PDIC files criminal case vs ex-officials of Exportbank

MANILA, Philippines–Philippine Deposit Insurance Corp. filed a criminal charge against the former chair and officers of closed Export and Industry Bank, alleging that they engaged in an unsafe and unsound business practice that put the bank in a disadvantage.

In a statement, PDIC said investigations by its legal team revealed that EIB spent P4.8 million in so-called success fee, P3 million of which was disbursed to a certain company named AO Capital Partners Ltd., which is engaged in investment banking.


The chair of the said company, Jaime Gonzales, is the same guy who served as former chair of EIB, the state-owned deposit insurer noted.

Success fee is payment for an undertaking that has been successful.


A person familiar with the matter said that in the case of EIB, the bank paid the success fee to AO Capital Partners, services of which were tapped to look for a white knight that will invest in EIB. Back then, the bank badly needed an investor to help prevent an imminent closure due to its financial troubles.

But the source said the fact that EIB failed to get an investor, it should not have paid any success fee. The fact that bulk of the fee went to a company whose chair is the same man who used to serve as chair of EIB made the bank liable for unsafe and unsound banking practice.

PDIC said the persons charged before the justice department violated provisions of the General Banking Law, which requires banks to refrain from transactions that is disadvantageous to their financial standing. The law recognizes that banks have a duty to observe safe and sound banking practices for the sake of their depositors and creditors.

Besides Gonzales, other bank officers charged before the Department of Justice were the following: former presidents Juan Victor Tanjuatco and Nilo Pacheco, former vice president and chief financial officer Teresita de Ocampo, former senior vice president and treasury head Alex Luis Pesigan, and former vice president for risk management Adeline Grimares.

Finance Secretary Cesar Purisima, who concurrently serves as chair of PDIC, said the filing of the case was important as this signals the obligation of banks to conduct business in a manner that is above board and that does not place at risk the interest of stakeholders, more so of depositors.

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TAGS: `success fee’, Business, crime, Exportbank, investment banking
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