Pichay, Gatchalians among indicted for bank takeover

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Valenzuela Rep. Sherwin Gatchalian and Prospero Pichay (inset) are among those recommended for criminal charges in connection with a bank takeover in 2009.

(CNN Philippines) — The Ombudsman on Friday (April 17) indicted Valenzuela Representative Sherwin Gatchalian, former congressman Prospero Pichay, Jr. and several others for their alleged involvement in an anomalous bank takeover in 2009.

A report from the Ombudsman’s office said multiple graft and malversation charges, as well as charges of violating the country’s banking laws, will be filed against Pichay, who is a former chairman of Local Water Utilities Administration (LWUA), former LWUA officials, corporate executives of WELLEX Group Inc. (WGI), Forum Pacific Inc. (FPI), and Express Savings Bank Inc. (ESBI) for ordering the purchase of the Laguna-based Express Savings Bank, Inc. (ESBI) in 2009.

Gatchalian is among the executives of WGI, which is owned by his father, “plastics king” William Gatchalian.

Aside from Pichay and Gatchalian, those named in the report were:

  • Eduardo Bangayan
  • Aurelio Puentevella
  • Enrique Senen Montilla III
  • Wilfredo Feleo
  • Daniel Landingin
  • Arnaldo Espinas
  • Dee Hua Gatchalian
  • William Gatchalian
  • Elvira Ting
  • Kenneth Gatchalian
  • Yolanda Dela Cruz
  • Peter Salud
  • Geronimo Velasco Jr.
  • Weslie Gatchalian
  • Rogelio Garcia
  • Lamberto Mercado Jr.
  • Evelyn dela Rosa
  • Arthur Ponsaran
  • Joaquin Obieta
  • George Chua
  • Gregorio Ipong
  • Generoso Tulagan
  • Wilfred Billena
  • Edita Bueno

Ombudsman Conchita Carpio-Morales said members of the LWUA Board passed a resolution approving the acquisition of ESBI, a Laguna-based thrift bank owned by the Gatchalians, FPI, and WGI, without the approval of the Monetary Board, Bangko Sentral, Department of Finance, and the Office of the President.

The acquisition was also done despite negative audit findings which showed that "the bank was insolvent after suffering substantial net losses and capital deficits for five straight years from 2005 to 2009."

The Ombudsman noted "the injury suffered by the government due to the respondents' actions is undeniable, as it deprived the government of the opportunity to use the illegally expended funds to instead fund the agency's lawful projects, not to mention the shares purchased by LWUA from FPI and WGI are now worthless, ESBI having been shuttered due to severe financial distress."

She added the government lost at "at least" P80,003,071.51 in this acquisition alone.