UCPB launches review of internal checks and balances

Weak internal controls, management changes and the general uncertainty over its ownership are making the United Coconut Planters Bank (UCPB) vulnerable to fraud and corruption.

In the wake of a P70-million scam that led to the reorganization of its Olongapo City branch, UCPB management has launched an internal investigation into its own internal checks and balances.

"We’ve reshuffled people in that branch and an internal investigation is going on," said UCPB president Jose Querubin. "We are trying to find out how something like this could have happened."

The scam involved a market assistant at UCPB’s Olongapo branch who was reportedly involved in irregularities and had since fled to the US after allegedly absconding with P70 million.

The Olongapo scam is not the first of its kind involving UCPB officials.

Still pending for resolution at the courts is a case filed against UCPB by the owners of the Titay’s Resort in Boracay which has since been foreclosed by the bank after the owners failed to settle their arrears with the Kalibo branch.

Owned by the Lumbon Family, the resort has been taken over by the UCPB after it dismissed at least two of its officials who were allegedly implicated in various acts of fraud.

The Lumbons said that after depositing P20 billion and signing up a P12-million loan, the account officers of UCPB persuaded them to sign blank documents to facilitate the automatic debiting of payments. But while the account was depleted, the loan was never paid.

Sources from the Bangko Sentral ng Pilipinas (BSP) admitted that weak internal controls, frequent changes in management and the very absence of a "culture of trust" could spawn fraud.

Sources said UCPB, then and now is best with the fundamental problem of ownership which has led to the lack of a sense of accountability and subsequent erosion of its corporate culture.

Under BSP rules, banks are required to report violations of banking rules and they face possible penalties if found repeatedly violating these rules.

According to the source, however, the more critical work involves educating clients that transact business with banks.

"The rules and regulations of the BSP do not guarantee that everything will be alright," said the source. "These rules are only as good as the people who, follow them and the people who enforce them. But even that won’t be enough if the clients themselves are unaware of their rights as bank clients."