Improper for Diokno’s LBP to gobble up DBP

All it’ll take is an executive order, Finance Sec. Ben Diokno brags. Having drafted it, he’ll make President Bongbong Marcos sign. Instantly Land Bank of the Philippines will subsume Development Bank of the Philippines.

Multiple conflicts of interest taint Diokno’s plan. DBP chairman Dante Tinga, former law dean, congressman, Supreme Court justice, sums them up:

One, Diokno rejected in September 2016 such LBP-DBP merger. It’ll muddle the two state banks’ objectives, he said. LBP is to develop agriculture; DBP, industry.

Two, Diokno was then two months as budget secretary, plucked by president Rody Duterte from 15-year retirement. Duterte disliked predecessor Noynoy Aquino’s February 2016 merger EO to the Governance Commission for GOCCs. The five-man GCG, with ex-officio members Diokno and finance chief Sonny Dominguez, promptly nixed the merger.

Three, still ex-officio today, Diokno says GCG can merge GOCCs. But it’s self-serving for him to define GCG’s powers.

Four, legal bodies like the Office of the Solicitor General and Office of the Government Corporate Counsel should instead be asked to interpret GCG’s coverage. The Constitution and Administrative Code denote such OSG and OGCC authority.

Five, Malacañang recently reiterated OGCC’s ascendancy over GCG. It was after GCG’s meeting with Executive Sec. Lucas Bersamin, once Chief Justice, and Presidential Chief Legal Counsel Juan Ponce Enrile. A memo enjoins OGCC to no longer require its prior approval of GOCC contracts. But it must still scrutinize those “that the Office of the ES, GOCCs, and other government agencies shall refer.”

Six, Congress chartered LBP and DBP. Only it can thus abolish or merge them. Not GCG, another Congress creation. Not Diokno whom Congress’ Commission on Appointments merely confirmed. OGCC head Rogelio Quevedo, Court of Appeals ex-justice, has so stated.

Seven, GCG scrapped the merger in 2019 via formal resolution. It’ll take another resolution, not Diokno’s press release, to revive it.

Eight, GCG chief Alex Quiroz, Sandigan ex-justice, announced that they have yet to re-study the basis for new resolution. Whereupon, Diokno rustled up his own study and EO.

Nine, Diokno as concurrent LBP chairman stands to benefit from merger. LBP will be the surviving entity; DBP, abolished.

Ten, in his 2019 State of the Nation, Duterte declared LBP a failure for focusing on commercial, not agricultural, lending. Could Diokno, by then four months as Bangko Sentral governor and Monetary Board chairman, have fed Duterte derogatory info on LBP?

Eleven, as finance secretary, Diokno had chaired LBP eight months when he sprang the merger surprise in March 2023. He couldn’t have turned around LBP in such short time from decades of “failure”.

Twelve, Diokno boasts that LBP’s board favors merger. But of course; he chairs it.

Thirteen, when presented the merger plan, Marcos suggested in-depth studies with Congress on legalities and economic impact. Impatient Diokno announced that the President will sign his EO by April. That didn’t happen; Diokno said it’ll be by May. Now he says November: “What are we waiting for?”

Diokno prematurely details his moves. He’ll retain LBP’s 752 branches and 22 of DBP’s 147 “for wider network.” But 752 + 22 = 774, a mere three percent bleb from LBP’s present reach.

He’ll displace 3,650 DBP employees, 2,700 of them rank-and-file. He’ll also shuffle LBP staff. Both banks’ labor unions are up in arms.

Upon gobbling up DBP, LBP’s assets will become P4 trillion, making it the Philippines’ largest. “A best regional practice,” Diokno claims. Only Singapore has a state bank as biggest. ASEAN neighbors prefer various state lenders for agriculture, exports, small businesses, etc. Malaysia has seven; Thailand, six; Indonesia and Vietnam, four each.

After merger Diokno will be more conflicted:

Fourteen, LBP and DBP granted behest loans to a Duterte admin crony, uncollateralized P18 billion and P8 billion, respectively. How did that get past BSP and Monetary Board? Now the combined P26 billion will look miniscule, merely 0.65 percent of P4 trillion – easy to write off.

Is Diokno used to such conflicts? His daughter became Asian Development Bank alternate director starting last year. Annual salary: $221,728. Plus housing and educational subsidy; worldwide medical, life and disability insurance; pension and home leave.

The ADB Board of Governors, of which Diokno is vice chairman, picks the directors and alternates. As finance secretary he is governor for the Philippines. ADB directorship is not a government post; the daughter holds a PhD degree. Still the President nominates candidates for director on endorsement of the finance secretary.

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