Speaker Pantaleon Alvarez of Davao del Norte has questioned the Development Bank of the Philippines’ (DBP) decision to grant at least P5.6 billion worth of loans to supposedly favored companies.
Alvarez raised the issue on Tuesday during a briefing by the DBP and by the Philippine Deposit Insurance Corporation on the Asian Infrastructure Investment Bank conducted by the House Committee on Banks and Financial Intermediaries headed by Rep. Ben Evardone of Eastern Samar.
Alvarez cited 2015 Commission of Audit (COA) report findings showing that the DBP granted P5.6 billion worth of loans to three borrowers despite more than 10 exceptions to and deviations from existing credit policies “which could result in a higher DBP credit risk and possible loss of government funds.”
The same COA report said review of various loan documents revealed that special transactions, particularly exceptions to and deviations from credit policies, were made by the three borrowers.
COA did not name the three borrowers but only identified them in general terms. Of the P5.6 billion loaned, P2.1 billion was granted by the DBP to an energy company in September 2015 to partially finance up to 50 megawatts Solar Power Project in Northern Luzon. This borrower was given a Borrower Risk Rating of six with 16 exceptions to and deviations from the bank’s credit policies.
Another P2 billion was lent by the DBP to a power company, with the loan proceeds used to redeem the power company’s outstanding preferred shares and fund its other general corporate purposes. Also, this power company’s credit application reflected 12 exceptions to and deviations from existing credit policies.
These energy and power businesses belong to the same group of companies.
The DBP also purchased P1.5 billion of P9 billion fixed-rate bonds of the holding company for the refinancing of existing debt obligations of the borrower and its subsidiaries and convert short-term debt to long-term liabilities to match the borrowers long-term contract-to-sell receivables from its customers.
Without specifying the amount, COA reported that the DBP also approved the loan of a holding company—the largest mass housing developer in the country in terms of units from years 2011 to 2013 based on the Housing and Land Use Regulatory Board—with 11 exceptions to and deviations from credit policies.
“We need to know who are these borrowers because it appears that they are so privileged. The bank even had to bend their policies multiple times just to accommodate their loans,” Alvarez told reporters.
“Of course, the DBP’s capital is limited. If DBP grants loans of such huge amounts to privileged borrowers, we have to know if these borrowers are paying their dues. The COA report is alarming. We have to ensure that the government is not losing money,” he said.
One of the most prominent cases of DBP granting a controversial loan involved former Trade Secretary Roberto Ongpin whose company Deltaventures Resources Inc. received a P600-million DBP loan even if DVRI lacked collateral and capital.
Ongpin was charged with graft before the Sandiganbayan but he was acquitted of the charges with finality in March 2015.