An official of the central bank on Monday branded the Legacy Group of Companies owned by Celso de los Angeles as an organized syndicate that gathered people's savings on a large-scale basis for use in self-dealing and fraudulent transactions.

In a prepared statement, Bangko Sentral ng Pilipinas (BSP) deputy governor Nestor Espenilla refuted claims made by the owner of the Legacy Group that "regulatory harassment" partly caused the demise of the group's businesses.

"We are dealing here with an organized syndicate that from day one was created to exploit human nature and weak links in the legal, regulatory and enforcement framework of our banking and financial system," he said.

"(They have been) covering their tracks through continuing gimmicks and other dubious transactions long enough until they can make a clean getaway by selling out to new investors," he said.

Earlier, Celso de los Angeles, chair emeritus and founder of the Legacy Group, blamed the BSP for his failed rural banks, saying the central bank kept interfering with their business plans.

Espenilla slammed what he said was the Legacy's dirty tricks in luring investors to subscribe to its offerings on the promise of high return and full protection by the Philippine Deposit Insurance Corp. (PDIC).

"They could do this efficiently because they were good at expanding their networks and reach by covertly taking over these banks and turning them into deposit-gathering zombies. They also used a network of sales agents and e-commerce methods to entice more people, a truly first-rate pyramid marketing organization," he said.

Espenilla urged Congress to look at their "various proposals to fill the gaps in our banking laws" with urgency.

He also asked the PDIC and the Securities and Exchange Commission to file the appropriate charges against the Legacy Group and its officials based on their own investigations.

The BSP earlier filed its second wave of charges--involving 116 counts of falsification of public documents and two counts of false statements--against officials, employees and agents of four rural banks under the Legacy Group. The banks included Rural Bank of Parañaque, Rural Bank of DARBCI in South Cotabato, Rural Bank of San Jose in Batangas, and Bank of East Asia.

Last January 5, the central bank slapped 16 Legacy officials, employees and agents with charges of 49 counts of falsification of public and commercial documents, plus one case each of false reporting and false statement.

However, de los Angeles was not included in the charges since the BSP said it has not found any evidence that would link de los Angeles in the offenses.

No truth to harassment

Meanwhile, former BSP deputy governor Alberto Reyes belied statements by de los Angeles that he "harassed" the latter just so his brother could escape paying up loans.

De los Angeles said the ex-BSP officer's brother, Efren Reyes, got a P756,000 loan in May 2000 from one of his banks. He said Reyes failed to pay the loan, which ballooned to P1.4 million by July 2003.

De los Angeles said every time he would follow up on the loan payments, the BSP would suddenly conduct a special audit of his company.

"The allegation of special audit, which implies harassment on my part, is factually and legally baseless. Under the law, banks can only be examined once every 12 months and a special audit can only be done with the affirmative vote of 5 out of 7 of the members of the Monetary Board. A special audit of banks is not in the authority of the deputy governor," he said.

"It is rather far fetched that I connived with the Monetary Board to harass Mr. de los Angeles just to enable my brother to avoid payments of his alleged loans," he added.

Reyes also denied that his brother received P500,000 as consultant's fee in exchange for helping de los Angeles solve his problems with the BSP in connection with the merger of his banks.

"I have no personal knowledge of any alleged transactions between Mr. de los Angeles and my brother... During that period I never endorsed or approved any plan of merger involvement Mr. de los Angeles' banks," he noted.

At the start of the hearing, Nueva Vizcaya Rep. Carlos Padilla urged lawmakers to investigate alleged corruption in the BSP.

"The BSP is supposed to be the guardian of the banks in this country. It is the mother bank. The banking instituions are only agents. They are supposed to protect the integrity and the stability and other matters related to banking. If the BSP itself is involved in corruption...Of course, I am not saying it is the BSP as an institution. I know some people there who are decent but one or two or three there who are involved in shenanigans can undermine the entire banking industry," Padilla said.