Ombudsman clears DBP execs on ‘wash sales’

The Office of the Ombudsman has thrown out for lack of evidence the complaint brought against 14 senior executives of the Development Bank of the Philippines (DBP) over the purported “wash sale” of P14.3-billion worth of treasury notes in 2014.

A wash sale refers to a transaction involving an investor or a group of colluding investors who sells security (stock, bonds, options) at a loss and repurchases it again at a bargain, for the purpose of claiming a capital loss and tax deduction later or of creating the impression of active trading.

The complaint was filed by the employees of the state-owned bank, represented by Francis Romulo Badilla Jr. and Rudelito Tirado Jr., who had accused their superiors of entering into several anomalous transactions which cost the government P717 million in actual losses.

The case stemmed from a Commission on Audit (COA) report covering 28 alleged suspicious trade transactions which the bank management later claimed were done “in good faith.”

The antigraft body issued the resolution on Dec. 15, 2015, but was received by the parties only on March 8.

Absolved of criminal and administrative liabilities were DBP board chair Jose Nuñez Jr., DBP president Gil Buenaventura and board directors Jose Luis Vera, Cecilio Lorenzo, Alberto Aldaba Lim, Lydia Echauz, Reynaldo Geronimo, Vaughn Montes and Daniel Laogan.

Also cleared were DBP executive vice president Fe Susan Prado, senior vice presidents Fritzie Tangkia-Fabricante and Mariquita Agena, and senior associate vice presidents Rustum Corpuz and Francis de los Reyes.

In its ruling, the Ombudsman said the complainants failed to back up their claims that the DBP officials violated Republic Act No. 3019, or the Anti-Graft and Corrupt Practices Act, the Securities Regulation Code, the Revised Penal Code and Republic Act No. 101491, also known as the Government-Owned or -Controlled Corporations Governance Act of 2011.

The bank executives were also accused of violating the Administrative Code and the regulations of the Bangko Sentral ng Pilipinas.

Insufficient evidence

In dismissing the complaint filed by the DBP Employees Union and the Association of DBP Career Officials, the Ombudsman noted that the Securities and Exchange Commission (SEC) was still investigating the transactions mentioned in the complaint.

“(T)his office finds insufficient evidence to establish probable cause against the respondents…In this case, it is still not sufficiently established that there was a violation of a rule or regulation or an offense,” read a portion of the Ombudsman resolution.

“Complainants also failed to present any evidence to establish that the respondents were directly or indirectly interested for personal gain or have a material interest in the transactions,” it said.

The antigraft body said the complainants “failed to show manifest partiality, evident bad faith, gross inexcusable negligence and undue injury as the questioned transactions have not been established to be ‘wash sales.’”

“Moreover, the transactions were not also shown to have been grossly and manifestly disadvantageous to the government with the issue of the alleged ‘wash sales’ pending with the SEC,” the Ombudsman ruled.