The Romualdezes and Equitable Bank

The family of Marcos crony Benjamin “Kokoy" Romualdez is back. Exhibit one: Equitable PCI Bank. Through the Trans-Middle East (Philippine) Equities, Inc. (TMEE), the Romualdezes were once the biggest shareholder in the Philippine Commercial and International (PCI) Bank. The Romualdez patriarch, brother of former First Lady Imelda Romualdez Marcos, allegedly acquired the majority shares by pressuring the Lopez family, then the owner of the bank, to give up these shares. In 1986, after the fall of Ferdinand Marcos, the Presidential Commission on Good Government sequestered the shares of TMEE in PCI Bank. But the Sandiganbayan in 2003 declared “null and void the writ of sequestration issued over shares of stock registered in the name of Trans-Middle East in PCIB (now Equitable PCI Bank)." Thus, Ferdinand Martin Romualdez, son of Benjamin, has since taken on a board seat to represent what is equivalent to the family’s seven percent share in the bank. Martin Romualdez became the chairman of the board in 2005 following a much-publicized boardroom squabble among the bank’s major stockholders—the Go family, who owned Equitable Bank which bought PCI Bank with the aid of the pension funds from the Social Security System (or SSS, which owns 25 percent of the merged bank) and the Government Social and Insurance System (or GSIS, which owns 12 percent). Because of this alliance, the Gos had the controlling stake even if they did not have the majority shares. The squabble was precipitated by the botched entry of the Sy family, who owns Banco de Oro, the eighth largest bank in the country. The Sys had a deal with SSS but this did not push through after a senator filed a suit contesting how the price of the transaction was set. Questionable withdrawal An internal memorandum made available recently to NEWSBREAK shows that in October 2005, when Martin was board chairman (he no longer holds the post), about P138 million (P137, 789, 161.15) was withdrawn by TMEE from the Trust Banking Group of Equitable PCI Bank. This sum represents accumulated cash dividends and profit sharing for TMEE’s shares from 1991 to 1995. This information is timely as Equitable PCI Bank will hold its annual stockholders meeting on May 23. Questions are being raised over the release of such funds. While the Sandiganbayan has indeed ruled that the Romualdezes could exercise their right to vote, the final ownership of the shares has yet to be fully determined. The court ruling, in fact, was based on a technical error on the part of the PCGG because in 1986, only one commissioner signed the sequestration order, violating PCGG’s own rules and regulations. It asserted that “the Court will not order the return of its (TMEE’s) shares of stocks sequestered per Sequestration Order No. 86-0056 dated April 15, 1986, but orders that the same, including the interests earned thereon, be deposited with the Land Bank of the Philippines in escrow for the persons, natural or judicial, who shall eventually be adjudged lawfully entitled thereto." Insiders say that Pelagio Ricalde, corporate secretary of Equitable’s Trust Banking Group, interpreted the Sandiganbayan ruling to mean that what should be held in escrow were the shares of stock only, not the cash and dividends. Thus, the bank allowed the withdrawal. NEWSBREAK has approached PCGG and Sandiganbayan officials for comments, but they were not available as of this writing. Meantime, the Sy family has since dislodged the Go family from the bank, and has been able to accumulate up to 34 percent of total shares, making them the bank’s single biggest shareholder to date. The logical next step would have been to merge Equitable PCIB with Banco de Oro so both banks can share synergies and form a bigger force in the local banking industry. However, GSIS, together with Martin Romualdez, blocked it.