Ombudsman suspends Pichay

Manila, Philippines - The Office of the Ombudsman yesterday ordered the six-month suspension of Local Water Utilities Administration (LWUA) board chairman Prospero Pichay Jr. for alleged misuse of funds.

Overall Deputy Ombudsman Orlando Casimiro, in his capacity as acting ombudsman, said there is enough evidence to prove that Pichay allowed the investment of P870 million in LWUA funds in a private bank in 2009.

Pichay said he would defy the order.

The Ombudsman issued a 10-page order directing Executive Secretary Paquito Ochoa to implement the six-month preventive suspension on the former Surigao del Sur congressman.

Malacañang has also placed three board members of LWUA under 90-day preventive suspension for alleged misappropriation of funds to acquire a troubled thrift bank.

Ochoa issued on Friday the suspension order on LWUA trustees Bonifacio Mario Peña, Susana Dumlao Vargas and Renato Velasco based on the complaint filed by Finance Secretary Cesar Purisima with the Office of the President on April 6. 

The case stemmed from the supposedly anomalous purchase of shares of stocks of the Laguna-based Express Savings Bank Inc. (ESBI) using LWUA funds.

Pichay, on the other hand, declared he would not comply with the Ombudsman’s order, which he described as “blatantly illegal.”

Pichay claimed he was being harassed, being an appointee of the previous administration.

He said former Ombudsman Merceditas Gutierrez already denied twice in November and last month—the motion for reconsideration (MR) filed by the complainant LWUA employees.

Pichay explained that under the law, a MR could only be filed once.

“So which of the two orders will I honor? This is an illegal (suspension) order and blatant one at that. Definitely, I will not respect that order,” Pichay said.

Pichay said Casimiro was pressured by the Aquino administration, particularly Finance Secretary Cesar Purisima, to issue the suspension order. Purisima stood as one of the complainants in his capacity as secretary of finance and member of the Monetary Board of the BSP, which regulates the banking industry in the country.

Pichay claimed Casimiro would not want to suffer the same fate as his predecessor Gutierrez who was pilloried before the public.

Pichay also questioned the authority of Casimiro to issue the order and review the cases handled by Gutierrez.

“As an analogy, if someone was acquitted of a crime by a judge in a regional trial court, when the judge is replaced his successor cannot review the case and reverse it and hand down a conviction,” he said.

The case against Pichay stemmed from a complaint filed by LWUA employees Rustico Tutol, Luis Estrada and Carmen Amores, accusing the former Surigao lawmaker of using P870 million of LWUA funds to invest in ESBI.

Also accused in the case were acting LWUA Administrator Daniel Landingin; acting Deputy Administrator for Investment and Financial Services Wilfredo Feleo; and Corporate Legal Officer and Board Secretary Arnaldo Espinas.

The complainants alleged the fund disbursements were made without approval from Monetary Board and provisions of the Bangko Sentral ng Pilipinas (BSP) circular.

Because of the multi-million peso investment, LWUA supposedly gained 20 percent ownership or control of ESBI’s voting stock but no income came out from the investment. The complainants said P400 million of the total amount invested is not even supported by any Memorandum of Agreement or Certificates of Investment that were supposed to protect LWUA’s interest.

The Ombudsman said the allegations against Pichay and the other LWUA officials involved in the fund mess had been established with documentary evidence.

Among the evidence presented were the LWUA board resolutions showing the fund disbursements to ESBI.

Pichay maintained the LWUA does not need to seek permission of the Office of the President in creating a new entity under the old administrative order.

He pointed out the LWUA did not create a new corporation but simply bought shares from the bank after seeking advice from BSP, but still sought the permission of the Office of President. –With Paolo Romero, Aurea Calica