Westmont Bank, then under the control of the Espiritu group, represented and warranted to UOB that the transfer of the loans was legal and valid and that all the necessary approvals had been secured from the BSP, United Overseas Bank of the Philippines (UOBP) said in a statement.
In the meantime, UOB, relying on the Espiritu group’s representations, invested P3 billion into Westmont and renamed it UOBP.
As part of the bank’s rehabilitation plan and the entry of UOB, a write down in Westmont Bank’s Capital was made, reflecting the true impaired value of the bank after continuing losses through the years.
The BSP subsequently said it did not approve the write-off of the P1.4 billion Westmont receivables and ordered UOBP to put them back in its books. But before that, about P90 million of the loans had been collected and remitted by UOBP to the Espiritu group as was the agreement.
The agreement also required the Caktiong group to put up P1.65 billion in new capital in return for its 33-percent-board representation. The Filipino shareholders failed to infuse the capital to UOBP and blocked arbitration in Australia over this issue by obtaining a preliminary injunction from a local court.
Less than three months after UOB’s takeover, the Wincorp (Westmont Investment Corp.) scandal broke out. Both Westmont and Wincrop were controlled by the same group led by the family of former Finance Secretary Edgardo Espiritu.
Wincorp investors had taken their case to court. Their money, around P7 billion, as substantially relent to companies owned by or associated with the Espiritu group, according to the UOBP statement.
UOB of Singapore singlehandedly put up roughly P5 billion more into the bank to meet all withdrawals caused by the Wincorp scandal.