Overseas investments not covered by Phl laws - BSP

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) said documents showed that the contract entered into by a local investor who accused the Manila branch of Dutch giant ING Bank NV of defrauding his family of investments amounting to $6.8 million is not covered by any law in the Philippines.

BSP managing director for Central Supervisory Support sub-sector Johnny Noe Ravalo who recently spoke before the Committee on Banks of the House of Representatives said the documents showed that the agreement entered into by Washington Lou and ING Bank was an offer to provide service and not an offer to sell securities.

“Based in the documents submitted, the agreement appears to be an offer to provide service,” Ravalo explained.

Unlike an offer to provide a service, he clarified that an offer to sell securities is covered by law under Republic Act 8799 otherwise known as the Securities Regulation Code (SRC).

“A central point is whether the agreement was an offer to provide a service or an offer to sell securities. The latter is covered by law under the Securities Regulation Code,” he said.

During the hearing last March 20, the BSP provided a summary of what it identified as the key issues based on the documents presented by the parties as well as citing the testimonies in various hearings.

However, Ravalo said the contentions made by Lou and ING Bank during the hearings were contradictory.

“On many points, the contention of Mr. Lou and the bank are directly contradictory. It is on these issues where proceedings in a court of law are necessary since the submitted documents are insufficient to close the issues raised,” he added.

Aside from the SRC, he pointed out that the BSP has an existing guideline on referrals and investment banking as well as the existing statutes under RA 9194 or the Anti-Money Laundering Act (AMLA) of 2001 is enough to protect the interest of investors.

He said the parties involved in the case were given by the House committee on banks until the end of next month to submit their final comments.

In a hearing last October, an official from the BSP’s Supervision and Examination Sector of the BSP said the SEC and BSP are cognizant of some high net-worth individuals choosing to invest outside the Philippines. 

The official said the BSP has already issued an advisory with regard to financial transactions executed outside the Philippines putting them beyond the country’s jurisdiction.

Leyte Rep. Andres Salvacion Jr. has filed House Resolution No. 779 last December 15, 2010 seeking an inquiry into the practices of ING Bank NV Manila Branch that defrauded Filipino investors of billions of pesos.

Lou is asking ING Manila to pay him and his family $6.8 million for alleged losses during the 2008 financial crisis from actual investments of only $3.25 million.

The investments that were made during the height of the global financial crisis in 2008 were coursed through ING Asset Private Bank Ltd of Singapore (IAPBL).

After falling to pay for a margin call on his losing leveraged investments in 2008, Lou filed a case with the Bacolod regional Trial Court against ING Bank Manila for compensation for losses from investments he executed through IAPBL.

The lower court dismissed his case but he filed similar cases before the BSP as well as the Securities and Exchange Commission (SEC).