Execs of Lehman RP firm face arrest

MANILA, Philippines – Five Filipinos allegedly connected with the bankrupt US-based investment firm Lehman Brothers were ordered arrested by the Mandaluyong City Regional Trial Court (RTC) for violating the country’s anti-dummy laws.

Mandaluyong RTC Branch 214 Judge Edwin Sorongon also issued a hold-departure order against Norman Macasaet, Carlos Mañalac, Michael Rabonza, Edilberto Castañeda and Ana Marie Katigbak for their “failure to submit themselves to the jurisdiction of the court.”

The case stemmed from a complaint filed by businessman-restaurateur Victor “Vicvic” Villavicencio against the Lehman Brothers and its reported Philippine affiliates – Philippine Investment One and Philippine Investment Two – for violating the country’s anti-dummy laws and constitutional restrictions on foreign ownership of land.

The respondents have filed several pleadings before Sorongon, including a motion for reinvestigation of the case and a motion to quash the arrest warrants issued against them.

However, in his Sept. 4 ruling, Sorongon denied the motions, stressing that the accused presented no “new issues but mere rehash and reiterations of their earlier arguments.”

The court also junked the motion for reinvestigation filed by the accused, saying there “was probable cause for their indictment” based on the complaint filed by Villavicencio, owner of the Kamayan and Saisaki restaurant chain.

In his complaint, Villavicencio said he entered into a restructuring deal with Equitable PCI Bank that allowed him to redeem the properties – foreclosed in 1999 to partially settle a P402-million debt he had with the bank – within 10 years.

However, he said Equitable PCI sold the assets soon after to an entity called Philippine Investment Two Inc., which is owned by Philippine Investment One Inc.

Villavicencio said he later discovered that Lehman Brothers was a majority shareholder of Philippine Investment One Inc.

He said he now wants to buy back the property from the Lehman Brothers-owned firm for P60 million to P65 million, reportedly the same price at which they bought it from Equitable PCI Bank.

From September 2004 to March 2005, Villavicencio said Lehman Brothers and the five respondents allegedly conspired and simulated the existence of several corporations in order to make it appear that Philippine Investment Two Inc. is qualified to own real properties in the Philippines.

But Villavicencio stressed that an examination of the records would show that Lehman Brothers is the real owner. The Constitution bars foreigners from owning land in the Philippines.

Despite having Filipino investors in the company, the accused only have one share each of both Philippine Investment One and Philippine Investment Two.

Lehman Brothers’ Singapore unit owns 1.24 million shares in each of the two corporations, Villavicencio said.

The anti-dummy law limits the management, operation, administration and control of corporations in the country to Filipino citizens.

From a net worth of almost $700 billion, Lehman recently filed for bankruptcy protection after several failed business ventures, the largest in the history of the United States.