The Palace has placed three board trustees of the Local Water Utilities Administration (LWUA) under preventive suspension for atleast 90 days in connection with the misappropriation of at least P480 million in public funds to acquire a troubled thrift bank.
Executive Secretary Paquito N. Ochoa Jr. issued on Friday the suspension order to 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, stemming from the anomalous purchase of shares of stocks of the Laguna-based Express Savings Bank Inc. (EXSBI) using agency funds.
Based on Ochoa’s order, Peña, Vargas and Velasco are suspended “for a period of at least ninety (90) days, and to continue until thepreventive suspension is lifted or the administrative adjudication of this case is terminated.”
Purisima stood as the complainant versus the LWUA board members, in his capacity as secretary of finance and member of the Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP), which regulates banks in the country.
Ochoa said Purisima sought the preventive suspension of Peña, Vargas and Velasco for “alleged grave misconduct arising from their direct and willful participation in facilitating the highly irregular and anomalous takeover and acquisition of shares of stocks of ExpressSavings Bank Inc., resulting in the dissipation and misappropriation of public funds.”
In their defense, Vargas, Velasco and Peña contend that the possession by LWUA of the majority of shares of stock of EXSBI were never taken up in any of their board meeting from the time they assumed office.
To support this claim, the three trustees submitted to the Office of the President Legal Affairs Office a certification by the LWUACorporate Legal Counsel/Board Secretary, which indicated that Peña was appointed LWUA board member on February 10, 2010; Vargas on March 1, 2010; and Velasco on March 9, 2010.
The suspension order pointed out, however, that “at the very least, the inaction of respondents… constitutes neglect in the performance of duty, if not grave misconduct.”
“As members of the Board of Trustees, it was incumbent upon them to know matters affecting LWUA,” the order stated.
The three trustees also insisted that the acquisition of the 445,337 shares of stock, constituting approximately 60 percent of theoutstanding capital stock of EXSBI for the amount of P80 million, was dated May 26, 2009 and the deed of absolute sale transferring the shares to LWUA was dated June 3, 2009.
The complainant, however, submitted documents showing that the MB, particularly Resolution No. 605 dated April 29, 2010 and Resolution No.1301 dated September 16, 2010, denied the request of EXSBI for approval of the transfer of shares to LWUA and authority to accept deposits from government entities.
Notwithstanding these resolutions, the shares were still transferred and the bank accepted and continued to accept deposits from government entities, the order noted.
“While the MB resolutions may have been directed to (EXSBI), respondents, as trustees of LWUA, cannot feign ignorance thereof,being that LWUA is the controlling shareholder of the bank,” the order said. “This non-compliance with or defiance of the MB Resolutions transpired (and continues to transpire) during the term of these three respondents as trustees.”
“Respondents, as trustees, cannot hide behind a certification that the acquisition of the shares in (EXSBI) was not discussed in any of the board meetings they attended,” the order also said.
The two-page suspension order also justified that “the possible prejudice their continued stay in office may have on the fairdetermination of the case, warrant the imposition of a preventive suspension.”