State-run Philippine Deposit Insurance Corp. said Wednesday it filed before the Department of Justice Task Force on Financial Fraud a criminal case against the chairman/president and 15 former directors and officers of the closed Banco Filipino Savings and Mortgage Bank Inc.
PDIC said in a statement the complaint was filed against the Banco Filipino executives for conducting business in an “unsafe or unsound manner” in violation of Republic Act No. 3591, as amended, or the PDIC Charter. It said the criminal act caused losses to the bank amounting to P789.46 million.
Charged were the bank’s chairman and president, vice chairman, four directors, corporate secretary and executive vice president and other high ranking officers.
It said that more than P700 million in legal fees were paid to various legal firms without any contracts or supporting documents during the period Banco Filipino was in dire financial difficulty until it was eventually closed and placed under the PDIC receivership.
Banco Filipino, a 62-unit thrift bank, was ordered closed by the Monetary Board of the Bangko Sentral ng Pilipinas and placed under the PDIC receivership on March 17, 2011.
PDIC said that upon takeover of the bank’s assets, records and affairs, it discovered that payments to these legal firms were made without the required “pass upon” review of the then BSP comptroller.
Moreover, a partner of the law firm which was paid the amount of P225.87 million was a director of the bank.
It said the disbursements of legal fees without written contract and the BSP comptroller’s “pass upon” review were contrary to the duties and diligence required from them as directors and officers of a banking institution and constituted conducting business in an unsafe or unsound manner.
The PDIC Charter punishes the conduct of business in an unsafe or unsound manner with imprisonment from six years to 12 years, or a fine of not more than P10 million, or both, at the discretion of the court.
PDIC earlier filed three criminal complaints with the DOJ involving a total amount of P5.2 billion against the former directors, officers and employees of Banco Filipino over alleged irregularities and anomalies discovered by the PDIC as receiver of the closed bank.
“The filing of cases against erring bank officials is in support of PDIC’s efforts to bring to justice parties that engage in fraudulent, irregular and anomalous acts that pose risk to depositors and the Deposit Insurance Fund, PDIC’s main fund source for payout of deposit insurance claims,” it said.
“PDIC continues to pursue legal actions against bank officials and personnel who engage in unsafe or unsound banking practices that threaten the stability of the country’s banking system,” it said.
PDIC said it is mandated by its charter to generate, preserve, maintain faith and confidence in the country’s banking system, and protect it from illegal schemes and machinations.