Cebu
City (12 March) -- A white sand
island with tree-fringed shore of waving
palms and lush beach foliage in Leyte
helped the 
Philippine
Deposit Insurance Corporation (PDIC) nail
Legacy Group owner Celso de los Angeles
in their syndicated estafa case filed
at the justice department and perjury
case at the Ombudsman's office.
On
March 11, PDIC, the receiver of the 12
closed rural banks linked to the Legacy
Group, filed the cases anchored on transactions
of Danao-based Rural Bank of Carmen.
PDIC
president Jose Nograles said in a press
conference Thursday that these cases are
the first in the series they will file
against the now collapsed Legacy Group
of financial services firms.
Taxpayers,
through state-funded PDIC, will be shouldering
P14 billion in insured deposit accounts
below P250,000 in the 12 Legacy-related
rural banks.
PDIC
developed the estafa and perjury cases
from transactions coursed through Rural
Bank of Carmen. It took PDIC's investigating
team 2 months to complete. The investigation
involved transactions and properties in
Leyte and Cebu in the Visayas region,
and Batangas in Luzon.
De
los Angeles's private island in Leyte,
called Calanggaman, was one of their first
leads.
P16-M
to P32-M loans
PDIC's
investigators traced P16.85 million loans
in the Rural Bank of Carmen made by 39
fictitious account holders.
The
loan proceeds were made to appear that
the alleged borrowers received the amount,
but these were in fact diverted to Angeles
son, Martin Nicolo. The balance were traced
to Pilipino Rural Bank of the Legacy group,
and other Legacy-related corporations.
In
2006, Celso de los Angeles paid the P16.85
million loan in behalf of the borrowers
by turning over to Rural Bank of Carmen
his ownership of Calanggaman island in
Leyte province.
Calanggaman
island, a 9.82 hectare island in Tinabilan
village in Palompon town of Leyte, appeared
in the list of de los Angeles' P355.8
million total assets in his Statement
of Assets and Liabilities (SAL) submitted
in April 2008. De los Angeles, then a
mayor of a town in Albay province, was
required to submit his SAL every year.
One
month after Bank of Carmen accepted Calanggaman
island as payment for the P16.8 million
loan, it entered into transactions that
involved companies that de los Angeles
had a stake in.
On
September 29, 2006, Calanggaman Island
was supposedly bought by Edifice Realty
Development Corp.. The Rural Bank of Carmen
allowed Edifice Realty to take over the
P16.8 million loan based on a Contract
To Sell (the Calanggaman island) between
de los Angeles and Edifice.
The
Contract to Sell was valued at P32 million,
effectively increasing the exposure of
Bank of Carmen from the original P16.8
million. In other words, the Legacy Group
was able to double the funds taken from
the depositors of Rural Bank of Carmen.
The
aggregate new and old loan, now amounting
to P32 million, was re-packaged as a 15-year
loan of Edifice Realty to the Rural Bank
of Carmen. Effectively, the rural bank
exchanged a real estate property (the
Calanggaman island), which was already
in their hands to settle an unpaid loan,
with an extended repayment package.
Edifice
Realty was to pay Rural Bank with P385,000
every month for the 15-year loan.
Prudent
bankers interviewed by abs-cbnnews.com/Newsbreak
considered the new package riskier since
the rural bank essentially swapped a lower-risk
asset (the island) with a higher risk
one (higher loan exposure to Edifice Realty
and a long-term repayment scheme).
The
PDIC also noted that Rural Bank of Carmen
allowed the swap based on a mere Contract
to Sell (COS) between de los Angeles and
Edifice Realty. The COS is a conditional
agreement between two parties that is
finalized through a Deed of Absolute Sale.
While
the repackaged loan of Edifice Realty
was worth P32 million in the COS, PIDC's
investigating team learned that, based
on the Deed of Absolute Sale, Edifice
only actually `paid' P1 million for the
Calanggaman island, PDIC's Ma. Antonette
Brillantes-Bolivar told abs-cbnnews.com/Newsbrea.
Bolivar headed the investigation and litigation
team in the deposit insurer.
In
other words, not only did Rural Bank of
Carmen allow a riskier repackaged P32
million loan, the entire loan was based
on a rigged valuation of the Calanggaman
island.
All
in the Legacy
The
scheme was perpetuated since de los Angeles
was behind Edifice Reality himself.
Edifice
Realty is 95 percent owned by Manpower
Resources, which in turn is 99 percent
owned by Celso de los Angeles.
Edifice,
being part of de los Angeles' Legacy Group,
was also sourcing the monthly amortization
payments—at least on paper—from
the other companies within the group.
The
P385,000 monthly amortization payment
of Edifice to Rural Bank of Carmen was
coming from Legacy Motors, Inc. and Fushion
Capital Corp, both part of the Legacy
family.
Legacy
Motors and Fushion were the group's corporate
vehicles that provided motorcycle loans
and investment products at extremely high
interest rates, which, according to de
los Angeles in his previous interviews,
made it possible for the group to make
good their double-your-money promises
to their rural bank depositors all over
the country.
In
previous Senate hearings, Legacy and Fushion
were reportedly also made up of simulated
and fictitious loans.
The
story, however, doesn't end there.
From
Batangas to Cebu
Bolivar
said they also found that P23 million,
the balance of Edifice Realty's P32 million
loan from Bank of Carmen in 2008, was
fully paid by a succeeding transaction,
also involving other entities under the
Legacy group.
The
PDIC found that Edifice later exchanged
the P23 million loan balance with five
properties in Batangas.
These
Batangas properties were previously mortgaged
to Dynamic Bank, another Legacy-related
rural bank.
Apparently,
the individual owners of the Batangas
properties had no idea that their properties
had made its way to Edifice Realty's assets.
Bolivar
said the Batangas property owners borrowed
from Dynamic Bank, which then mortgaged
their assets as collateral for the loans.
The borrowers were not able to pay up,
so Dynamic Bank took over their properties.
Dynamic
Bank apparently turned around and sold
the Batangas properties to five different
individuals who are based in Cebu. These
Cebu-based individuals then turned over
the properties to Edifice Realty.
The
Batangas-based clients of Dynamic Bank,
in their affidavits submitted to PDIC,
denied that they even know who the Cebu-based
individuals are, and claimed that their
signatures in the sale documents to the
Cebu-based ones were forged.
Unattached
PDIC's
Mendoza told reporters that these evidences
have been turned over to the relevant
government agencies. PDIC has filed syndicated
estafa, a non-bailable offense, at the
justice department, and perjury at the
Office of the Ombudsman.
PDIC
added the perjury case since de los Angeles
reflected the Calanggaman island in his
statement of assets.
Nograles
said pursuing the cases against entities
and individuals that took part in the
multibillion peso scheme is part of their
mandate, in addition to paying off the
insured portion of validated deposits.
However,
until the Department of Justice completes
its preliminary investigations and files
these cases in court, the assets of de
los Angeles found during the course of
PDIC's investigation remain unattached.
This
means that the public assertions of politicians
that de los Angeles' properties be confiscated
so these could be used to pay the depositors
and investors are easier said than done.
Without a case actually filed in court—either
by the justice department or individual
creditors or depositors—de los Angeles'
properties flashed in the media remain
scot-free.
The
cases filed by PDIC are part of the series
filed against Legacy and de los Angeles
by other regulators, such as the Bangko
Sentral ng Pilipinas, which oversees the
rural banks, and the Securities and Exchange
Commission, which oversees the pre-need
businesses, including those from the Legacy
Group.
