The loans extended by Development Bank of the Philippines (DBP) to a company of Roberto V. Ongpin were secured by collateral worth over twice the value of the transaction, the businessman said on Monday.
In a statement, the former Marcos trade minister also pointed out that the borrowing firm in question—Deltaventure Resources Inc. (DVRI)—had, in fact, over P1 billion in stockholders’ equity when it took out two loans worth a combined P660 million from DBP in late 2009.
Ongpin has criticized the current DBP board of directors for purportedly engaging in a “witch-hunt” that eventually drove a DBP lawyer, Benjamin Pinpin, to take his own life on Aug. 2.
DBP filed on Aug. 5 a criminal complaint of graft and violation of banking laws against 25 past and current officers and three private individuals, including Ongpin, in connection with the grant of the loans that were approved in just one day.
Control of Philex
The loans from DBP accounted for 16.5 percent of the P4 billion Ongpin borrowed from six financial institutions, including the UK-based Ashmore Group.
Ongpin used the funds to finance his acquisition of shares in Philex Mining Corp., the country’s largest gold and copper mining firm. Ongpin later sold the shares to Manuel V. Pangilinan, allowing the latter to gain control of Philex.
“For obvious reasons, they simply ignore the fact that these loans were completely above board, fully collateralized, have been fully paid and in fact were extremely profitable loans for DBP,” Ongpin said.
In the case filed in the Office of the Ombudsman, DBP said the paid-up capital of DVRI was only P625,000, and therefore the loan of P510 million was “816 times” more than the paid-up capital.
“It should be pointed out that DVRI was incorporated in 1977 and that the paid-up capital is of absolutely no significance,” Ongpin said.
“What is important is that by 2008, the stockholders’ equity of DVRI was already P114 million. In fact, when the DBP loans were made in 2009, the stockholders’ equity of DVRI was already more than P1 billion,” he added.
Contrary to claims that the loan was not backed up by collateral, and thus exposed the government financial institution to undue risk, Ongpin pointed out that it was actually backed up by P1.87 billion in securities, equivalent to 2.77 times the loan value, and higher than the bank’s baseline requirement of a collateral cover of two times the loan amount.
Philweb shares
The collateral included some P1.1 billion worth of shares in Ongpin’s publicly listed gaming firm, Philweb Corp., and another P610 million worth of shares in Philex.
“The lawyers [of DBP’s current board] also maliciously state that DBP sold 50 million shares in Philex Mining to DVRI at P12.75 which were sold one month later by DVRI at P21 per share,” he said.
“They then conclude that this sale deprived the bank of ‘a potential trading gain’ of over P412.4 million. This allegation is preposterous, patently illogical and obviously intended to confuse.”
Asked about the bank’s reaction to Ongpin’s claims, Leonora Fernandez, DBP vice president for corporate affairs, said the government financial institution “would rather not comment on the matter at this time.”
The Philex shares were bought from DBP by Ongpin’s companies at P12.75 per share on Nov. 5, 2009. Previous to that transaction, Philex had been trading at a range of P9 to 11 per share. On the date of the transaction, Philex closed at P11.78, lower than the selling price of DBP to DVRI.
“So, clearly, [then DBP president Reynaldo] David made a sound decision to dispose of part of his Philex holdings at P12.75,” Ongpin said. “Mr. David certainly cannot foretell future stock price movements. For the information of the DBP lawyers, only God can do that.”