DOJ recommends suing CJH DevCo over dealings with BCDA

The Department of Justice has recommended filing malversation charges against officers of Camp John Hay Development Corp. (CJH DevCo) and its subsidiary the Camp John Hay Hotel (CJH Hotel) for failing to fully remit its obligations to the Bases Conversion and Development Authority. Ordered charged by the DOJ were:

•  Robert John Sobrepeña, chairman of the board and chief executive officer of CJH DevCo

• Ferdinand Santos, president and member of the board of directors of CJH DevCo and CJH Hotel

• Alfredo Yñiguez III, executive vice president, chief operating officer and member of the board of directors of CJH DevCo and CJH Hotel

• Emily Roces-Falco, chief finance officer of CJH DevCo and CJH Hotel.

The case stemmed from 26 rooms in the Manor Hotel and Suites that were transferred from the CJH DevCo to state-owned BCDA, a government-owned corporation tasked to convert military bases into productive civilian use. The units were given to the BCDA to settle CJH DevCo's unpaid obligations with BCDA, the DOJ noted in a statement released to reporters. Camp John Hay was a rest and recreation facility for US military forces in the country. CJH DevCo asked the BCDA to sign a leaseback agreement allowingCJH DevCo to continue renting out the rooms to paying guests, with the BCDA getting getting its share of the profits. But the BCDA did not sign the agreement, citing stipulations "disadvantageous to the government," the Justice Department said. Despite the absence of a signed agreement, CJH DevCo rented out the rooms and started remitting a checks to the BCDA. However, on July 22, 2010, CJH DevCo remitted a check that covered only 50 percent of BCDA's share in 2009, with the other half allegedly used by the firm to offset drawdowns on payments for supplies payment. On July 4, 2012, BCDA secured a cease-and-desist order from the Securities and Exchange Commission (SEC) and demanded that the 26 rooms and the profits involved be turned over to the government. CJH DevCo refused to heed the BCDA's demand, and continued remitting checks from the rentals, according tot he Justice Department. The company justified its stand saying the hotel rooms were not public property since they were not owned by the government and that the BCDA is a government-owned and -controlled corporation "distinct from the government." In a resolution, the the DOJ's National Prosecution Office ruled that the rooms were public property. "Contrary to respondents' claim that BCDA is a corporation with a personality separate and distinct from the government, the NPO, citing statutory provision and jurisprudence, held that BCDA remains to be an instrumentality of the national government," the resolution read. "The properties transferred to [BCDA]... are thus public funds intended for governmental purposes," it added. The resolution noted the malversation charges only pertained to the income derived from the 16 units in the Manor Hotel. "There was no malversation with respect to the proceeds due under the Leaseback Agreement from the [10 rooms] in the Suites Hotel, since records revealed that it was indeed operating at a loss at the time." Meanwhile, 12 other executives and officers of the CJH DevCo were cleared by the DOJ for insufficiency of evidence. — VS, GMA News