Charges filed over ‘fake’ loans

CEBU, Philippines - The Department of Justice on Tuesday filed criminal charges against Lapu-Lapu City Mayor Paz Radaza and other former executives of the defunct Rural Bank of Subangdaku Inc. for allegedly creating nearly P2.6 billion of fictitious loans.

Radaza, the bank’s president at that time, along with former loans manager Julius Eullaran and directors Francisco Gaisano, Peter Gaisano and Sonia Go, is facing charges before the Mandaue City Municipal Trial Court in Cities and the Regional Trial Court.

The FREEMAN found out that there were 62 separate cases filed against Radaza and other accused assigned at the sala of RTC Presiding Judge Augustine Vestil.

Separate cases were also assigned at the sala of MTCC Branch 3 Presiding Judge Wilfredo Dagatan and MTCC Branch 2 Presiding Judge Carlos Fernando.

According to one of the accounts filed in court, the accused in October 1999 “helped each other and knowingly obtained or took out a loan” of over P328,000 from RBSI through the bill purchase loan of Marmelina Cuevas, an employee of White Gold Club Inc.

However, the complaint said the real beneficiaries of the loan were the accused and WGCI, a related interest of RBSI where accused served as interlocking directors, officers and stockholders.

The claim further read that through the BP loan availment of Cuevas, a check for the same amount was made payable to WGCI, not to Cuevas, and deposited in WGCI account in RBSI on the same day without waiting for said check to go through the regular clearing period of three to five days.

The proceeds of the loan were allegedly transferred to the accounts of WGCI and the accused in RBSI.

Further, the loan was neither approved by the majority of the members of the bank’s Board of Directors, excluding the accused, nor reported to the Bangko Sentral ng Pilipinas, the complaint said.

The same mode was allegedly applied by the accused to other fictitious names that availed thousand of loans from RBSI.

Early this year, the Philippine Deposit Insurance Corporation filed the criminal case before the Department of Justice against the accused, complaining that they conspired to create 6,051 fictitious loans amounting to almost P2.6 billion from 2004 to 2008.

The amount accounted for about 97 percent of loans supposedly released by the Subangdaku head office.

Apart from the non-existent loans entered in the books of the bank, PDIC noted in an e-mailed statement that the former bank officials also did business in an unsafe and unsound manner.

The rural bank was placed by the Monetary Board under receivership on January 8, 2009, Bangko Sentral ng Pilipinas records showed.

The respondents ordered the staff to fill out official receipts purporting to payments being made to the bank when in reality, Subangdaku received no payments, the complaint said.

“These supposed payments were used to provide the purported source of the fictitious loan proceeds,” the PDIC said.

Based on the sworn affidavit of the bank’s former loan officer, PDIC said respondents ordered their subordinates to falsify receipts creating non-existent loans, “no questions asked,” PDIC claimed, citing a former loan officer of Subangdaku. The list supposedly contained information and details of the loan transactions. 

“This claim was supported by the findings of the expert forensic accounting team from Alba Romeo & Co. that PDIC engaged to assist in the investigation,” the insurer of bank deposits said.

Results of the forensic investigation showed 5,470 of the 6,051 fictitious loans had no credit information as a basic requirement, while 581 did not have any supporting document attached, PDIC said.  

“Consequently, demand letters to the named borrowers of these loans were returned because of unknown addresses or because the borrowers did not exist,” PDIC said.

The court has recommended P20,000 bail for each case filed against every accused.

If convicted, they will be fined not more than P10,000 or imprisonment of not less than six months but not more than 10 years, or both, at the discretion of the court as prescribed under Section 26 of the Rural Banks Act of 1992.

The FREEMAN tried to contact Radaza for her side of the story but she was not responding to calls and text messages as of press time yesterday.

In an earlier report, however, Radaza chose not to comment on the issue, saying she never wanted to keep recalling her stint as president of the bank.

She had likewise assured that the case won’t affect her function as Lapu-Lapu City’s chief executive.— (FREEMAN)