CAP lambasts SEC for partial dropping of criminal complaint

College Assurance Plans Phils. Inc. (CAP) has assailed the Securities and Exchange Commission (SEC) for dropping some directors as respondents to a criminal case it filed with the Department of Justice, saying this only goes to show that the SEC was irresponsible in coming up with the complaint.

The SEC dropped charges against Senator Juan Flavier, Eusebio Tanco and Rafael Evangelista as respondents in the criminal complaint it filed against CAP officers and directors.

CAP legal counsel Gilbert Reyes said both Flavier and Tanco merely restated what the Corporation Code says are the statutory duties of directors and officers.

"The SEC’s decision to drop some respondents merely on what the law already provides only shows how reckless and haphazard the SEC’s preparation was in drawing up the charges. If the SEC can drop Flavier, Tanco and Evangelista (who is a major stockholder of CAP) solely on a mere restatement of the law, then the whole case ought to be dismissed already," Reyes said.

Both Flavier and Tanco, former directors of CAP, said they were never involved in the day-to-day operations of CAP and that they had no shareholdings in the pre-need firm except for the nominal shares assigned to them.

"The board sets policies, the officers implement day-to-day. The SEC ought to have known this," Reyes said.

"Obviously, the SEC’s act of dropping some directors based solely on what the Corporation Code provides will not be lost on us. If this is sufficient to drop, both nominal directors and major equity directors alike, why were directors singled out? What is good for the goose should be good for the gander?" Reyes said.

Reyes said the other respondents to the case will soon file a counter-affidavit.

The SEC did not cite its reasons for removing the three directors as respondents in the complaint. It merely stated that these directors’ inclusion is "not essential".

The criminal complaint filed by the SEC stemmed from CAP’s unauthorized sale of pre-need plans to the public.

In its complaint, the SEC said directors of corporations, being responsible for the management of the company, have the obligation and the legal duty to ensure that the corporation is operating within the bounds of law.

In discharging his duties as director of CAP, Flavier said he merely relied on the information given by CAP management or disclosed during meetings of the board of directors.

Flavier noted that in late 2003, the CAP board approved a recovery plan aimed at improving its liquidity by increasing its capital and enhancing the value of its trust assets to meet the actuarial reserve liability. This recovery plan, however, was never implemented, forcing Flavier to resign as director of CAP in January 2005.

Evangelista, on the other hand, said he was no longer working for CAP during the time the alleged fraudulent acts had been committed by the pre-need firm. He resigned as corporate secretary of CAP and from all other positions in all other companies affiliated with CAP on April 20, 2004 for health reasons.