P6B of Legacy deposits ‘doubtful’

Written by Erik de la Cruz / Reporter

Friday, 13 March 2009 00:35

A TOTAL of 31,103 deposit accounts amounting to P6.05 billion, or 43 percent of insured deposits in 12 banks affiliated with the Legacy Group, have been classified as “doubtful” by the Philippine Deposit Insurance Corp. (PDIC) because of incomplete documents and questionable transactions. “If the documents are missing, then no payout will be made,” PDIC president Jose Nograles said in a media briefing on Thursday. Of the total 134,653 accounts with insured deposits of P14 billion, the PDIC has “verified” or looked into 73,989 accounts with insured deposits of P6.43 billion. But of the verified accounts, only P381 million were classified as “validated” or eligible for insurance payment, he said. The figures were based on the initial assessment conducted with the assistance of audit firm KPMG-Manabat Sanagustin & Co. The rest of the accounts, which amount to P7.57 billion, were still subject to “further examination,” according to Nograles. As of March 10, the PDIC had paid only P138.5 million in insurance claims, or 70 percent of regular savings accounts with balances of P100,000 and below. Verifying all the accounts and segregating the valid ones from those which do not qualify for insurance payout have proven to be a “long and tedious” process, Nograles said. It is, thus, hard to set a deadline for the PDIC to complete the account verification and payout of all valid accounts, he said. “This will take time, but we have to do this to separate the victims from the perpetrators so that we can protect the victims and bring the perpetrators to justice,” he said. “That’s why we are appealing to former officers and employees of the Legacy Group and affiliated banks to turn over the documents in their possession to the Senate Committee on Trade and Industry headed by Sen. Mar Roxas II,” Nograles said. The PDIC, he said, can then obtain copies of those documents from the Senate committee for its examination and investigation of the accounts. Based on the initial verification, deposits with incomplete documents amounted to P5.42 billion. “We cannot really establish how this occurred. We can only speculate and there are many possibilities. Maybe there are no documents in the first place, or maybe the documents had been destroyed or taken out,” Nograles said. Nograles said the PDIC is facing not just a “very serious constraint” in performing its task of settling insurance claims, but also “threats and pressure” from some depositors clamoring for immediate payout. Still, he said the PDIC has no choice but to carefully investigate all the doubtful accounts as mandated by its charter. Doubtful accounts that involve questionable transactions so far totalled P621.36 million, he said. The PDIC, in a statement, said these accounts included “deposits from conversion of preneed plans, fictitious loans and deposits related to car/motorcycle promotion and others.” The 12 closed banks affiliated with the Legacy Group, which also included preneed companies, are Rural Bank of Parañaque, Pilipino Rural Bank (Cebu), Dynamic Bank (Batangas), Philippine Countryside Rural Bank (Cebu), Rural Bank of San Jose (Batangas), Bank of East Asia (Cebu), Rural Bank of DARBCI (General Santos City), Rural Bank of Bais (Negros Oriental), Nation Bank (Negros Occidental), First Interstate Bank (Leyte), Rural Bank of Carmen (Cebu) and the San Pablo Development Bank (Laguna). PDIC general counsel Romeo Mendoza said the transactions were questionable because “there is no funds inflow and the depositor is potentially nonexistent.” “When we say questionable, there is no cash inflow. A lot of investigations are ongoing now on these things,” he said. The PDIC will start distribution of numbered claim forms to all depositors of the 12 Legacy-affiliated banks on March 18. Acceptance of claims will start on March 23. The filing of a claim, however, does not necessarily mean automatic payment of the claim. It is part of the validation process of the deposit accounts, it said. The PDIC, meanwhile, said it filed on Wednesday before the Department of Justice a syndicated-estafa case against Celso de los Angeles, his son Martin Nicolo and 19 others “for conspiring to siphon off funds of Rural Bank of Carmen in Cebu...through fraudulent, anomalous and irregular transactions.” Syndicated estafa is a nonbailable offense and is punishable with lifetime imprisonment. More cases may be filed against de los Angeles as the PDIC continues to look into the books of Legacy-affiliated banks, Mendoza said. A PDIC statement said de los Angeles “created 39 fictitious loans amounting to P16.85 million in RB Carmen, and diverted the proceeds to his son, Martin Nicolo, and to other Legacy-related corporations.” “The 39 fictitious loans were erased from the books of RB Carmen after de los Angeles himself purchased the fictitious/simulated loans in consideration for the Calanggaman property, a 9.8-hectare island located in Calanggaman, Tinabilan, Palompon, Leyte,” it said. The PDIC said that a month after de los Angeles assigned the island, “RB Carmen was made to appear to have sold the Calanggaman property to EDIFICE Realty and Development Corp. for P32 million payable in 15 years.” The PDIC said that based on records at the Securities and Exchange Commission, EDIFICE Realty is 99- percent owned by Resource Providers and Manpower Services Inc., and the remaining 1 percent is owned by de los Angeles and his family. Resource Providers is, in turn, 98.94-percent owned by de los Angeles and the remaining 1.06 percent by his son Martin Nicolo and nominee lawyers, the PDIC said. According to the PDIC, “the alleged amortization payments by EDIFICE for the Calanggaman property were funded by the accounts of Legacy Motors Inc., and Fusion Capital Corp., both Legacy-related corporations, which accounts were later found to be funded with proceeds of motorcycle and investment loans which were also fictitious.” “EDIFICE’s obligation to Carmen was found to have been fully discharged with the assignment of five properties located in Batangas, but these properties were traced to another Legacy bank, the closed Dynamic Bank, which has a mortgage lien on these properties,” the PDIC said.