Roberto R Romulo faces criminal charges for Securities Code violation

The Department of Justice (DOJ) recommended yesterday the filing of criminal charges against Presidential Adviser Roberto R. Romulo for violations of the Securities Regulations Code and its implementing rules and regulations.

In a 16-page resolution, Regional State Prosecutor Jaime L. Umpa said that there is probable cause to indict Romulo for violation of Section 38 of the Securities Regulations Code and Rule 38 of its implementing rules and regulations.

The complaint against Romulo was filed by Government Service Insurance System (GSIS) president and general manager Winston F. Garcia questioning Romulo’s position as "independent director" of the Equitable-PCI Bank (EPCIB).

The GSIS together with the Social Security System (SSS) Holds a 41-percent stake in EPCIB.

In ruling in favor of Garcia, Umpa said there is probable cause to hold Romulo liable for violation of the Securities Regulations Code and its IRR, which stemmed from his selection as "unqualified independent director" of the EPCIB in 2004 while retaining his membership in the board of directors of the Equitable Card Network and the Equicom Management Systems, Inc.

"All considered, this office finds probable cause that the crime arising from a violation of Section 38 of the Securities Regulations Code and Rule 38 of its implementing rules and regulations has been committed and that respondent Roberto Romulo should be held for trial for this offense pursuant to Section 53, paragraph 53.1 of the Securities Regulations Code arising from his nomination and election as independent director of Equitable PCI Bank in 2004" Umpa said, in his resolution which was approved by Chief State Prosecutor Jovencito Zuno.

In the same resolution, Umpa, cleared Romulo’s co-respondents, namely Antonio Go, Anthony Conway, Peter Go Pailan and Nilo T. Divina, all members of the EPCIB’s nomination committee, saying that they cannot be held liable for conspiracy.

"However, the evidence on record would warrant the dismissal of the complaint against respondents Antonio Go, Anthony Conway, Peter Go Pailan and Nilo T. Divina for lack of probable cause" Umpa said.

In his complaint, Garcia said that Romulo had accepted a position as "independent director of EPCIB even though he knew he was disqualified for conflict of interest provided under Republic Act (RA) 8799 orthe Securities Regulations Code and Section 38 in relation to Section 73 of the Code’s IRR.

Garcia said that the website of Equicom showed that the company was a "joint venture of the Equitable Group and Telus International."

Umpa cited that Section 73 provides that "any person who violates the code and its rules and regulations would suffer imprisonment of not less than seven years nor more than 21 years, or pay a fine of not less than P50,000 nor more than P5 million, or both, at the discretion of the court."

He said that under the Securities Regulations Code, an independent director "must be 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 covered company."

"Such a business relationship exists between the two corporations (Equiable and Equicom) that would interfere with the exercise of an officer of the former of the independent judgment required of an independent director of the latter. This was clearly shown in the chart contained in the counter-affidavit of respondent Romulo" Umpa said.

Umpa said Romulo withheld such information from the members of the nomination committee and the board of directors of the bank and accepted his nomination and election as independent director of Equitable PCI Bank and assumed such office in clear violation of Section 38 of the Securities Regulations Code and Rule 38 of its IRR.

He also cited that the Securities and Exchange Commission (SEC), in its May 8, 2006 order, found Romulo disqualified to be an independent director of the EPCIB.

"This case has generated considerable media attention, firstly because of the personalities involved and secondly because it is considered a test case for the sincerity of government in promulgating rules and regulations concerning good corporate governance. It behooves the DOJ to be clear and definite in its findings" Umpa said.

(The STAR tried to contact Romulo for his comments yesterday but was unable to do so up to press time despite repeated attempts.)