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By Daxim L. Lucas, Senior Reporter
First of a series
By May 22, 1998, Tomas “Buddy” Gomez III had
had enough.
That day, the former Press Secretary of the
Aquino administration resigned from the board of directors of BF
Homes Inc. and as vice chairman of its ad hoc receiver’s executive
committee.
Judging by the tone of his letter, a copy of
which was obtained by The Times, Gomez was very upset — and with
good reason, if he is to be believed.
“During the last 12 months, I have identified
irregularities and officially documented reports about financial
indiscretions that not only border on the criminal but are
additionally illegal,” he said.
Gomez said BF Homes’ practices “are
thoroughly not in keeping with the mandated practice of a
corporation” under rehabilitation receivership of the Securities
and Exchange Commission (SEC).
The resignation letter was addressed to board
members BF group stalwarts Albert C. Aguirre, Teodoro O. Arcenas,
Orlando M. Samson, Gregorio S. Imperial, Maxy S. Abad, and Stephen
N. Sarino — they are some of the leading lights of what was one of
the country’s largest business, real estate, and banking groups of
the early 1980s.
“That these (practices) have been disregarded
and consciously swept under the rug indicate that my findings are
not mere mistakes of judgment but are, in fact, errors of intent and
design,” he said.
Gomez accused the real estate firm’s receivers
of behaving “in disregard of the inalienable rights and interests
of both creditors and stockholders” which, under the rules of the
SEC, should be the main concerns of each and every member of the
team.
Among the many anomalies he uncovered during his
short tenure on the board include being “intentionally and
maliciously used and implicated” in the affairs of FBCI
Construction Corp.
The construction firm with a paid-up capital of
P50.5 million was allegedly owned by BF Homes. Upon closer
investigation, however, Gomez learned that the trail toward firm’s
ultimate beneficial owner was traced right to his doorstep —
all this, he claimed, without his knowledge.
“No one ever relishes being taken for a
fool,” he declared in his letter.
As Gomez tells it, he was later “confronted
with incontrovertible evidence” by the “other contending
heirs” of the late Don Tomas B. Aguirre — the founding
patriarch of the BF group of companies — that FBCI’s holding
company was also registered in his name.
He claimed that the firm had a registered
paid-up capital of P100,000 which, in fact, did not exist.
Aggravating this was his eventual discovery that
the construction firm had actually been transacting business with
Banco Filipino, all without his knowing it.
As a final stab, the disgruntled ex-director
expressed his intention to pursue an investigation into the alleged
anomalies, to the extent of alerting legal and regulatory
authorities.
Tip of the iceberg
Gomez’ accusations are serious enough.
But if similar accusations are leveled against a
business group that includes a large savings bank and two insurance
firms — institutions whose very existences depend on the
absolute trust of its clients — they tend to take on greater
weight.
Indeed, except for Sarino, all the addressees
are also on the board of directors of Banco Filipino Savings and
Mortgage Bank.
Unknown to the parties concerned at that time,
the BF Homes directors will be dragged into another problematic
situation involving the controversy-hungry bank a few years down the
road.
From all indications, Gomez’ discoveries
were only the tip of the controversy iceberg.
When he resigned in disgust from the real estate
firm almost five years ago, he had no way of knowing that the
questions about BF Homes’ activities would return to haunt the
group’s other firms as well.
The virulent dispute about the assets of the
late Don Tomas has been public knowledge for some time now.
The family patriarch died intestate, leaving his
children to squabble over the spoils.
The story of the BF group, specifically those
regarding Banco Filipino, is full of plots and sub-plots, depending
on which side of the family is telling the story.
So pending the resolution of a long-running
legal battle between siblings, the court appointed the younger
Aguirre as the executor of the estate. This, however, has not
prevented other members of the family from contesting his various
business decisions in his role as executor.
Recently, this dispute erupted into the open
once again when information was leaked to several media outfits
about several potentially illegal financial transactions at Banco
Filipino.
Banco Filipino rose from the ashes almost three
years ago after the Supreme Court ruled that the old Central Bank of
the Philippines acted with “grave abuse of discretion” in
ordering the bank closed in the mid-1980s after it suffered a
massive bank run.
Today, it is one of the country’s largest
savings banks, capitalized at P3.52 billion, and having some P11.63
billion in assets under management as of end-September 2002,
according to the database of the Bangko Sentral ng Pilipinas (BSP).
The transactions in question are loans between
the bank and other firms within the Aguirre group of companies.
The Times obtained documents that illustrated
how one particular loan was structured.
On Aug. 1, 2001, Banco Filipino extended a
P106-million loan to a firm named Filipino Vastland Co., Inc. headquartered
at 1015 Executive Center, Tropical Ave., Las Piñas City.
The bank granted another P5-million loan to the
company on Oct. 19, 2001, and yet another P37 million a few days
later on Oct. 30.
All told, Filipino Vastland now owed Banco
Filipino P148 million, due on Aug. 1 and Oct. 1, 2006.
In the three promissory notes obtained by The
Times, Filipino Vastland was represented by its President Maxy S.
Abad and treasurer Rosalina E. Tacolod.
As a general rule, bank regulators require all
large loans to be approved by a bank’s board of directors.
Is it just coincidence that Abad also sits on
the board of directors of Banco Filipino which approved the
loan?
Conflicting interpretations
Regulatory officials at the BSP have conflicting
interpretations about banking rules on related lending or loans to
so-called DOSRI (directors, officers, shareholders, and related
interests) accounts.
One ranking official said bank loans to firms
which share the same directors or officers with the lender should be
classified as DOSRI loans, and as such, should be subjected to
prudential limits.
He has good reason to be concerned about any
DOSRI violations. BSP has identified abuse of DOSRI loans as the
single biggest cause of local bank failures both before and after
the 1997 East Asian financial crisis.
Another BSP official said such loans might
escape the regulatory dragnet since the beneficiary of the loans is
a company were extended to a corporate borrower and not an
individual who is a director, owner, or shareholder.
That is, of course, unless Banco Filipino and
Filipino Vastland (which is headquartered in the same address as BF
Homes) share the same shareholders, which would make the real estate
firm a “related interest.”
The General Banking Law of 2000 gives the
central bank the power to tighten the definition of DOSRI loans in
the interest of protecting depositors’ funds from abusive bankers,
but regulators are still deliberating on several proposals given the
number of issues involved.
In any case, several bankers agreed that while
the transaction may fall on a gray area, they are bound to raise
eyebrows and merit a closer examination at the very least.
Bankers Association of the Philippines (BAP)
Executive Director Leonilo G. Coronel believes that a bank which
lends funds to another company owned or led by an insider is a
potential violator of corporate governance tenets.
“There could be an issue on corporate
governance that can be raised,” he said in an interview last week.
“It may be a DOSRI situation, but it is more a situation of
self-dealing.”
He stressed that banks couldn’t be too careful
about where to invest their funds, especially since these were
deposited by their clients with the bank-client fiduciary
relationship in mind.
“Not only do you lend to related companies,
you are also lending using depositors’ money which were entrusted
to you.”
As the documents showed later, not only was the
fiduciary relationship between Banco Filipino and its depositors put
to the test, but those of other financial institutions of the BF
group companies too.
Second Part
| Conclusion
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