Crime raps filed vs shuttered Banco Filipino execs for ‘unsafe, unsound’ banking

The Philippine Deposit Insurance Corporation (PDIC) filed at the Department of Justice (DOJ) a criminal case against ranking officials and directors of the shuttered Banco Filipino Savings and Mortgage Bank Inc. “for conducting business in an unsafe or unsound manner.”

The complaint for violation of banking laws ser by the PDIC charter was filed at the DOJ’s Task Force on Financial Fraud against the bank’s chair and president and 15 former directors and officers.

“The criminal act caused losses to the bank for a total amount of P789.46 million,” the PDIC said in a statement, adding that those charged — without identifying them by name — were the bank’s chairman and president, vice chair, four directors, corporate secretary and executive vice president, as well as other high ranking officers.

The PDIC complaint stated that more than P700 million in legal fees were paid to various legal firms without any contracts or supporting documents during the period Banco Filipino was in dire financial straits until it was eventually closed and placed under PDIC receivership.

Banco Filipino, a 62-unit thrift bank, was ordered closed by the Monetary Board of the Bangko Sentral ng Pilipinas and placed under PDIC receivership in 2011.

Upon takeover of the bank’s assets, records and affairs, PDIC discovered that payments to these legal firms were likewise made without the required “pass upon” review of the then BSP comptroller. Moreover, a partner of the law firm which was paid the amount of P225.87 million was a director of the bank.

“Current internal guidance in the light of the Data Privacy Law is for PDIC not to name the persons concerned in the case filed with the DOJ,” PDIC president Roberto Tan said in a mobile phone message to the Inquirer, when asked about the identities of those charged.

In its complaint, the PDIC stated that the disbursements of legal fees without written contract and the BSP comptroller’s review are contrary to the duties and diligence required from them as directors and officers of a banking institution and constituted conducting business in an unsafe or unsound manner.

The PDIC charter punishes the conduct of business in an unsafe or unsound manner with imprisonment from six years to 12 years, or a fine of not more than P10 million, or both, at the discretion of the court.

Edited by TSB