Pichay asks appellate court to stop suspension

A HIGH-RANKING local water official has asked the Court of Appeals (CA) to stop the Office of the Ombudsman from suspending him over a graft charge for acquiring a bank.

Local Water Utilities Administration (LWUA) chair Prospero Pichay has filed a petition for certiorari, seeking the issuance of a temporary restraining order against the order of acting Ombudsman Orlando Casimiro in enforcing his suspension.

Pichay was ordered suspended after his agency acquired a Laguna-based thrift bank, Express Savings Bank Inc., an allegedly anomalous transaction.

Casimiro's predecessor, resigned Ombudsman Merceditas Gutierrez had twice denied the government's motion to suspend him pending investigation of the graft case.

Pichay's suit was raffled to Associate Justice Estela Perlas-Bernabe of the CA's Third Division, which is chaired by Associate Justice Bienvenido Reyes and Justice Elihu Ybanez as junior member.

Casimiro, in his May 20 order, placed Pichay under a six-month preventive suspension without pay for the alleged unlawful investment of LWUA funds in the total amount of P780 million in ESBI, which spelled losses to the government.

The Ombudsman, however, denied the suspension of Pichay's co-respondents, LWU Administrator Daniel Landingin, Acting Deputy Administrator for Investment and Financial Services Wilfredo Feleo, and LWUA Corporate Legal Counsel Arnaldo Espinas, due to lack of proof of their participation in the disputed LWUA Board Resolutions that authorized the fund release for the bank's acquisition.

The case against Pichay was filed after the newly-created investigative and adjudicatory board of the Office of the Deputy Executive Secretary on Legal Affairs (IAD-Odesla) found Pichay liable in a separate complaint instituted by the Department of Finance led by Secretary Cesar Purisima.

In its complaint filed at the Department of Justice, the DOF said Pichay, including other respondents, violated the Manual of Regulations for Banks, in relation to Section 36 of the New Central Bank Act; Sections 3(e) and (g) of the anti-graft law; and malversation under Article 217 of the Revised Penal Code, for acquiring EXSBI with an authorized capital stock of P100-million divided into one million common shares.

"These offenses have arisen from the direct and willful participation in facilitating the highly irregular and anomalous takeover and acquisition of the shares of stock of EXSBI, a financially troubled bank undergoing rehabilitation, in wanton violation of pertinent banking laws and rules and at a gross disadvantage to LWUA and the national government, resulting in the dissipation and misappropriation of public funds in the amount of at least P480-million," the 35-page complaint stated.

LWUA is a government-owned and -controlled corporation as a specialized lending institution for the promotion, development and financing of local water utilities, and as depository of the reserves for capital improvement of local water utilities.

Without obtaining the requisite approvals from the DOF, Office of the President, and the Monetary Board, LWUA pushed through with the acquisition of the 485,337 shares of stock constituting approximately 60 percent of the outstanding capital stock of the bank worth P80-million, the complainant said.

LWUA likewise made additional capital infusion to the lender worth P400-million in the form of cash for future subscription on August 25, 2009, intended to increase the authorized capital stock of the thrift bank and to address its capital deficiency.

LWUA's acquisition of a majority stake -- and infusion of additional capital -- in the bank caused undue injury and is disadvantageous to LWUA and the national government in patent violation of the anti-graft and corrupt practices act. (ECV/Sunnex)