P73-M kickback for Urban execs?

Posted at 04/30/12 8:24 AM

MANILA, Philippines - Former officials of the defunct Urban Bank, predecessor of the now also shuttered Export and Industry Bank (EIB), have been accused of pocketing P73 million in the sale of an 8,628-square meter property in Pasay City in 1994.

Accused of raking in huge kickbacks were Marilyn Ong; Eric Lee, a director of the bank; Teodoro Borlongan, bank president; Art Manuel; Ben Lim; Delfin Gonzales; Corazon Bejasa; and Benjamin de Leon, all former officials of Urban Bank. Borlongan committed suicide in 2005.

In an affidavit submitted to the Supreme Court (SC), Enrique Montilla, former president of Isabela Sugar Company Inc. (ISCI), said he took part in the scheme where the bank officials allegedly allocated P242 million for the land purchase but actually released only P169 million to stockholders of his company.

Montilla’s affidavit, dated March 26, 2012, was attached as a supplement to the motion for reconsideration that lawyer Magdaleno Peña had filed to seek a reversal of the SC ruling on Dec. 11, 2011 awarding the counsel a measly P4 million instead of P25 million that he had demanded.

Montilla and his relatives, the Peña, Lovina, Abello and Lacson families of Negros Occidental, used to own ISCI.

Meanwhile, directors and officers of newly closed EIB are expected to escape charges of unsafe and unsound banking practices.

Speaking to reporters, Nestor Espenilla Jr., deputy governor of the Bangko Sentral ng Pilipinas (BSP), said initial investigation showed that the directors and officers of the commercial bank did not commit any violation, including gross negligence.

“In any closure like this we do an automatic investigation,” he said. “But so far when EIB was still open we didn’t see any indications of gross negligence, which was the reason why other banks got closed. So I don’t think they were in that situation.”

Jaime Gonzalez chairs EIB, Alfredo Yao and Albert Cheok are vice chairmen, while Juan Victor Tanjuatco is president.

The board of directors includes Dionesio Carpio Jr., Douglas Chew, John Luen Wai Lee, Joseph Pineda, Rainer Silhavy, Sai Chong Cheng, Maria Constance Gonzalez, Antonio Panajon Edna Daguisin-Reyes, Jeffrey Yao, and Roberto Atendido.

The closure of the Aguirre-owned Banco Filipino Savings and Mortgage Bank on March 17 last year resulted in the filing and counter-filing of complaints between several officials of the BSP and the bank.

The Monetary Board ordered the closure of EIB Thursday night after the commercial bank admitted that it does not have enough cash to service its maturing deposits worth between P700 million and P800 million.

It was placed under the receivership of the state-run Philippine Deposit Insurance Corp. (PDIC) as mandated under Section 30 of Republic Act 7653, the New Central Bank Act of 1993.

The commercial bank was placed under receivership “on account of its inability to meet its obligations as they become due, insufficient realizable assets to meet its liabilities and its inability to continue in business without involving probable losses to its depositors or creditors.”

As early as 2010, EIB had committed to sell its core banking business to Banco de Oro Unibank Inc. of retail magnate Henry Sy, but the transaction has yet to get final approval of the BSP.

The country’s largest bank decided to abandon the plan due to several issues, including pending cases against the bank.

Espenilla said officials of BDO informed the BSP last Thursday that it was no longer keen on acquiring EIB due to issues.

“It is a very sad thing for us, we wish it could be fixed,” he said.

Espenilla said the closure would affect about 50,000 depositors with deposits amounting to over P15 billion.

“In fact they turned over the bank to us properly or they told us properly that they give up basically and then allow PDIC to come in without too much trouble,” he said.

EIB has a nationwide network of 50 branches and 47 ATMs to provide seamless delivery of banking services

Subsidiaries and affiliates include EIB Securities Inc., Arthaland Corp., Valuefinance Inc., EIB Insurance Brokers Inc., Exportbank Plaza Condominium Corp., and Urbancorp Technologies Corp.

Last month, it sold its 18.4 percent stake in Arthaland for P177.7 million.

In its website, EIB said it is backed by local and global stockholders led by the Yao Group as well as Hong Kong-based Lippo China Resources Ltd., Raiffeisen Zentralbank Österreich AG (RZB) of Austria as well as investment and financial advisory specialist American Orient Capital Partners Group

Based on its 2011 General Information Sheet submitted to the Securities and Exchange Commission (SEC), EIB has an authorized capital stock of P7.5 billion, of which P4.73 billion had been paid-up and subscribed.

Its major shareholders include Amsterdam-based Ridderbrecht BV with 11.62 percent; Lead Bancfund Holdings Inc. with 10.03 percent; Apex Bancrights Holdings Inc. with 10.03 percent; Extra Year Investments Ltd. with 9.5 percent; Asiawide Refreshment Corp. with 8.45 percent; Medco Asia Investments Corp. with 7.88 percent; and Yao with 6.35 percent.

Other shareholders include Yao’s Zest-O Corp. with 5.92 percent; San Miguel with 4.96 percent; King Mild Ltd. with 2.64 percent; Conreal Holdings Ltd with 2.64 percent, and Medco Holdings with 2.45 percent. – With Lawrence Agcaoili