barin said that while Legacy Group head Celso G. de los Angeles, Jr. had assured the commission all claims would be met, the SEC has its own action plan. Plan details were not divulged. Mr. De los Angeles last Saturday said the group would file a petition for insolvency at the Makati Regional Trial Court this week to pay all investors and creditors in its "double-your-money" scheme. He said proceeds from the insolvency petition would prioritize the 14,000 investors in the scheme, since depositors in the group’s failed banks would be paid by the Philippine Deposit Insurance Corp., while pre-need plan holders could get paid through the pre-need companies’ trust funds. In a telephone interview, SEC Secretary Gerard M. Lukban said the commission is still trying to determine the number of Legacy pre-need plan holders and investors in the "double-your-money" scheme. He said some plan holders that bought back their plans to join the Legacy Group’s "double-your- money" scheme will be treated as investors and therefore excluded from those whose settlement will be sourced from the trust fund. Meanwhile, Provincial Prosecutor Emmanuel Y. Velasco said simultaneous hearings will be held in Luzon, Visayas and Mindanao beginning March 6 to gather complaints against the Legacy Group. "We are assuming there will be many complainants who would want to come to us," he said in a chance interview with reporters. Ten prosecutors have been appointed to handle cases. Legacy Group officials have been invited to questioning as well, including Mr. De los Angeles. Mr. Velasco heads the panel formed by Justice Secretary Raul M. Gonzalez that will lead the preliminary investigation against officials of the Legacy Group. He said the panel will first tackle the complaint filed by the Bangko Sentral ng Pilipinas, which claimed that bank officials and employees routinely faked documents to make it appear that their borrowers were legitimate. The central bank claimed the Legacy rural banks, in fact, diverted funds to "ghost" borrowers. Investors last week also filed a P187.4-million syndicated estafa charge against Legacy owners and incorporators, claiming they were not able to recoup their investments. And last week, the SEC’s compliance and enforcement division filed charges of fraud, intentional misrepresentation and breach of securities laws against the Legacy Group at the Justice department in connection with the sale of unregistered securities. Mr. Velasco said prosecutors will try to resolve the individual cases, as these could not be "consolidated." "Without prejudging the case, this is not a class suit. The plan holders and clients have several interests [and demands]," he added. He said the panel will not prosecute the SEC case as the complaint involves violations against the Securities Regulation Code, adding a different taskforce handles these cases. The office of Assistant Chief State Prosecutor Leah Armamento, to which the complaint has been assigned, declined to comment. Mr. Velasco said prosecutors do not have a deadline, "but... are covered by the rules on [preliminary investigation]." A Justice department circular provides prosecutors 60 days within which to wrap-up their preliminary investigation. — Don Gil K. Carreon and Ira P. Pedrasa, BusinessWorld