Saturday, December 13, 2008

What’s happening at the Bangko Sentral?

First, a report came in about a Bicol “development” bank which turned belly-up, leaving thousands of small depositors gypped of their precious savings. The only thing that created a stir in the region was word that a big politician lost a hundred million of his publicly-purloined wealth (where else would he have gotten such a hoard, but from the abuse of his “profession”?) in the bank. Modus operandi of this small bank is simple---offer high interest rates that people would never get from the commercial banks, nor from the rural banks that are “straight”. It’s again a pyramid scheme, but people never learn, their “greed” always gets the better of them.

That was about six months ago. The character behind the bank was a certain Celso de los Angeles, who at one time (2004-2005) was even conscripted into the government service by no less than the Vice-President of the Republic, who brought his “genius” into the public housing sector. Looking back, that stint in government probably gave him the cachet to enter the banking industry, who knows, perhaps even impress the Bangko Sentral ng Pilipinas.

Apparently though, the Bicol caper was not his last. In November, three so-called rural banks in Cebu also declared a bank holiday. Two of them are reportedly part of the guy’s financial casbah. Then this week, the Rural Bank of Paranaque followed. Again part of the De los Angeles “Legacy” empire. (His flagship enterprise is called Legacy, which used to be in another racket---the pre-need plan, where giants like CAP and Yuchengco’s Pacific Plans likewise got hundreds of thousands of educational futures stranded.)

And almost simultaneously, a rural bank in Bais, Negros Oriental, another in Bacolod City, capital of Negros Occidental. And another in San Jose, Batangas, also in Calatagan. And another in San Pablo City.

How many hundreds of millions, if not billions in small depositors’ money had been lost in these banks? We will not know until the Bangko Sentral ng Pilipinas, which is tasked to supervise all banks in the benighted land, tells us, if they ever will.

It seems such a mystery that the bank which comes ever so quickly to the succor of the Philippine peso to keep it within “manageable float” in the foreign exchange market, and has been assiduously doing this every single banking day, has been hoodwinked by one smart operator who has become very big by putting up, or buying into, a string of “small” rural banks.

The Bangko Sentral ng Pilipinas was legislated into existence in the nineties after its predecessor, the Central Bank of the Philippines, had racked up so much liabilities that its existence had become “in extremis”. Those liabilities were sucked up by the Filipino taxpayer so that their government could pronounce the new entity, the Bangko Sentral, the new fiduciary trust of 90 million unfortunate souls, “clean” and well, trustworthy.

The Bangko Sentral, through the Monetary Board, also manages the state of the Philippine peso, using monetary tools, such as interest rate fixing and bank reserve requirements, in order to “stabilize” the currency as well as inflation. It seems to be doing that pretty well.

But if the string of failures exemplified by the recent bank holidays of these “small banks” is any indication, the Bangko Sentral has apparently been quite lax in the supervision of the banking industry, at the very least, in its protection of small depositors in “small” banks. How in the first place, has the Bank been unable to detect the interlocking interests of one character in a string of “development” and rural banks with such strombotic names as “Dynamic Bank”?

Sure a hundred thousand is insured with the Philippine Deposit Insurance Corporation, another taxpayer-owned facility that absorbs banking losses like a sponge, provided it soaks up no more than the limit provided by law for every single depositor. But what’s a hundred thousand these days? The equivalent of a thousand pesos in the good old days, that’s what. (In the days of Diosdado Macapagal, the minimum wage was a hundred twenty pesos a month. It is now ten thousand pesos a month, even more in the NCR, in the reign of his daughter Gloria).

Which brings me to another question---how much of the Bangko Sentral’s financial base has been eaten up by its own bad loans, financial accommodations it extends to ailing banks, big or small, which have not been paid to date, or for which the BSP has been given collaterals too over-stated for the face value of their assistance?

Take one instance---the Capitol Development Bank, which has also gone under, a “victim” of the Asian recession of 1997, or so they say. The Bangko Sentral loaned out 1.5 billion pesos in an effort to “save” the said Capitol Bank in two successive tranches---1.17 billion on 22 April 1998, and two days after, another 332 million pesos. The president of the bank, a Mrs. Cynthia Villar, signed promissory notes good for six months or 180 days, at an interest rate of 14.957% per annum. The managing director in charge of the Department of Loans and Credit as well as the Asset Management Department, a certain Andres Rustia, signed for the Bangko Sentral. Upon its maturity, Capitol Development failed to pay Bangko Sentral.

Instead, they settled the loan through a dacion en pago (payment by surrender of property) of 483.97 hectares in Norzagaray, Bulacan. At the time of the dacion, the zonal value assigned by the Bureau of Internal Revenue, which is supposed to approximate actual market value, was 60 pesos per square meter or 600,000 pesos per hectare. That 484 hectares should therefore be worth 290 million pesos, but it was used to settle an account from the Bangko Sentral of 1.5 billion pesos! Can you beat that?

In fine, the fiduciary trustee of the people of the Republic of the Philippines, issuer of legal tender used by its benighted residents within the metes and bounds of the same Republic, now holds assets valued at 290 million, which”erased” liability of Capitol Development Bank worth one and a half billion, plus close to another hundred million in interest, or more than five times the value of the property now in its possession. In effect, the Bangko Sentral lost the people’s money to some very, very wise guys, for and in behalf of a hopelessly bankrupt medium-sized, family-owned bank.

The deed of real estate mortgage was dated June 29, 2001 for the 483.973 hectares (484 has.) of agricultural land in Norzagaray, Bulacan which was used as payment for the P1.5 billion loan of CDB in April 1998. Funny coincidence this, but from the time the promissory notes became due and payable, Rep. Manuel B. Villar had become Speaker of the House of Representatives, by grace of newly-elected President Joseph Estrada, and then again, senator of the realm. And the main signatory for Capitol Bank, Mrs. Cynthia Aguilar Villar, had become the representative of the lone district of Las Pinas, an herencia from her husband the Speaker turned senator.

But wait, apparently, that’s not the end of the story though, for the Bangko Sentral ng Pilipinas.

The land paid to the Bangko Sentral was occupied by farmers whose forebears had been continuously cultivating that huge patch of dirt, and who were granted titles to the same in 1960, after proving continuous occupation of what was then deemed public land. Now, when the BSP went to the register of lands in Malolos to transfer their newly acquired Norzagaray holdings, they presented the titles surrendered to them by Capitol Bank.

Lo and behold! The original certificate of title was issued on July 25, 1944, during the Japanese occupation, when there was no civil government in the Philippines. In fact, Commonwealth Act 141, as amended, maintained that “authorizing the issuance of sales patent was illegal and inoperative during the Japanese occupation.”

Sa madaling salita, “mickey mouse” pala ang mga titulo ng lupa na ibinayad sa Bangko Sentral! Will wonders never cease? Breathtaking!

Pray ask---if the Bangko Sentral ng Pilipinas had accepted as collateral for 1.5 billion in loans something that had a zonal valuation of less than 300 million pesos, why should it bother to exercise any due diligence in checking the bona-fides of the titles paid to it? Tutal, pera lang naman ng bayan iyan. Happy naman si Speaker, later Senate President, at si congresswoman, hindi ba?

So what will the Bangko Sentral ng Pilipinas do to that smaller “fat cat”, a certain Celso de los Angeles, owner of this string of failed rural banks? E, di wala.

Some are smarter than others, truly. The story of our lives in the benighted land.

In the “bad old days” of Marcos, there were behest loans left and right, to those cronies described as “smarter than others” by this Manapat researcher whom Gloria made head of the National Archives. The taxpayers ended up paying more taxes to soak up these unpaid liabilities. Charge mo sa “bayan”.

We thought that throwing the dictatorship was also the end of this criminal practice of using other people’s money, this “charge mo sa bayan” syndrome.

But now we know that congressmen charge to the “bayan” the egregious tongpats they squeeze from contractors for their pork barrel. And local officials also charge the “bayan” their tongpats from garbage collection contracts, as well as “mababaw na kaligayahan” projects such as giant Christmas trees and street lamps galore, along with fireworks displays---all horrendously overpriced.

We know that the “bayan” always gets royally screwed in government projects and contracts, even those funded by overseas assistance, bilateral or multilateral, in this kleptocratic reign as in others before it.

Well folks, this is the system we survive in. We always end up footing the bill, for nothing. We’d like to f—k the system, if only we could, but those who are “smarter than others” want to perpetuate it. Ha…llelujah! Hallelujah…Hallelujah! Halle…lu…jaaaah!


Anonymous said...

Sir for your info, PDIC's maximum deposit insurance coverage is P250,000.

- Rommel of PDIC