Second of three parts
THE charges that resulted in the arrest of one-time Banco Filipino (BF) director and former Foreign Affairs secretary Perfecto Yasay last week were originally filed in April 2011, based on alleged violations of the New Central Bank Act dating back to as early as 2003. The warrant for Yasay’s arrest was issued on March 8 of this year, meaning it took the authorities more than five months to finally execute it, against someone who should not be particularly hard to find.
All of that of course simply encourages suspicions that sorting out the BF mess and applying the remedies prescribed by law is not really the point. BF depositors who never recovered all of their deposits certainly feel that way, and so to do BF’s former employees, many of them lost their life savings as well as their jobs when the bank was ordered closed in March 2011.
The following article, originally titled, “MBC ‘Outraged’ at Court of Appeals for Doing Its Job,” was the second I wrote for my blog shortly after BF’s closure more than eight years ago. In the interest of saving space it has been shortened a bit here, but still illustrates the maddening ethical flexibility applied to the troubled bank’s case:
“The Makati Business Club issued a statement on Wednesday expressing their ‘outrage’ over the recent decision of the Court of Appeals overruling the BSP’s closure of Banco Filipino. And why is the MBC outraged?
“‘The decision appears to reward defiance of the Bangko Sentral ng Pilipinas, encourage undisciplined business practice, and, worst, permit abuse of depositors’ trust and misuse of the people’s money,’ the MBC said.
“And of course, since we all know the MBC is the go-to source for lessons in Constitutional law, they helpfully added, “‘…the Bangko Sentral ng Pilipinas was meant by the Constitution to be independent and the sole authority in such matters, free from court interference, except only in the case of grave abuse of discretion amounting to lack or excess of jurisdiction.’
“There are two parts to this story. One part is relevant, and one is not. The first is the legal case pitting BF against the BSP, in which the Court of Appeals found that the BSP did not accord the bank due process in ordering its closure — in other words, did not follow its own rules — and that BF was not in fact insolvent as the BSP had claimed. In its 50-page decision, the CA specifically said that the BSP had committed a grave abuse of discretion, and therefore it was the responsibility of the court to check the central bank’s action in this particular case. In effect, the MBC is bitching about the Court of Appeals doing exactly what the MBC understands the court is supposed to do.
“That’s the relevant part of the story. The BSP, of course, will appeal the ruling and it will be up to the Supreme Court to review and decide whether or not the Court of Appeals ruled properly or overstepped its Constitutional bounds. The second, irrelevant part of the story is the allegations and innuendo surrounding the bank and the Aguirre clan who controls it. The main argument made by the MBC echoes that aired by the [Aquino administration] last week: BF was engaged in dodgy business practices and was as a result a financially-unhealthy bank; therefore, even if it means flouting the rules to do it, shutting the bank down is ultimately a public service.
“That assertion might hold some water if, in the 16 years since BF was reopened after its first closure in the mid-80’s, a significant portion of which time the bank was operating under ‘enhanced supervision’ of the BSP, the BSP had ever cited the bank, its managers, or its owners for improper business practices, but that never happened. That oversight was something else noted in the CA’s decision, the implication being that, if action on the BSP’s part any time before the closure really had been required, the BSP’s failing to do its job also amounts to a grave abuse of discretion.
“What is unspoken in the claims that ‘BF was engaged in bad business practices’ is the grudge most of the local political and business community seems to hold against the Aguirres. Whether they deserve their reputation for being ethically-challenged or not is hard to determine, because there is a distinct aspect of covetousness in the criticism leveled at them: BF’s main business is not banking, but real estate, and their vast residential complexes around Metro Manila are an irresistible temptation — particularly to a rent-seeking business class that has no imagination, nor any real need to have one, for any investment other than tract-housing real estate development.
“None of that should matter, because this country has a framework of laws and regulations that, on paper at least, ensure that banks are managed safely and fairly, that legal disputes are subjected to a process designed to produce a just outcome, and that government departments do not overstep the bounds of their authority. Rules and procedures, however, have fallen out of favor in the BS Aquino era. For whatever reason — we can only speculate on the connections to the Inner Party of those who must have a stake in BF’s being liquidated — the ruling of the CA and the possibility that BF may be reopened is highly undesirable, and so the bank and the court alike are subjected to what has long since become a tiresome pattern of demonization by the Administration. The idea is not so much to discredit BF in the public’s perception, but the court system, the only impediment to the ruling cabal’s doing what they please.
“It’s discouraging that the MBC would add their voices to the clamor — discouraging, because they should know better than to espouse a position that a system driven by unfounded allegations and half-bright opinions is preferable to one driven by a clear and consistent set of rules that apply to everyone. Showing that the President and his spokespeople have nothing on them in the talent for making dumb assertions, the MBC warned that ‘This order goes against the tide of our improving global competitiveness rankings,’ as if universal recognition of the infallibility of the Aquino government was actually a thing. What goes against the tide of ‘improving rankings’ is inconsistency and uncertainty; almost every external assessment of the country’s business environment cites ‘policy uncertainty’ and ‘weak rule of law’ as significant obstacles to investment and development. By endorsing disregard for the law and established procedures, all the MBC — and the not-inconsiderable amount of the Philippine economy it represents — has done is thrown away its own protection.”
To be concluded on Thursday