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DBP execs face graft raps for 'wash sale' of P14.3-B gov’t securities

By ELIZABETH MARCELO, GMA News

High-ranking officials of the Development Bank of the Philippines (DBP) are facing graft and administrative charges before the Office of the Ombudsman for selling P14.3 billion government securities to a private company, albeit supposedly under illegal terms, resulting in losses totaling P717.07 million against the government.
 
In a 19-page complaint filed by the DBP Employees Union (DBPEU) and the Association of the DBP Career Officials (ADCO), 14 high-ranking officials the state-run bank were charged with violation of several provisions of Republic Act 3019 or the Anti-Graft and Corrupt Practices Act, RA 8799 or the Securities Regulation Code (SRC), Revised Penal Code (RPC) and RA 101491 or the GOCC Governance Act of 2011.
 
Aside from the criminal charges, DBPEU and ADCO also rapped the DBP executives with administrative charges for violating Executive Order 292 or the Administrative Code of 1987, and various Bangko Sentral ng Pilipinas (BSP) circulars.
 
“Respondents Board of Directors and Senior Management Officials of DBP did not elect or employ officers who are fit and proper for their positions. Neither did they act with due care and extraordinary diligence in the conduct of the business of DBP… Their actions have caused actual government losses in the amount of P717.07 million,” the complaint read.
 
The complainants said that due to these losses, the DBP’s net income dropped significantly to P4.5 billion last year from P5.6 billion in 2013.
 
The DBP is a government financial institution.
 
The charges stemmed from an audit report recently released by the Commission on Audit (COA) which pointed out that P14.3 billion worth of government securities (GS) held by the bank were sold “at a loss”  by the DBP Treasury Group at various dates to “one and the same” private company, First Metro Investment Corporation (FMIC).
 
The state auditor found out that DPB bought back the same securities from FMIC “on the same day at the same price” these were sold.
 
Deemed an illegal trading practice by the central bank, such unsound way of doing business, commonly called a “wash sale,” leads to market manipulation and violates RA 8799 or the Securities Regulation Code, the commission noted.
 
The report cited 28 “wash sale” transactions between the DBP and FMIC done through the Philippine Dealing and Exchange System (PDEx). The Philippine Dealing and Exchange Corporation then informed the Bangko Sentral about the transactions which led to a COA investigation.
 
 The complaint alleged the DBP board of directors and senior management officials approved the illegal buy and sell transactions involving government securities held by the DBP Treasury Group. The bank executives knew the transactions fall under the category of a “wash sale,” it said.
 
The heads of the DBP Financial Sector, Asset and Liability Department and the Local Bond Trading Unit involved in transactions do not have professional licenses and lack the qualification and work experience required by the SRC and BSP, the complaint revealed.
 
“They were hired by the DBP Board and management despite the fact that they did not have the requisite Civil Service eligibility at the time of the hiring,” the complainant read.
 
 The executives facing charges were:
  • Jose Luis Vera, board director and Risk Oversight Committee (ROC) vice chairman

  • Jose Nuñez, Jr. board chairman and ROC ex-officio member

  • Gil Buenaventura, board vice chairman and president and ROC ex-officio member

  • Cecilio Lorenzo, board director and ROC member

  • Alberto Aldaba Lim, board director and ROC chairman

  • Lydia Echauz, board director and ROC member

  • Reynaldo Geronimo, board director and ROC member

  • Vaughn Montes, board director and ROC member

  • Daniel Laogan, board director

  • Fe Susan Prado, EVP and ROC ex-officio member

  • Fritzie Tangkia-Fabricante, senior vice treasurer and group Head

  • Rustum Corpuz, senior associate vice president (SAVP) and Department of Asset Liability and Management head

  • Francis Delos Reyes, SAVP and Local Bond Trading Unit head
“Kung wala sanang pagkalugi dahil sa transaction na ito, mas malaki sana ang na-i-remit natin sa Philippine government (in 2014)... 'Yang almost P800 million losses na 'yan ay pera ng taongbayan, pera natin,” said Francis Romulo Badilla Jr., ADCO president.
 
“At alam natin na pag may nalugi may kumita. So we are asking the Office of the Ombudsman to dig deeper into this, para malaman natin kung sino talaga ang nakinabang,” Badilla added. – VS, GMA News
Tags: developmentbankofthephilippines, dbpexecs, dbpwashsale
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