Bankers in P 70-M thrift, rural bank merger scam charged with fraud

The Department of Justice (DOJ) filed criminal charges against a former official who ran two separate banks that eventually failed in close succession, Philippine Deposit Insurance Corp. (PDIC) said on Friday.

In a statement, the government-run deposit insurer said authorities had filed charges against the chair of the board of directors of the closed Accord Savings Bank Inc., who is also the former CEO of the closed Philippine Farmers Bank Inc.

Another former Accord Savings Bank board member and a vice president for audit and risk management of Philippine Farmers Bank were also charged with violations of Republic Act No. 3591, or the PDIC Charter.

The justice department’s charge sheet stated that the accused conspired with each other to use the funds of Philippine Farmers Bank amounting to P69.5 million to acquire capital stocks of Accord Savings Bank, “causing material loss and damage to the depositors of both closed banks and PDIC.”

Upon takeover by the PDIC as receiver of Philippine Farmers Bank, it was found that Accord Savings Bank’s capital stocks were not recorded as assets of Philippine Farmers Bank. On the other hand, upon takeover by PDIC as receiver of Accord Savings Bank, the stocks paid for with the funds of Philippine Farmers Bank were recorded in the name of the respondent and his associates, which enabled him to take control over the financial institutions. Other than Accord Savings Bank, the accused held controlling interest in the closed Philippine Farmers Bank and Winbank Inc.

The cases, based on the complaint filed by PDIC with the DOJ, are now pending in Branch 148 of the Makati City Regional Trial Court. These alleged violations of the PDIC Charter are punishable with imprisonment of not less than six years up to 12 years or a fine of P50,000 to P2 million.

Accord Savings Bank was an 11-unit thrift bank while Philippine Farmers Bank was a 14-unit rural bank ordered closed by the Monetary Board of the Bangko Sentral ng Pilipinas and placed under PDIC receivership on April 17, 2009, and September 17, 2009, respectively.

The filing of charges against officers of the closed banks were made in an effort to bring to justice parties that engaged in acts that put depositors and PDIC’s insurance fund at risk.

“The PDIC continues to pursue legal actions against bank officials and personnel who engage in unsafe or unsound banking practices that pose grave threats to the stability of the country’s banking system,” it said, adding that it was mandated to “generate, preserve, maintain faith and confidence in the country’s banking system, and protect it from il­legal schemes and machinations.”