Pichay may face criminal raps for buying bank using state funds

PROSPERO Pichay, a former chairman of the Local Water Utilities Administration (LWUA), may face criminal charges after he and other officials allegedly "facilitated" the "irregular" acquisition of a bank using state funds.

Pichay is accused with the unlawful use of P480 million from the LWUA to acquire Laguna-based Express Savings Bank Inc. in 2009, the Department of Justice said Wednesday.

Aside from Pichay, the three-woman panel also found probable cause to indict acting LWUA administrator Daniel Landingin for graft, malversation, and violation of the New Central Bank Act.

"Based from the circumstances obtaining in this case, respondents Pichay and Landingin directly participated in facilitating the irregular acquisition of shares of stocks of ESBI, which is a financially troubled bank, without obtaining the requisite approvals from the Department of Finance, the Office of the President, and the Monetary Board," the 20-page resolution stated.

Exempted from the charges, meanwhile, are Renato Velasco, Susano Dumlao-Vargas, and Bonifacio Mario Pena since they were not members of the LWUA Board of Trustees at the time the allegedly anomalous transactions were entered into.

The recommendations will be forwarded to the Office of the Ombudsman, the country’s graft prosecutor tasked to file the cases before the Sandiganbayan.

The resolution stemmed from a complaint filed by Finance Secretary Cesar Purisima last year but he has yet to comment on the DOJ’s action as of this posting Wednesday.

As early as October 2008, the state prosecutors noted that the Finance department informed Pichay that it is still evaluating LWUA’s subject proposal to acquire a subsidiary corporation.

This information, however, was apparently unheeded after the board 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 in May 26, 2009.

Moreover, the LWUA took out funds worth P400-million in the form of cash last August 25, 2009 intended to increase the authorized capital stock of ESBI and to address its capital deficiency, again without securing approval from proper authorities.

The bank has allegedly been suffering losses since 2005 that by end of 2009, it has posted a capital deficiency of more than P51 million. Reports said the bank is controlled by the family of Valenzuela City Mayor Sherwin Gatchalian.

“Consequently, the manner by which respondents Pichay and Landingin had acquired or purchased the shares of stocks of ESBI and the subsequent additional capital infusion in it which is very much disadvantageous and had caused undue injury to LWUA’s public funds and to its deserving clientele constitute unlawful acts and corrupt practices in violation of the anti-graft laws,” the panel composed of Senior Assistant State Prosecutors Rosalina Aquino, Aileen Marie Gutierrez, and Edna Valenzuela said.

Pichay, an ally of former President Gloria Macapagal-Arroyo, was relieved by Malacañang in July last year after the Court of Appeals denied his appeal to stop the Office of the Ombudsman from suspending him for the alleged fund misuse.

He was replaced in the board by Rene Villa, Arroyo’s agrarian reform secretary who later joined nine other Cabinet members in 2005 calling for her resignation over the supposed rigging of the 2004 presidential elections.

LWUA is a government-owned and controlled corporation (GOCC) with a specialized lending function mandated by law to promote and oversee the development of water supply systems in cities and municipalities outside Metro Manila. (Virgil Lopez/Sunnex)