Pichay, ex-LWUA administrator, convicted over 2009 purchase of Express Savings Bank – Manila Bulletin


Outgoing Representative Prospero A. Pichay Jr. was found guilty by the Sandiganbayan of three bribery charges in connection with the purchase of Express Savings Bank, Inc. (ESBI) while he was a director of Local Water Utilities Administration (LWUA) in 2009.

Pichay sought re-election in the 1st district of Surigao del Sur in local and national elections on May 9, but lost.

Prospero A. Pichay Jr.

LWUA Acting Deputy Administrator Wilfredo M. Feleo was also convicted.

Pichay and Feleo were sentenced to 18 to 30 prison terms for the three bribery charges with a life ban from holding public office.

But they were acquitted of charges involving alleged violations of Section X126.2(c)(1)(2) of the Banking Regulatory Handbook in relation to Sections 36 and 37 of Republic Act No. 7653. (the new Central Bank Act) for the prosecution’s failure to prove its guilt beyond a reasonable doubt.

The criminal charges stemmed from LWUA’s purchase of ESBI, a local Laguna-based savings bank through WELLEX Group Inc. (WGI) and Forum Pacific Inc. (FPI).

The anti-corruption tribunal said that as head of the board of the LWUA, Pichay had approved the acquisition of ESBI even without obtaining regulatory approvals from the Monetary Board of Bangko Sentral ng Pilipinas (MB-BSP) , Department of Finance (DOF), and the Office of the President.

“It cannot be denied that Defendants Pichay and Feleo were aware of this requirement, as they consulted with the Office of the President, DOF and BSP. They were specifically advised to obtain prior approval from the Monetary Board. This advice was given before LWUA purchased ESBI’s shares,” the court said.

The court said Pichay and Feleo may not have been driven by “an obviously fraudulent and dishonest purpose”, since they were simply carrying out a legal warrant. However, the court pointed out that they performed the task “randomly and improperly”.

“Even assuming the defendant did not act in bad faith or with manifest bias, his negligence in the circumstances was not only gross but also inexcusable,” the court said.

Due to the actions of Pichay and Feleo, the court declared that LWUA had acquired a 60% stake in ESBI worth 80 million pesos, made a 300 million peso deposit in the bank and a capital injection worth 400 million pesos.

They were accused of granting unjustified benefits, advantages or preferences to ESBI owners and corporate and individual shareholders by transferring 780 million pesos of LWUA funds to ESBI to increase the bank’s authorized share capital.

The transfer was made even though the bank had a negative realized value of P12,932,429 in March 2009. For the years 2005 to 2009, the prosecution said that ESBI faced “substantial net losses and deficits capital”.

Charges against their two co-defendants, LWUA board member Enrique S. Montilla III and acting administrator Daniel Landingin, were dismissed due to their deaths.

The 66-page decision was written by Associate Judge Lorifel L. Pahimna with the concurrence of Fourth Division President Alex L. Quiroz and Associate Judge Edgardo M. Caldona.




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