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AFPSLAI loses P500M


The Armed Forces and Police Savings and Loans Association Inc. (AFPSLAI) has lost more than P500 million in only two years due to poor investments and mismanagement, the bank’s former president said. A paper written by retired Col. Conrado K. Tolentino from the Defense department showed that the military-controlled savings bank had suffered losses because of its investments in Centennial Savings Bank (CSB) and Centennial Financing Corp. (CFC). AFPSLAI owns 81% of CSB and 60% of CFC. "It is significant to note that the report shows that in a span of only two years, 2003 and 2004, CSB lost a total of P517.394 million while CFC lost a total of P12.963 million. These losses adversely affected AFPSLAI’s investment in the two companies," he said. Mr. Tolentino was AFPSLAI president from June 2001 to June 2002. He was also a trustee of the military and police bank from June 2002 to April 2003. Because of the report, Mr. Tolentino was expelled by the AFPSLAI board last Saturday and was told to close his AFPSLAI account. According to the board, his findings "generated disturbance and apprehension" among members. AFPSLAI officials were also quick to point out that the figures stated by Mr. Tolentino did not paint a true picture of the bank’s financial condition. In a letter to military Chief of Staff General Generoso S. Senga, retired Police Director and AFPSLAI President Rufino G. Ibay said CSB’s equity losses had been due to operational shortfalls and adjustments made in accordance with central bank rules. He also dismissed claims that the losses had been due to mismanagement. "We hasten to add that contrary to the claim of Col. Tolentino, losses in CSB and CFC had minimal impact on the financial condition of AFPSLAI. In fact, despite imputing the losses of these two corporations, AFPSLAI registered positive income in 2003 and 2004," he said. In his paper, Mr. Tolentino said AFPSLAI’s profitability had declined over the past two years. While the firm’s net income increased, expenses also grew, causing profit margins to decline. In 2001, the profit margin was 88.68%. In 2004, it was down to 82.12%. The firm’s nonperforming loans had also "skyrocketed," Mr. Tolentino said. In 2002, bad loans amounted to only P1.4 billion. The following year, it went up to P4.18 billion. Mr. Tolentino urged the military leadership to investigate AFPSLAI’s books to get a clearer picture of its finances and management. A defense official who refused to be named said the matter had been taken to Defense Secretary Avelino Cruz, Jr. But Mr. Cruz asked Mr. Senga to look into the matter first since this is a military issue. -KRISTINE L. ALAVE, Business World Reporter

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