Ombudsman Conchita Carpio Morales has ordered the filing of graft and malversation charges against senator-elect Sherwin “Win” Gatchalian and members of his family in connection with the irregular acquisition of an insolvent bank acquired by the Local Water Utilities Administration (LWUA) in 2009.

The criminal charges stemmed from the acquisition by the LWUA of the Express Savings Bank Inc., a local thrift bank based in Laguna owned by the Gatchalians of the WELLEX Group Inc. (WGI) and Forum Pacific Inc. (FPI).

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Gatchalian, who won in the recent May 9 elections under the senatorial banner of Grace Poe, was indicted as a former corporate executive of the Wellex Group Inc. (WGI) which co-owned the bank acquired by LWUA.

In a statement, Gatchalian said he is confident the case would be dismissed, noting that in his 15 years in public service he had never been charged for corruption.

“We will face this baseless case head-on because we have nothing to hide. I have never been charged for graft and corruption as proven by my almost 15 years of public service, marked by transparency and good governance. My name and reputation have never been tarnished by any acts of graft and corruption. The truth will eventually come out and redeem my good name,” Gatchalian said.

Besides Gatchalian, facing indictment are former LWUA officials Prospero Pichay Jr., Eduardo Bangayan, Aurelio Puentevella, Enrique Senen Montilla III, Wilfredo Feleo, Daniel Landingin, Arnaldo Espinas; Wellex Group Inc. executives led by its owner, so-called “Plastic King,” William T. Gatchalian, his wife Dee Hua Gatchalian, and his sons senator-elect Gatchalian, Alay Buhay Representative Weslie T. Gatchalian and Kenneth Gatchalian, Elvira A. Ting, and Yolanda de la Cruz; FPI executives Weslie Gatchalian, Arthur R. Ponsaran, Geronimo Velasco Jr., Peter Salud, Rogelio D. Garcia, Lamberto Mercado Jr., Joaquin Obieta and Evelyn de la Rosa; and ESBI executives George Chua, Gregorio Ipong, Generoso Tulagan, Wilfred Billena, and Edita Bueno.

READ: Pichay, 5 Gatchalians sued

They stand accused of committing three counts of violation of Section 3(e) of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act), three counts of Malversation, and violation of Republic Act No. 8791 (General Banking Law of 2000) and the Manual of Regulation for Banks.

According to the Ombudsman, Pichay and other LWUA officials approved the acquisition of the insolvent bank in 2009 despite audit findings that show that the bank suffered net losses and capital deficits for five straight years from 2005 to 2009.

The acquisition took the effect of a financial rescue, as the LWUA officials bought 445,377 ESBI shares worth P101.363 million from the Gatchalian group that gave the agency 60-percent equity in the bankrupt bank.

Pichay and the other officials later injected P780 million LWUA funds to the bank to increase its authorized capital stock.

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The Gatchalians of Wellex and other owners of the bank were also paid P80 million in the acquisition.

READ: Gatchalians say raps a political vendetta

The LWUA made the acquisition and transactions despite warnings by the Bangko Sentral ng Pilipinas (BSP), the Monetary Board of the BSP, and the Department of Finance (DOF) about the ESBI’s fragile financial condition following a due diligence review that showed high liquidity and credit risks.

The acquisition was also made without the requisite regulatory approvals from the BSP, its Monetary Board, the DOF and the Office of the President.

In ordering the filing of charges to the Sandiganbayan, Ombudsman Morales said “in view of the bank’s precarious financial standing at the time of the sale, the windfall received by herein private respondents must be deemed unwarranted benefit, advantage or preference.”

She added that “respondents defied banking laws and regulations in purchasing ESBI shares.”

Morales noted that “the injury suffered by the government due to the respondents’ actions is undeniable, as it deprived the government of the opportunity to use the illegally expended funds to instead fund the agency’s lawful projects, not to mention the shares purchased by LWUA from FPI and WGI are now worthless, ESBI having been shuttered due to severe financial distress.”

“The government effectively lost at least P80,003,070.51 in this questionable acquisition alone,” Morales added.

According to Gatchalian, he as a three-termer Valenzuela mayor only had 14 shares worth P2,500 or P178.57 per share in the insolvent bank.

Gatchalian said he did not take part in the management and daily operations of the insolvent bank, and was not privy to the talks for its sale to LWUA.

“These 14 shares, which is equivalent to 0.00001886042 percent of the total shareholdings sold, are mere qualifying shares in the bank. Yet, I am being charged for receiving an unwarranted benefit of P2,500,” said Gatchalian.

“And for the amount of P2,500, the Ombudsman is trying to portray me as a crook and part of the conspiracy to defraud the government from the sale of ESBI,” he added. IDL

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