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Pichay, LWUA execs face criminal raps before DOJ


Finance Secretary Cesar Purisima has filed with the Department of Justice a criminal complaint against board members of the Local Water Utilities Administration (LWUA), including its chair, former Surigao del Sur Rep. Prospero Pichay. Filed Tuesday, the charges stemmed from LWUA’s allegedly anomalous acquisition of a Laguna-based thrift bank in 2008, in which the government supposedly incurred losses of about P480 million. Purisima said the respondents' acts constituted malversation of public funds, which is punishable under the Revised Penal Code. "The LWUA Board willfully misused and dissipated public funds to acquire a financially troubled and failing bank, and in the process, bailed out the Gatchalian family [bank owners] from an unprofitable investment at the expense of LWUA and the national government," Purisima said. GMA News Online is still trying to reach Pichay for his comment as of this posting. For the latest Philippine news stories and videos, visit GMANews.TV Purisima filed the complaint in his concurrent capacity as member of the Monetary Board, the policy setter of the Bangko Sentral ng Pilipinas. He also filed a separate administrative complaint before the Office of the President on Wednesday. Preventive suspension Purisima said Pichay and other members of the LWUA board of trustees should be held liable for the allegedly irregular acquisition of 60 percent of the outstanding shares of cash-strapped Express Savings Bank Inc. (EXSBI). The other respondents named in the complaint were LWUA board members Renato Velasco, Susana Vargas, Bonifacio Maria Peña Sr., and Daniel Landingin. Purisima also asked the DOJ to order a preventive suspension against the respondents to stop them "from exerting undue influence by intimidating subordinates and tampering with documentary evidence" while the Justice Department holds its preliminary investigation. LWUA is a government-owned and -controlled corporation as a specialized lending institution for the promotion, development, and financing of local water utilities, and as depository of the reserves for capital improvement of local water utilities. EXSBI has meanwhile suffered deficiencies since 2005. The bank posted a capital deficiency of more than P51 million by the end of 2009. About 87 percent of the bank was originally controlled by the family of Valenzuela Mayor Sherwin Gatchalian. In his complaint, Purisima questioned the LWUA's infusion of P480-million in the "financially-troubled" bank using money from the government coffers. "These offenses have arisen from the direct and willful participation in facilitating the highly irregular and anomalous takeover and acquisition of the shares of stock of EXSBI, a financially troubled bank undergoing rehabilitation, in wanton violation of pertinent banking laws and rules and at a gross disadvantage to LWUA and the national government, resulting in the dissipation and misappropriation of public funds in the amount of at least P480-million," the 35-page complaint stated. 'Devious scheme' Purisima added that since 2008, the LWUA board had used the "devious scheme" of engaging in the banking business. Back then, Pichay sought the advice of the Office of the Government Corporate Counsel (OGCC) on the proposed creation of a Water Development Bank as a wholly owned subsidiary of LWUA. In its legal opinion, the OGCC said that while the LWUA has the corporate powers to create the WDB as a subsidiary, the matter is still subject to a review by the Department of Finance and the Office of the President. The bank must also comply with banking laws, rules and regulations, the OGCC said. But without consulting with the Finance Department, Pichay proposed the matter directly to former President Gloria Macapagal-Arroyo, a known political ally. Arroyo in turn referred the matter to the Bangko Sentral ng Pilipinas (BSP), which informed Pichay of a moratorium on the establishment of new banks. BSP Deputy Gov. Nestor Espenilla then advised Pichay to "scout for banks desirous of additional a capital infusion or existing stockholders willing to divest of their stockholdings" instead. But in his complaint, Purisima questioned why the LWUA board still set its eyes on acquiring the troubled Laguna thrift bank. Purisima then said that the LWUA board pushed through with the acquisition of 60-percent of the bank's outstanding capital stocks even without the approvals of the Office of the President, the DOF, and the BSP's policy-setting team, the Monetary Board. The DOF and the OP supervise GOCCs like LWUA. Meanwhile, any sale or transfer of shares that will result in the ownership of more than 20 percent of the voting shares of a bank also needs central bank approval. — PE/VS, GMA NEws

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