EPCIB minority board is bogus, illegal — Garcia

The head of pension fund Government Service Insurance System (GSIS) insisted yesterday that the board of directors elected by the Go family in Equitable PCI Bank is "bogus and illegal."

In an interview before meeting with EPCI Bank management at the bank’s Makati headquarters yesterday, GSIS president and general manager Winston Garcia said their legal counsel is currently "studying legal and administrative measures against the so-called minority group."

GSIS was among the majority group of EPCI Bank’s shareholders, including the Social Security System, Trans Middle-East Philippine Equities of the Romualdez family, and the SM Group of retail tycoon Henry Sy, which walked out of the bank’s annual general meeting last Tuesday to reconvene and elect their own set of board directors.

"There is only one board, there is only one legitimate board. Any other board which is not elected by the majority is bogus and illegal," Garcia stressed. "We just can’t accept a minority interest controlling the bank. That is something not negotiable."

The group claimed they represented a majority of 54.6-percent voting rights when they held their own meeting, while the bank’s founders, the Go family and their allies, only came up with about 39 percent.

But Garcia said despite their internal squabble, they will see to it that the bank’s operation continue "like nothing is happening."

Garcia, along with the breakaway group’s newly-elected chairman Ferdinand Martin Romualdez and new corporate secretary Pelagio Ricalde, visited the bank’s headquarters yesterday to check on its operations. "We are doing the duties of a legitimate board," he said.

"We will let professional management run this bank. The policies recommended by the management team we are prepared to adopt. We have high respect and confidence in the professionalism and the capability of the management of the bank," Garcia added.

Rene Buenaventura retained his post as EPCI Bank president and CEO as both the majority group and the Go-led board appointed him.

Garcia, however, admitted that the majority board had asked the management team to report to the board, as a precautionary measure, withdrawals or any transactions worth at least P50 million.

Out of Court Settlement?

Meanwhile, despite the prospects of a long drawn-out court battle, EPCIBank’s majority shareholders said they are still open to settling their differences with the minority group without going to the courts.

The SSS-GSIS-led group will meet next week with Finance Secretary Gary Teves to seek ways of solving the problem out of court.

"Our main concern is this might degenerate into a war between two groups and drag on for a long time,’’ Teves said. "We don’t want that to happen. We want this settled out of court. It is better if we can work this out quietly.’’

"Any resolution to this case will always be welcome,’’ said

Garcia in an earlier phone interview.

SSS president Corazon dela Paz said they may ask the courts to declare the group, not the Go family, in control of the bank.

"I am not closing the door to any discussions out of court,’’ Dela Paz said in a separate interview.

The Department of Finance is in charge of the two pension funds.

The boardroom battle may make it harder for EPCIBank to sustain its earnings performance. Profit more than doubled to P567 million in the first quarter after rising 55 percent to P1.8 billion, an eight-year high, in 2004.

"I believe both parties are reasonable people and I am hoping that this will be resolved as soon as possible for the good of the bank,’’ said Nilo Divina, EPCIBank’s corporate secretary representing the Go-led board. "Of course we are willing to talk.’’

Criminal charges mulled

In a related development, the GSIS has urged the Securities and Exchange Commission (SEC) to refer to the Department of Justice (DOJ) its criminal complaint against some officials of the EPCIBank.

In a letter to the SEC, Garcia said the DOJ should look into the criminal complaint it filed against Antonio Go, Roberto Romulo, Peter Go Pailan, Anthony Conway, Nilo Divina and Cesar Bautista "for violation‰ of the provisions of the Securities Regulation Code."

Bautista was recently included in the complaint as he was elected independent director of EPCIBank while being allegedly disqualified, a fact that was not made known to the stockholders during their meeting last July 19.

Garcia recalled that in an order dated July 11, 2005, the SEC disqualified Romulo as an independent director. On July 19, the SEC denied a motion for reconsideration of Romulo’s disqualification. The Bangko Sentral ng Pilipinas (BSP) also disqualified Romulo from being nominated as independent director of the bank.

"Despite the foregoing rulings of the SEC and BSP, the two government agencies given regulatory powers over EPCIBank, Mr. Romulo still attended the nominations committee and the board of directors meetings and even voted therein," said Garcia.

"These illegal and contemptuous actions showed the wanton disregard of the respondents in our complaint of the authority of the SEC and BSP, a blatant disrespect to the lawful orders issued by these regulatory agencies, and the willful and criminal intent to violate the Securities Regulation Code to the damage and prejudice of the other stockholders of the bank," Garcia further said.