Banco Filipino ran a 'Ponzi' scheme – BSP

(Updated 10:47) Banco Filipino Savings and Mortgage Bank operated using the fraudulent "Ponzi" or pyramiding scheme that fattened the purses of the bank’s officers and lawyers in the process, the Bangko Sentral ng Pilipinas (BSP) said in a statement Tuesday. In a 170-page opposition filed before the Court of Appeals, the BSP justified its order to close and place Banco Filipino under the receivership of the Philippine Deposit Insurance Corp. (PDIC) after the bank allegedly continued engaging in a Ponzi scheme that funded withdrawals using later deposits. In the scheme named after Italian Charles Ponzi, who earned notoriety for the technique in the 1920s, a company hands out returns to investors not from the firm’s profits but from the investors’ own money or funds that subsequent investors pour in. The BSP explained that Banco Filipino lured its depositors by offering an interest of 6 to 14 for special savings when other banks were paying only 1.8 to 3.3 percent. The beleaguered bank used the deposits to pay the interest of old deposits and fund its day-to-day operations, the BSP alleged. “In view of all these undisputed facts, BSP’s action in recommending and thereafter placing under the receivership of PDIC was the only course left in order to protect Banco Filipino’s depositors, creditors, and the public in general," the central bank said. Banco Filipino owner Albert "Bobby" Aguirre and other directors, officers, and so-called related interests of the bank borrowed P2.2 billion of the depositors’ money and never paid them back, according to the BSP. Banco Filipino also violated the caps and limits that the BSP set, the central bank added. The thrift bank also paid its officers and consultants P250 million, according to the central bank, adding that P245 million in legal fees were handed out last year to former Securities and Exchange Commission chairperson and Banco Filipino vice chairperson Perfecto Yasay, and lawyer Harry Roque. In an interview with GMA News Online, a lawyer with Roque's law firm called the allegation "misleading" as their group started to act as Banco Filipino counsel only late last year on one issue that involved the bank. He did not elaborate on the issue. "How can Banco Filipino do all of this when in fact the BSP has comptrollership of Banco Filipino?" added the lawyer familiar with the case, who spoke on condition of anonymity. "Banks are not created for the benefit of its directors or officers. Instead Banco Filipino was being run to the extreme prejudice of its depositors since it was violating various laws and BSP regulations, including its refusal to submit periodic financial statements for the few years to hide its true financial weakness," the BSP said. — PE/VS, GMA News