PDIC files another round of criminal raps vs. defunct LBC bank officers

The Philippine Deposit Insurance Corp. (PDIC) sued former executives of closed LBC Development Bank Inc. for violating Republic Act 3591 or the PDIC charter.

In a statement released on Thursday, PDIC said LBC Bank officers conducted business in an "unsafe and unsound manner" that caused LBC Bank's aggregate losses to reach at least P1.8 billion.

The criminal complaint was filed before the Department of Justice (DOJ) Task Force on Financial Fraud last April 15.

The government-run corporation charged LBC Bank’s former directors Santiago G. Araneta, Juan Carlos G. Araneta, Fernando G. Araneta, Carlos G. Araneta, and Joseph Jeffrey Rodriguez.

Also named respondents to the complaint are  the bank's former chairman, president and CEO Ma. Eliza G. Berenguer, former head of treasury Ofelia F. Cuevas, former finance head Apolonia L. Ilio, and former cashier Arlan T. Jurado.

"The complaint alleged that the respondents positioned the bank to be an active player in the remittance business through a service agreement with LBC Express," PDIC noted.

Under the agreement, LBC Bank was tasked as the pay-out or distribution agent of LBC Express.

In return, LBC Express was responsible for the payment of service fees for every transaction facilitated by LBC Bank.

LBC Express is a remittance company owned by stockholders and directors of LBC Bank.

It added, "The complaint further alleged that the respondents, taking advantage of their bank positions, deliberately acted in favor of LBC Express and disregarded their duties and responsibilities to LBC Bank when they failed to require LBC Express to pay the service fees due."

Moreover, the respondents were charged for their failure to question or investigate the cause of LBC Express’ non-payment of the service fees.

The complaint also charged respondents for "their failure to impose measures to protect the interest of LBC Bank, either by terminating the service agreement unless payment was made to LBC Bank, or by imposing sanctions to LBC Express for failure to pay."

According to the complaint, the said service agreement was renewed repeatedly from 2005 to 2011.

"These acts, as stated in the complaint, constitute the conduct by the respondents of unsafe and unsound banking practices," PDIC stressed.

LBC Bank was closed by the Monetary Board of the Bangko Sentral ng Pilipinas and placed it under receivership of PDIC on September 9, 2011.

The PDIC has earlier filed charges of estafa, syndicated estafa and falsification of commercial documents against former directors and officers of LBC Bank. — APG, GMA News