In a 22-page resolution issued last July 3 – but which was only received by the SEC on July 31 – the three-man DOJ investigating panel junked the SEC’s motion to charge Wincorp officials with criminal and civil liabilities for allegedly violating certain provisions of the Securities Regulation Code.
The case of Wincorp, an investment house headed by John Anthony Espiritu (son of former Finance Secretary Edgardo Espiritu), stemmed from complaints by its clients following the pre-termination of their placements, which the company failed to cover in early 2000.
Wincorp reportedly owes its clients about P7 billion in pre-terminated commercial papers. The company is a local affiliate of Malaysia’s Westmont group, whose other interests include banking and securities brokerage.
Just last week, an organized group of Wincorp clients, the 333 Investors Group Association Inc., came out with an open letter to President Arroyo expressing concern that the DOJ investigation will be "railroaded or white-washed" in favor of the younger Espiritu.
The group, whose total exposure in Wincorp amounted to P478.8 million, said it took the DOJ more than three months to decide on the case since it was deemed submitted for resolution.
The older Espiritu was recently appointed by President Arroyo as a special envoy to multilateral and bilateral financial institutions or an ambassador-at-large, more than a year after leaving the Estrada Cabinet and months after testifying in the celebrated impeachment trial of the former Chief Executive.
The SEC pursued the charges of violating Sec. 8 and 26 of the src relating to the unregistered sale and fraudulent transactions by Wincorp in securities or investment contracts upon the complaints of the 333 group and several other individual clients.
But the DOJ ruled that from the evidence presented, "what simply transpired between the private complaints as lenders) and the borrowers was a loan transaction and not sale of securities, with respondent Wincorp acting merely as agent of the private complainants."
The DOJ panel claimed even the Wincorp officials as well as the managers of the former Westmont Bank (now United Overseas Bank) were also "victims" and not acting in conspiracy since they likewise made personal investments with Wincorp amounting to millions of pesos "with full understanding of the risks involved in the transaction and, thus, stand to suffer the same consequences as the private complainants and other investors."
The DOJ said another point to be considered is the fact that the respondents are being charged under the new provisions of the src, which took effect only on Aug. 8, 2000.
It said the src does not contain a saving clause which qualified that pending actions or violations committed to prior to its effectivity shall not be affected and the same will continue to be prosecuted and punished in accordance with the law then in force, in this case the Revised Securities Act.
"However, even if the provisions of the Revised Securities Act is the one applicable, given the case on hand, still respondents (Wincorp) can no longer e charged and prosecuted under the said Act because at the time the herein complaint was filed by the SEC on Oct. 30, 2000, the Revised Securities Act was already repealed in its entirety by the Securities Regulation Code," the DOJ said.