Surigao del Norte Rep. Prospero Pichay Jr. INQUIRER FILE PHOTO
Surigao Del Sur Rep. Prospero Pichay has asked the Sandiganbayan to dismiss the criminal charges filed against him in connection with聽the anomalous buyout by the Local Water Utilities Administration (LWUA) of an insolvent bank in 2009 when he was then LWUA chair.
In his motion for judicial determination of probable cause, Pichay asked the anti-graft court Fourth Division to dismiss the three聽counts of graft, three counts of malversation, one count of violation of聽Manual of Regulation for Banks,聽and one count of聽violation of Republic Act 8791 or General Banking Law of 2000.
Pichay was accused of leading the purchase by LWUA of 60 percent equity in聽Express Savings Bank Inc. (Esbi)聽to save the insolvent bank from the brink of bankruptcy.
The Laguna-based thrift bank is owned by Forum Pacific Inc. (FPI) as well as the Wellex Group, the company of the family of Senator Sherwin Gatchalian. He and the members of his family also faced charges over the buy-out.
搁贰础顿:听Gatchalian seeks dismissal of LWUA case
In his motion, Pichay said he could not be charged with graft for having bad faith because he did not violate any banking regulations.
He said the acquisition of ESBI shares was not opposed and was in fact approved by the Monetary Board.
Pichay said the LWUA relied on good faith on the Bangko Sentral ng Pilipinas鈥� orders that gave the 鈥渋mpression鈥� LWUA could continue with the ESBI transaction.
He said the BSP did not state that LWUA disregarded the law in the purchase of the insolvent bank.
鈥淚n none of the exchanges did the BSP ever state, nay intimidated that LWUA was disregarding or was in danger of violating any applicable law or rule,鈥� Pichay said in his motion through his lawyers.
鈥淭hus, by allowing LWUA to continue with the infusion, it is unfair to penalize the accused for believing in good faith on the BSP鈥檚 orders and suggestions,鈥� he added.
Pichay also said the Ombudsman鈥檚 allegation that LWUA failed to secure the consent of the Department of Finance is 鈥渂eside the point鈥� because no executive issuance require the department鈥檚 favorable endorsement.
He added that though the finance department gave unfavorable comments about the ESBI purchase, the BSP gave a 鈥渢acit approval鈥� for LWUA to buy ESBI鈥檚 equity.
Pichay maintained that there is no probable cause to charge him for graft on the allegation he caused undue advantage to ESBI officers when LWUA purchased the bank鈥檚 60 percent equity in a form of financial rescue.
He said to claim that LWUA paid half of the purchase price of ESBI because of the bank鈥檚 financial issues 鈥渞eflects a poor understanding of the dynamics and intricacies of contract negotiation.鈥�
He added that as early as 2008, LWUA already needed a bank as its financial arm.
鈥淭he Ombudsman鈥檚 attempt to characterize this 鈥榖enefit鈥� as unwarranted鈥ust fail for the same reasons that its discussion on the existence of bad faith and manifest partiality must fail,鈥� Pichay said.
Pichay said there is also no probable cause to charge him with three counts of malversation or the criminal charge of misappropriating public funds under the Revised Penal Code.
Pichay said he as LWUA chair had no custody or control over LWUA鈥檚 funds, pointing instead to the LWUA treasurer.
He said there could not have been misappropriation of funds because he did not violate any law or regulation in connection with the ESBI buy-out.
Pichay said the P400 million capital infusion and P300 capital deposit were still intact in the savings and asset accounts, and thus these funds could not be considered missing that would constitute the charge of malversation.
鈥淗ow the Ombudsman could conclude that there was misappropriation is a complete mystery,鈥� Pichay said.
Pichay said he also could not be charged for violation of manual of regulation for banks because under the manual, only banks engaged in lending are required to secure approval from the BSP.
鈥淟WUA, as the investor and non-bank party, is not obliged to secure such Monetary Board approval,鈥� Pichay said.
Lastly, Pichay said he could not be held liable for violating Republic Act 8791 or the General Banking Law which prohibits appointive public officials from holding any office in a private bank.
He said because of the acquisition of the ESBI majority shares, the bank ceased to become a private bank and has thus been converted as a government-owned bank.
He added that officials from the government agency which bought the shares and made deposits and capital infusion to ESBI are bound to hold positions in the bank as a matter of law and public interest.
鈥淐onsidering that the present case filed against accused is bereft of factual and legal bases, the Honorable Court ought to dismiss the case,鈥� Pichay said.
In support of his motion to dismiss, Pichay said the Ombudsman also took six years to conclude its fact-finding investigation and preliminary investigation, and thus a 鈥渂latant violation鈥� of his constitutional right to speedy disposition of cases.
The Ombudsman鈥檚 purported violation of his constitutional right should compel the court to dismiss the case, Pichay added.
搁贰础顿:听Gatchalian, Pichay face criminal raps over bank buyout
According to the Ombudsman, Pichay and other LWUA officials approved the acquisition of the insolvent bank in 2009 despite audit findings that show that the bank suffered net losses and capital deficits for five straight years from 2005 to 2009.
The acquisition took the effect of a financial rescue, as the LWUA officials bought 445,377 ESBI shares worth P101.363 million from the聽Gatchalian聽group that gave the agency 60-percent equity in the bankrupt bank.
Pichay and the other officials later injected P780 million LWUA funds to the bank to increase its authorized capital stock.
The Gatchalians of Wellex and other owners of the bank were also paid P80 million in the acquisition.
搁贰础顿:听Gatchalians say raps a political vendetta
The LWUA made the acquisition and transactions despite warnings by聽the Bangko Sentral ng Pilipinas (BSP), the Monetary Board of the BSP, and the Department of Finance (DOF) about the ESBI鈥檚 fragile financial condition following a due diligence review that showed high liquidity and credit risks.
The acquisition was also made without the requisite regulatory approvals from the BSP, its Monetary Board, the DOF and the Office of the President.
In ordering the filing of charges to the Sandiganbayan, Ombudsman Conchita Carpio Morales said 鈥渋n view of the bank鈥檚 precarious financial standing at the time of the sale, the windfall received by herein private respondents must be deemed unwarranted benefit, advantage or preference.鈥�
搁贰础顿:听Winning senator聽Gatchalian聽indicted over anomalous bank deal