Sandiganbayan finds ex-GSIS officials in Ecobel deal guilty of graft

Two former officials of the Government Service Insurance System (GSIS) were convicted of graft by the Sandiganbayan First Division in connection with a $10-million insurance mess in 1998.   In a decision promulgated on Oct. 11, 2012, the graft court sentenced former GSIS General Insurance Group senior vice president Amalio A. Mallari and Marketing and Support Service vice president Alex M. Valencerina to six years and one month to 10 years jail time for issuing a questionable surety bond to Ecobel Land Inc.   Mallari and Velencerina were also disqualified from holding public office.   Two others accused in the same case, GSIS Suretyship Department manager Leticia G. Bernardo and Ecobel chairperson Estela J. Edralin, were acquitted for lack of evidence that they were guilty beyond reasonable doubt.   The anti-graft court also issued an arrest warrant against private defendant Josephine Edralin Boright, an official of property developer Ecobel, who remains at large.   In 2006, Valencerina, Mallari and Bernardo were indicted together with Boright and Edralin.    “After a judicious assessment of the stipulations of the parties and the evidence on record… the Court finds that the prosecution has proven with moral certainty the culpability of only accused Valencerina and Mallari but failed to establish with the same quantum of proof the participation of accused Bernardo,” the court noted.   Prosecutors said the transaction was full of irregularities because the surety bond was approved despite lack of counter-bond to protect GSIS – the state-run pension fund for government employees. They also found insufficient collateral by Ecobel which did not pay any premium before the bond was paid.   Also considered grounds for the conviction of those accused were the absence of approval by the GSIS Board of Trustees, lack of approval by Bangko Sentral ng Pilipinas for foreign-currency denominated bond, and short cuts in the evaluation of the bond application and its supporting papers.   Evidence presented during trial showed Valencerina endorsed Ecobel’s application to the GSIS Investment Committee in spite of a spurious statement that Philippine Veterans Bank (PBV) was an obligee in the matter on hand at that time.   While Ecobel had no loan agreement with PVB, the bank was named as such in the surety bond.   The court questioned why Valencerina on March 30, 1998 and January 14, 1999 certified the bond was fully secured and collateralized.   Ecobel then used the bond to draw $10 million from Bear and Stearns International Ltd., exposing GSIS in the process.   Mallari – as the superior of Valencerina and Bernardo – was held liable for ignoring the faulty transaction.   According to the Sandiganbayan, Mallari “willfully closed his eyes” to the defects in Ecobel’s papers.   Mallari had known, even before Ecobel lodged its application with the Surety Department, it had a previously denied application with the Finance Group, the court noted. — With Carmela Lapeña/VS, GMA News