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Banking

Gatchalian insurance firm under state of liquidation

- Ted P. Torres -
TICO Insurance Co. Inc. formerly known as Tabacalera Insurance Co., is now under a state of liquidation after more than a year under a conservator. The Wellex Group Inc. of plastic king William Gatechalian reportedly controls TICO.

In November 2000, the Insurance Commission (IC) issued a cease-and-desist order (CDO) on TICO after it failed to cover up its capital impairment and margin of solvency of 46.9-million as well as failing to report its financial status in 2002. The CDO disallows the non-life insurance company from selling new policies.

IC issued the CDO for capital impairment worth P115.6-million, and margin of insolvency worth P115.2-million. It likewise appointed a conservator.

According to lawyer Rommel A. Frias, the conservator appointed by the IC, the insurer must settle approximately P50-million or the sum insured.

"However, some policyholders are asking for more as they are including interest payments and penalties," Frias lamented, adding that the amount is feared to amount to more than a hundred percent. "we tried to save the company."

TICO has P50-million in assets but it has contingent liabilities with the government in accumulated taxes amounting to over P15-million with a little over P5-million due the Bureau of Customs.

What has forced government to liquidate the company was the refusal of the board of directors to infuse additional capital to immediately pay its claims. It has assets in the form of properties worth over P30-million, which had been put under mortgage by the board of a certain Jetstar Enterprises.

That transaction was not however recorded by the company as a mortgage payment and according to the commission "the corresponding proceeds were not entered in the company’s cash in bank."

The IC said that the insurer’s board refused to save the company by withholding new capital and by keeping clear of the company. The stubborn nature of the board may likewise prompted the commission to go to court and force the board members to shell out money to save the company, pay its creditors and policyholders as well as its backlog of taxes with government.

"Legally, we can pierce the corporate vein and probably save the situation," Frias said.

The Gatchalian-led Wellex Group Inc. acquired then Tabacalera Insurance in 1997 buying 491,035 common shares of the total 500,000. The remaining 965 shares were held by certain firms named Calmont & Co., Hare & Co., and host of individuals.

Documents show that these so-called individuals had addresses in Zurich, Switzerland; Barcelona, Spain; New York, USA; and several in San Francisco, California, which were held by the trust department of a certain Wells Fargo Bank.

By the end of 1999 when TICO started having serious financial problems, Wellex reportedly sold out its controlling shares.

Forum Holdings acquired 404,985 shares while Pacific Concorde Corp. acquired 93,950 shares. But Forum Holdings is not registered as a holding company in violation of the provision of Section 286 of the Insurance Code.

The members of Forum Holdings board of directors are Rodito Esquillo, Alex Dino, Simlico Lado, Roberto Tumala, and Andres Magat. Dino, Tumala and Magat are also directors of Pacific Wide Realty and Development Corp.

Both firms turn out to be controlled by a certain firm named First Alliance, which reportedly is a British Virgin Island registry.

Further review of documents drawn from the investigation indicate that there was improper recording of cash receipts and disbursement involving the Wellex Group, and Air Philippines, then owned by William Gatchalian and now held by the Philippine Airlines (PAL).

Investments in the stock market were down by the Wellex Group. Among the stock certificates held and eventually sold were from issues like San Miguel Corp., Philippine National Bank, ABS CBN, Basic Petroleum "B", Engineer Equipment Inc., and the International Container Terminal Services Inc.

However, the company failed to present documents to support the arrangements, which likewise indicated discrepancies in the number of shares per company and the number of shares inventoried.

TICO maintained a bank account with Equitable PCI Bank with the account number 1413-03152-0 but according to the IC records "it was maintained in the name of Ting, Elvira, or Cruz, Aba."

vuukle comment

AIR PHILIPPINES

ALEX DINO

ANDRES MAGAT

BASIC PETROLEUM

COMPANY

FORUM HOLDINGS

FRIAS

MILLION

WELLEX GROUP

WELLEX GROUP INC

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