GOVERNMENT lawyers opined that the state-owned Development Bank of the Philippines (DBP) has a strong case to hold criminally liable businessman Roberto Ongpin, former members of the DBP board of directors, and several other bank officials for irregular loan transactions involving P650 million of government funds.

Solicitor General Jose Anselmo Cadiz noted that based on the documents in their hands, Ongpin and some former officials of the DBP could be held liable.

“Based on available document, we have a strong case to hold them liable for violation of banking laws and the anti-graft and corrupt practices act,” he pointed out.

President Benigno Aquino 3rd appointed Cadiz as lead counsel of the DBP in the cited case.

The chief government lawyer stressed that government investigators would leave no stone unturned in prosecuting the said case. He vowed that persons responsible for the questionable loans at DBP would be held accountable.

Cadiz posited that the loans granted to Ongpin have the hallmarks of a behest loan and speculative insider trading.

“The real question is whether DBP officials violated banking laws and its own rules to engage in speculation using state funds when the DBP’s thrust is medium and small industries and not to depend on the value of shares,” he explained.

He noted, “the transactions fall squarely in the description of a behest loan by the Supreme Court.”


Hallmarks of behest loans
He added that the government might also opt to initiate actions to forfeit the income derived from the transactions in favor of the government in line with the Aquino government’s zero-tolerance policy on grafters.

According to Cadiz, the P660-million loan to Delta Ventures Resources Inc. (DVRI) may be considered behest since the borrower is undercapitalized, and the loan was under-collateralized.

Other “markers” for a behest loan present in the case is the deviation of use of loan proceeds from the purpose intended and the extraordinary speed in which the loan release was made to a “crony.”

Ongpin himself admitted that he is a friend of former First Gentleman Mike Arroyo.

Cadiz, moreover, argued that the previous DBP Board approved the loan notwithstanding the fact that DVRI was undercapitalized with only P625,000 paid up capital with reported losses of P98 million and retained earnings of negative P2.3 million.

DVRI loans were also under-collateralized, as confirmed by DBP’s current Internal Auditors.

In addition, the cited personalities may be liable for violating certain provisions of Republic Act 3019, or the Anti Graft and Corrupt Practices Act.

“The finding of the DBP that DVRI obtained behest loans has basis in fact and law. DVRI was under-collateralized and undercapitalized. Ongpin was known [to be close] to the Arroyo administration and DBP approved the loan in an extraordinary speed,” Cadiz said.


Irregular approval
He also lamented that DVRI did not comply with the basic borrowing requirements mandated by banking laws and DBP’s Rules.

“In fact, it is surprising that the DBP’s Board even waived the evaluation of Delta Ventures’ financial capacity to repay the loan, which is a basic precondition to the approval of loans,” Cadiz said.

The chief government lawyer also found it questionable that DVRI was allowed by the previous DBP board to withdraw its collateral even if the P510 million was still unpaid, thereby leaving the loan without collateral during the period when the original collateral was withdrawn.

“There is also diversion of the loan from the original purpose by which it was availed of. This is clearly one indicator of a behest loan,” he said.

Moreover, DBP lost an opportunity trading gain of P412 Million based on the findings by the Commission on Audit.

“Even if DBP made money from the sale of DBP’s Philex shares to Delta Ventures, DBP could have made more money had it not hastily sold its 50 Million Philex Shares to DVRI in November 2009,” Cadiz pointed out.


No fishing expedition
Cadiz junked allegations that the on-going investigation is a fishing expedition.

“There are diversionary tactics which does not confront the issue frontally. It cannot be called a witch-hunt because clearly something wrong has been done and we are merely correcting it since documents show that the DBP and Ongpin violated the law,” Cadiz said.

“If we do not do anything for fear that we will be accused of persecution then we will have no functioning justice system,” he added.

Cadiz commented that the loans granted to Ongpin appear to be in the nature of “character loans,” and that the borrower should “not have qualified by any stretch of imagination.”

“We cannot allow that, otherwise rules will be violated on a mere promise that a loan will be paid. They should not have given loans based on speculation. The amount involved is really shocking. We are talking of more than half a billion pesos here,” he pointed out.

Earlier, DBP filed criminal and administrative cases against its past board led by chairman Patricia Santo Tomas, President Reynaldo David, and former Trade Minister Roberto Ongpin over P660 million in loans that the bank had granted to an Ongpin company to finance his acquisition of Philex Mining shares.

The complaint before the Ombudsman also named former DBP chief operating officer Edgardo Garcia and former directors Ramon Durano IV, Alexander Magno, Floro Oliveros, Joseph Pangilinan, Miguel Romero, Franklin Velarde and Renato Velasco among the respondents.

Delta Ventures used the DBP facility to buy a block of Philex Mining shares at P12.75 a share, flipping them less than a month later at P21 a share to the Metro Pacific Group.