The Philippine Deposit Insurance Corp. (PDIC) on Friday announced that it has filed with the Department of Justice a criminal complaint against a former bank president for conducting business in an unsafe and unsound manner.
The regulator in a statement said that the complaint was against Hans Paulo Bulos, former president of the closed First Country Rural Bank Inc., for alleged violation of the PDIC Charter.
The PDIC’s complaint alleged that Bulos, on various dates from December 2009 to May 2010, caused the creation of unrecorded back-to-back loans aggregating P10 million with third-party banks to help boost the bank’s capital level, and settled these loans by withdrawing from the deposit accounts of various depositors without their consent.
According to the complaint, a back-to-back loan transaction required the deposit of First Country Bank with a third-party bank to be used as security for the loan it transacted with the latter.
“The proceeds of the back-to-back loan were then used as additional capital in the name of an individual or entity of First Country Bank’s choice. However, since the funds inflow was treated as capital infusion, the back-to-back loan was not recorded as a loan obligation in the books of First Country Bank,” PDIC said.
First Country Bank settled and pre-terminated the back-to-back loans by withdrawing from the long-term deposits of its clients without their consent, the complaint added.
Furthermore, PDIC noted that investigation showed that respondent Bulos and his father, Honorio Bulos Jr., directed the former officers of First Country Bank to obtain back-to-back loans from third-party banks to address the bank’s capitalization problem.
“Honorio, who died on February 22, 2011, was de facto owner of First Country Bank.
Investigation further showed that Hans Paulo Bulos likewise instructed the nonrecording of said transactions in the books of First Country Bank,” it mentioned.
The Monetary Board ordered the closure of First Country Bank on December 9, 2010, and placed it under PDIC receivership pursuant to Monetary Board Resolution 1744.A. As of March 31, 2013, the PDIC had paid P582.3 million in deposit insurance claims for 3,335 accounts of depositors of First Country Bank.
Mayvelin U. Caraballo