The process and policies governing loan approval by the state-owned Development Bank of the Philippines are now under review after an initial investigation indicated “perceivably imprudent lending practices” during the Arroyo administration.
This was according to Finance Secretary Cesar Purisima, who said Thursday that an ongoing investigation of DBP transactions during the previous administration was meant not necessarily to look for irregularities of the previous regime, but to reform DBP’s lending policies in such a way that would make these better comply with regulatory standards.
“Particularly, the loan-approval policy is being reviewed. This is to make sure that [the DBP] board is fully involved in the process and that the standards are aligned with those set by the BSP [Bangko Sentral ng Pilipinas],” Purisima said.
Purisima was tasked by President Aquino to spearhead an inquiry into transactions made by DBP during the Arroyo administration.
Results of the inquiry gave rise to accusations that the bank might have engaged in imprudent lending practices. In particular, former officials of DBP have been accused of approving loans worth P150 million and P510 million for Deltaventure Resources Inc. of businessman Roberto Ongpin without observing proper lending rules.
The loans, disbursed in 2009, were said to have aided in Ongpin’s acquisition of Philex Mining Corp. shares, which were later sold to businessman Manuel Pangilinan.
Ongpin has denied the allegations of the current DBP officials. He has accused the present board of the DBP of engaging in a witch hunt against people known to be friends with the former first family.
Ongpin alleged that this gave too much pressure on and forced a DBP documentation lawyer, Benjamin Pinpin, to commit suicide on August 2.
Ongpin said there were no irregularities in the loans extended by DBP, arguing that the loans were fully paid before maturity and allowed the DBP to earn based on market interest rates.
But DBP’s external counsel claimed that the manner by which the loans were approved put the bank at risk of regulatory sanctions by the central bank.—Michelle V. Remo