Citing Section 38 of the Securities Regulation Code specifying that an independent director should be an individual who is not an officer or employee of the corporation, its parents or subsidiaries, Garcia alleged that Romulo willfully violated this provision by accepting the EPCIB directorship despite knowledge that he is not qualified, having been a member of the board of directors of Equicom Systems Management Inc., a joint venture between the Equitable Group and Telus International.
Romulo, along with Go, Conway, Divina and Go Pailan allegedly conspired with one another to withhold such information from the bank stockholders and other members of the nomination committee and the board of directors. Because of this collusion, the interest of the minority stockholders such as the GSIS and the Social Security System have been prejudiced because they were deprived of the right to have a legitimate and qualified independent director, Garcia attested.
While Romulo is mandated by law to exercise his own independent judgment free from the influence of the other board members and related interest, he had "always sided with all the nominee directors of the Go family, especially with regard to actions that would perpetuate their (Go’s) hold and influence on the affairs of the bank despite the fact that they are no longer the majority stockholders," Garcia said in his complaint. Romulo is also facing serious administrative and criminal charges filed by former Solicitor General Francisco Chavez before the Sandiganbayan for conflict of interest.
As used in Section 38 of the src, independent director means a person who, apart from his fees and shareholdings, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director in any corporation, Garcia emphasized. Sources have also alleged that Go and Romulo are known to be close associates on account of Equicom.
In a related development, the Bangko Sentral ng Pilipinas (BSP) through incoming BSP Governor Amando Tetangco disclosed that the Monetary Board found EBC Investments Inc. (EBCII), an investment house wholly owned by EPCIB, to be in violation of a May 1999 directive to dispose of its EPCIB shares within two years from acquisition, and is, thus, being directed to sell such shares immediately.
EBCII was also directed to submit to the BSP a capital build-up program to address the resulting capital impairment that may have resulted in its failure to dispose of such shares, and to explain why it should not be subjected to administrative sanctions for its failure to comply with the said directive.
Tetangco also instructed EPCIB to submit an explanation why dividends were paid to EBCII in May this year in view of the provisions of Statements of Financial Accounting Standards or SFAS No. 21 which considers shares of the parent held by a subsidiary as "treasury shares."
Reports had also floated earlier that independent director Fulgencio Factoran had been at loggerheads with the Go faction in a previous directors’ meeting over the 10-percent treasury shares, and had called to task EPCIB president Rene Buenaventura and directors Antonio Basilio, Cesar Bautista and Roberto Romulo for maneuvering to maintain the Go family’s tight rein on the bank.