FINANCIAL institutions, caught in malpractice, are prepared to pay substantial fines so long as the malpractice is not fully understood and, more importantly, does not have to be admitted.
The Bangko Sentral ng Pilipinas (BSP) last week announced that it had imposed a fine of P1 billion on Rizal Commercial Banking Corporation (RCBC) for the latter’s role in a substantial fraud in which Bangladesh Bank lost $81 million (almost P4 billion). In this context, P1 billion is a small fine. From what was reported a few months ago, RCBC believed that it would have to pay much more. It should do. Does this mean that as far as BSP is concerned, it is case closed?
I hope not.
There are still many stones unturned.
We need to know more about where all the funds went. An uncertain amount went to casinos. We believe that casinos have much information about what happened to the money that entered their domain. What about the money that did not go to casinos?
Bangladesh Ambassador to the Philippines John Gomes met President Rodrigo Duterte last week. Gomes reportedly said that Duterte promised that Bangladesh would receive all the money lost. I am sure that Duterte is sympathetic towards the Bangladesh case, but I am not sure that he would have made this promise.
Gomes also reportedly expressed the hope that the Senate Blue Ribbon committee would be reconvened. I can understand why. It was the Blue Ribbon Committee that made progress. In contrast, the government instrumentalities, namely BSP and the Anti-Money Laundering Council (AMLC) are inutile. It is disappointing that AMLC accepted, without serious question, RCBC’s version that all the responsibility for the fraud was that of its Jupiter Street branch manager, Maia Deguito.
Has AMLC made any progress since the Senate hearings? Is Deguito still the only one being charged?
I doubt whether Senate will hold more public hearings.
The return of approximately $15 million deposited by junket operator Kim Wong to Bangladesh will take a while. We have heard for several months that the money would be returned in “one to two months” but there are clearly problems. Ricardo J. Paras III, chief state counsel of the Department of Justice (DOJ), said it is important for Bangladesh to prove that it is its money.
There is another $2.7 million which is with Solaire Resort and Casino. According to the Philippine Amusement and Gaming Corporation (Pagcor), this money should soon be released to Bangladesh.
There is still much money that is unaccounted for. There is no evidence that this money went to the casinos.
Where did it go?
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There is talk that the bank secrecy law (RA 1405) should be relaxed. My experience is that the legal departments of financial institutions use the bank secrecy law to conceal malpractice. What we need is a more proactive and energetic BSP to pin down malpractice within the banks.
Shady financial institutions, both banks and insurance companies, are able to retain the initiative in dialogues with the BSP and the Insurance Commission.
The Constitution specifies that consumer protection is a government responsibility. Consumer protection, however, in the financial services sector is not effective. Changes need to be made.
I believe that the Department of Trade and Industry (DTI) should be empowered to handle all consumer complaints, including complaints in the financial sector. The links between the BSP and the Insurance Commission and the financial institutions are too strong so that wronged clients are not able to obtain the redress they seek.
DTI would create the level playing field that is needed when investigating consumer complaints.
President Duterte was elected partly on the basis that he would ensure that bad things would happen to bad people.
There are plenty of bad people in the financial services sector.
It is high time that bad things happen to these people.