LWUA's acquisition of Express Savings Bank done in ‘good faith’, Gatchalian camp says

The camp of Valenzuela Rep. Sherwin Gatchalian insisted that the Local Water Utilities Admnistration's acquisition of his family's Express Savings Bank Inc.,  a local thrift bank based in Laguna, in 2009 was done in good faith.

 

Lawyer Lamberto Mercado Jr., vice president for legal affairs of the Wellex Group, Inc., said this in a statement after the Office of the Ombudsman on Friday announced the filing of charges against Gatchalian, former LWUA chairman Prospero Pichay, and 24 others over the allegedly anomalous acquisition.

 

The charges stem from LWUA's acquisition of ESBI, a local thrift bank based in Laguna, and owned by the Gatchalians, Forum Pacific Inc., and WGI.

 

Mercado, who is also among the respondents, said it was unfortunate that the Ombudsman has yet to act on a motion filed on April 5 and “ has instead announced to media the contents of the March 16, 2015 Joint Resolution finding probable cause against respondents to the case.”

 

He said the respondents never benefitted at all from the sale, as there was no proof that they personally or actually received any part of the consideration for the subject shares.

 

He added that FPI, WGI’s and the other private respondents’ personal stake holdings in ESBI were purely for investment and they were sellers in good faith.

 

“It is unfortunate, though, that FPI and WGI were sucked into the whirlpool of political vendetta against known political allies of the previous administration since former LWUA chairman Prospero Pichay is known to be very close to detained former President Gloria Macapagal-Arroyo,” said Mercado.

 

He said the duty to secure prior approval from the DOF, OP and BSP for the acquisition of the ESBI shares was imposed on the LWUA Board and not on the selling shareholders which were the private respondents in the case.

 

“In fact, public respondents warranted in writing that they have obtained such approvals from the appropriate government agencies. Hence, the selling of the shares of FPI and WGI to LWUA was done in good faith,” he added.

 

The WELLEX official said the LWUA Board’s apparent failure to secure prior approval for the purchase of the questioned ESBI shares should not prejudice FPI and WGI.

 

“Private respondents were impleaded in this case solely because they supposedly conspired with public respondents to commit the crimes charged. The above facts, however, clearly negate any claim of conspiracy,” he said.

 

Mercado further said LWUA’s purchase of the shares in ESBI when the latter was supposedly experiencing liquidity problems does not necessarily amount to an “unwarranted benefit” to FPI or WGI, much less to private respondents themselves.

He said that, during the sale, there was an existing moratorium imposed by the BSP on the establishment of banks and it was on record that the BSP advised LWUA to consider the acquisition of an existing bank instead.

 

“The financial condition of ESBI was certainly considered by private respondents when they set the price for their shares and when the buyer LWUA purchased these shares. ESBI had an existing banking license and such license is worth more than P50 million,” said Mercado.

 

He added that ESBI was then operating several branches with a substantial and steady clientele and trained personnel and it had acquired assets with market value of P63 million and had millions of pesos in receivables.

 

He said it made more financial sense for LWUA to acquire an existing and operating bank than to create a new bank considering the exorbitant expenses and the long time it would take to create a new bank.

 

Mercado said the ESBI shares were acquired by private respondents at 340.23 per share in 1996 and sold at 179.63 per share in 2009, so the sellers lose P200 million in terms of value when it acquired the bank. Also the assets and foreclosed properties will surely command a higher value if the bank is sold at present time, he added.

 

“There was no basis to conclude that the consideration paid by LWUA was excessive. Thus, the sale of a bank with an existing license was obviously reasonable and for valuable consideration. Private respondents did not benefit from the capital infusion of P700 Million in ESBI since said transaction occurred after private respondent had already sold the 445,377 shares in ESBI to LWUA,” Mercado said.

 

Pichay, Gatchalian and rest of those accused will be charged with three counts of graft, three counts of malversation, and violation of Banking Law and Manual of Regulation for Banks before the Sandiganbayan.

 

Former LWUA officials Eduardo Bangayan, Aurelio Puentevella, Enrique Senen Montilla III, Wilfredo Feleo, Daniel Landingin, and Arnaldo Espinas will also be charged.

 

Others who will also be in the charge sheet include:

 

-WELLEX Group Inc corporate executives Dee Hua Gatchalian, William Gatchalian, Elvira Ting, Kenneth Gatchalian, and Yolanda dela Cruz;

 

-Forum Pacific Inc executives Peter Salud, Geronimo Velasco Jr, Weslie Gatchalian, Rogelio Garcia, Lamberto Mercado Jr, Evelyn dela Rosa, Arthur Ponsaran, and Joaquin Obieta; and

 

-Express Saving Bank  Inc officials George Chua, Gregorio Ipong, Generoso Tulagan, Wilfred Billena and Edita Bueno. — Amanda Fernandez and Amita Legaspi/JDS, GMA News