Checks or Affidavits in the Mail? That is the Question

Remember Mrs. Lego? She just called yesterday to inform me that hallelujah! she received two mails the other Friday. One mail had a check containing P100,000, representing a time deposit that would have matured last January, 2009, if only it hadn't been overtaken by events.

The other mail was for her daughter's CTD, which contained a letter requiring her personal appearance at the PDIC office, something to do with a Legacy loan that she had incurred. Found out that her CTD was surrendered when she applied for that loan, and when she filed a claim, she had attached the acknowledgment receipt in lieu of the surrendered CTD. PDIC tracked the loan, and have asked the daughter to do an accounting of her monthly payments she had made as loan repayments. Fair enough!

There are some DEADBOL members that are receiving mails, some enclosed with checks but most with affidavits that have to be signed and notarized. A check with PDIC's documentary requirements revealed that affidavits of ownership or co-ownership, as the case may be, are solicited only when signature cards are missing or the signature in the card does not tally with the signature in the claim form. This is a valid requirement if it is not abused. However, we know of one family who received 15 letters, and all contained affidavits: it is statistically impossible that everyone of those accounts had missing signature cards or non-tallying signatures. All members of the family had personally visited the bank, filled up the specimen signature cards, and were old enough that their signatures are not expected to change through the years.

One cannot help but be suspicious that this is just another ploy of PDIC to further delay the payment of valid claims by stringing out the verification process.

Who is the real villain? BSP or PDIC

The consultant pointed out that BSP has come out with relatively clean hands from the Legacy debacle. He said that PDIC is being vilified by the bank depositors but forget that PDIC, under its 2004 charter, could only examine the banks if directed by the Monetary Board. However a close perusal of charter's Sec. 8, article 8 shows that PDIC could on its own initiate and "conduct examination of banks with prior approval of the Monetary Board. That, to avoid overlapping of efforts, the examination shall maximize the efficient use of the relevant reports, information, and findings of the Bangko Sentral which it shall make available to the Corporation."

Here's the rub- the BSP had primary responsibility to monitor these banks, and in fact if reports are to believed, had started its investigation of Legacy banks as early as 2001. Why did it take 7 years before it concluded that these banks were conducting unsafe and unsound banking practices? If we are to believe the allegations of ex-PDIC President Ricardo Tan that it had conducted its own investigations of these same banks in 2005 where it found anomalies and irregularities, then why didn't BSP move earlier against these banks? From the aforementioned article above, BSP would have shared its 2001-2004 findings with the PDIC, and since both investigations lead to the same conclusion, then why didn't the BSP and for that matter, the PDIC file charges against the bank officers?

The consultant offered a juicy tidbit: when the combined SEC and NBI teams raided the Makati offices of the Legacy Consolidated Plans, they found several boxes of documents belonging to the Legacy banks. The PDIC got wind of this development, and requested that it be turned over to them. The SEC refused, and the PDIC had to go to court to compel the SEC for the turnover of the documents to them. Can you imagine that? SEC not cooperating with PDIC. BSP turning down PDIC's loan request of P14 billion. And who ends up the loser and victim of this inter-agency intramurals? As usual, the depositors. No wonder Celso and his ilk were and are able to milk the public: these gov't agencies cannot get their act together.

But wait... isn't that the SEC whose commissioner was tagged as having received almost P7 million worth of goodies from CGA? We heard from the grapevine that during the height of senate and congressional investigations of the Legacy mess and SEC Commissioner Jesus Martinez, big boss caused the family of Martinez to be billeted in Hongkong, shades of Jun Lozada. Rumor has it that the family of the commissioner was held hostage so as not to implicate the boss of Celso and Speaker. Jesus Martinez kept his mouth shut until death shut him up for good (or bad). If this rumor is true, then this explains why Celso is scot-free while his US counterparts- Bernie Madoff and Robert Allen Stanford- have been indicted for numerous charges, and more importantly, been stripped of their assets.

A Matter of Miscommunication?

Had a long teletalk with a close consultant of Jose Nograles, PDIC President and these are the details we gleaned from our discussions:

a. PDIC is singling out Davao as the nest of depositors who "because of greed" invested their money in legacy banks even though there wasn't any single legacy bank in Davao. We immediately corrected the use of the word invest since this implies the possibility of loss or gain from putting in one's money in a venture or financial instrument. We told him that investment is different from deposit which gives a fixed return on one's money placement, and the fixed return is called interest rate per annum. And when we talk about Legacy banks, we talk about deposits. The consultant gave me the impression that PDIC will resist paying these Davao depositors, and other such depositors;
b. Based on his talks with Joepot, the consultant sees no problem with depositors who opened multiple accounts within the maximum deposit insurance and PDIC-insured account configurations especially when joint accounts and ITF accounts are made with qualified beneficiaries- persons within the 3rd degree of consanguinity; and
c. That mailing of checks had one objective of making life difficult for depositors who opened dummy accounts using employees, friends, etc. Now it will be up to the dummy who gets issued a check in his/her name to give up what the check represents- a big amount to a driver, maid, or even a friend in need. It will be more problematic for the real owner of the funds to trace a former employee, so as to deposit the check made in the latter's name.

We also mentioned PDIC's limiting the use of a SPA to those living abroad and medically incapacitated. The consultant was surprised to find out that PDIC turned down depositors (who were temporarily in Manila to file claims) from having the PDIC officer attest to their appearance with their valid IDs. This process would have enabled these depositors to execute an SPA while in the Philippines. But no, the PDIC insisted that these depositors go back to their respective countries and execute the SPAs in the nearest Philippine consulate, which is sometimes several hours and hundreds of miles away. Talk about mindless bureaucracy, and making life tough for the depositors, who are the raison d'etre of PDIC.

The consultant believes that miscommunication is the root cause of the image problem of PDIC; and that PDIC intends to pay legitimate depositors. When asked why it is taking too long, he said that the processing and verification of 135,000 accounts in Legacy banks and thousands more of non-Legacy bank accounts is causing the delay. We believe otherwise: our previous posts on the topic establishes the fact that PDIC is illiquid and is relying on its monthly assessment collections to pay the depositors.

We are of the opinion that if only PDIC had acknowledged its insolvency, and admitted that the situation became worse by the subsequent failure of more than a dozen non-Legacy banks, then depositors would understand. They only needed assurance that their deposits would eventually be paid. The scare tactic of calling tens of thousands of accounts as dubious due to lack of or missing bank documents did not help the situation, it only cause anxiety and anguish, leading to the formation of DEADBOL (go here to register).

Be a Good Regulator

PDIC, BSP, and various banking associations recently inked a memo of agreement for the launch of the “Be a Wise Saver” program, which aims to improve depositor awareness in light of the recent string of bank failures.

According to PDIC President Jose Nograles, the campaign has something to do with the recent closure of the controversial Legacy banks. He said the Legacy issue started because depositors believed in something that is “too good to be true,” a scenario that PDIC hopes to avoid in the near future.“We learned from the Legacy mess. We have to make sure now that the depositors are well-informed. They have to know who they’re dealing with,” he said.

What!!! that is like advising people not to buy generic drugs because they are made by Filipino and Indian companies, don’t be fooled into buying these low-cost drugs because you are not sure of its quality. Buy the branded drugs: even though much more expensive, at least you are sure of its efficacy.

Don’t deposit in the rural banks, especially those that give high interest rates because they are not well-capitalized and are prone to fail. Deposit in the big commercial banks though they give very low interest rates: at least you are sure they won’t go under.

Question: Drugs are regulated by the BFAD; do you mean that even though these generic drugs are approved and monitored by the BFAD, they could be adulterated or even detrimental to one’s health?

Question: Rural banks are regulated by the BSP and the PDIC; do you mean that even though these banks are supervised and monitored by the BSP and PDIC; are you telling me that they are conducting unsafe and unsound banking practices?

Answer: Helloooo! This is the Philippines. Regulators here don’t do nothing, until it is too late.

An Overseas Letter from a Fil-Am Retiree

I am not at all exaggerating about my present financial condition . the family has exhausted all its savings waiting for six months now for return of insurance claims . All my credit card companies are starting to call now due last months statements remains unpaid . While we are now just paying our utility bills and the biggest one the home amortization and subsistence (food & groceries).... My only income now is $1,003 SSS monthly retirement check and the home amortization alone is $2,411.00 monthly .

If no insurance money will come in the next month , the family will have no recourse but to default in our home amortization payments.

Yours truly,

Sad to say, but true. While PGMA, cabinet secretaries, congressmen, and their families are now junketing in Japan and Brazil, Filipinos here and abroad are paying the price for our governement's incompetence and apathy for the ordinary people. This is exactly the reason why DEADBOL (go here to register) was organized: to light a fire under the a**es of our public servants and put fire in the bellies of the oppressed.

The Postman now works for the PDIC

Good news for some! HC is the first depositor we know who confirmed that PDIC mailed him three checks in payment for all three of his RBOP time deposits. Vicky, a fellow member-depositor who works in Angola, had earlier received two checks, representing her share of two joint accounts in RBOP wherein her mother was her co-account holder. David, a foreigner-member living in Cebu, reported today that he and his wife were paid for their respective shares of joint accounts and one single account worth P100,000, that represented some of his accounts in Bank of East Asia. Update: the next day, his adult stepdaughter received from the mail a check for P250,000, also for a BEA deposit.

Here is what we can deduce from the experiences of these lucky depositors (we say lucky because there are a lot out there, including yours truly, who have not even seen the shadow of a mailed envelope:
1. RBOP's time deposit accounts, inspite of the bank's notoriety as the main hub for Celso's fraudulent activities, have been verified and some account holders are now being paid. So this means that depositors of other banks are getting paid and one example is David's BEA accounts;
2. Except for HC's case (his accounts totaled about P500,000), the other two were only paid a fraction of their total deposits. David received less than 15% of his deposits. PDIC advised him to submit a notarized affidavit of disinterest persons if he wanted to be paid for one of his individual accounts, and all because his middle initial was spelled out in the CTD, but not in the signature card. Vicky's mother has to file a notarized affidavit of co-ownership before her mother's share would be paid out. PDIC is making the depositors jump through hoops. So the strategy is pay a little and then dangle the possibility of getting paid for the other accounts, but only after undertaking another set of tasks and processes. If PDIC is relying on its monthly assessment collections to fund its payments, then this strategy is logical.
3. All three actively worked for the recovery of their accounts: HC wrote a presidentiable who endorsed his letter to PDIC; Vicky got herself interviewed by GMA-7 TV; and David keeps on writing to, commenting in and posting to any blog or online medium. Oh yes, David also wrote a letter to the same presidentiable who must have endorsed it to PDIC.

Bad news for others! We called Mrs Lego yesterday night and again this afternoon, and she gave us the same news- no mail received as yet. Poor woman, she has futilely visited twice her city's postal office. She told me that she called the PDIC office and they told her that she should be receiving her check within a week. Mrs. Lego told them that it has been exactly a week since she had "rallied" in their Makati office, but still no letter. She said that if by tomorrow she has not yet received that much-awaited letter containing a check, she would pay PDIC a visit the next day and plead, beg, cry, and shout (again). The waiting saga of this 64 yo woman continues....

Goodfellas of the Philippines

Remember the movie Goodfellas (1990) starring Robert de Niro, Ray Llota, Joe Pesci. It was a true mobster story about three mafia gangsters. In one segment of the movie, restaurant owner Sonny tries to collect 7,000 dollars of unpaid bills from Tommie, a dangerous, disruptive and volatile criminal, who gets so angry that he breaks a glass bottle on Sonny’s forehead. In the next scene, a scared Sonny complains to Paulie, the local Mafia boss overlord. Although unaware of how to run a restaurant, Paulie promises to offer protection by becoming a partner. “Sonny is now committed and beholden to Paulie. Now Sonny’s got Paulie as a partner. Any problems, he goes to Paulie. Trouble with a bill, he can go to Paulie. Trouble with the cops, deliveries, Tommy, he can call Paulie. But now the guy's got to come up with Paulie's money every week. No matter what. Business bad? F--k you, pay me. Oh, you had a fire? F--k you, pay me. The place got hit by lightning, huh? F--k you, pay me. Also, Paulie could do anything. Especially run up bills on the joint's credit. And why not? Nobody's gonna pay for it anyway. And as soon as the deliveries are made in the front door, you move the stuff out the back and sell it at a discount. You take a two hundred dollar case of booze and you sell it for a hundred. It doesn't matter. It's all profit. And then finally, when there's nothing left, when you can't borrow another buck from the bank or buy another case of booze, you bust the joint out. You light a match.” And the restaurant is set on fire by Paulie’s hoodlums and burns down.

Sounds familiar? You bet it does. If we go by LAV’s June 12 comment in Ricky Carandang’s blog and KBP Cebu Chairman Leo Lastimosa's statement, they both say that Speaker Nograles, Butch Pichay, and other powerful people were partners of Celso de los Angeles. Here is a possible scenario: Celso runs to Prospero Nograles and company when BSP in 2003, according to Celso, starts harassing and extorting from him (remember his accusation against ex-BSP Deputy Governor Alberto Reyes and his brother, Efren Reyes). In the next scene, a scared Celso complains to Noggie, who probably gets the go-signal from his big boss. Although unaware of how to run banks, Noggie and company promises to offer protection by becoming partners. Celso is now committed and beholden to Noggie and company. Now Celso has got Noggie as a partner. Any problem, he goes to Noggie and his boss. Trouble with PDIC? Big boss says back off to Ricardo Tan, PDIC president who initiated a PDIC investigation in 2005. Tan doesn’t back off, and he gets replaced by another (who dies while holding office). Trouble with BSP? Big boss says back off and BSP backs off (according to Alberto Reyes, BSP had started its investigation of legacy banks as early as 2003 but takes five years to act on its findings). But now Celso’s got to pay his new partners. Noggie is now more powerful: not only is his brother-in-law working for the BSP, but his younger brother is PDIC president. Business bad because of financial crisis? F--k you, pay me. Launder money for them, pay their campaign expenses using legacy funds, use legacy offices and staff for their election campaigns, etc. Create so many fictitious loans using bloated collateral to siphon off money deposited by trusting and unsuspecting depositors. Come up with ghost applicants for motorcycle loans and receive hundreds of motorcycles. Print out so many CTDs assigned to the new partner’s dummies. It doesn’t matter. It’s all profit. And then finally, when there's nothing left, when you can't borrow another buck from the bank or get more legitimate deposits, you bust the banks out. Declare bank holidays. Is this a true story, too?

That one possible scenario. Here in another possible rundown: Celso himself gets tired of the payouts to and extortions from his new partners, and he himself gives up and closes all his business in one go. Celso is an AIM MBA graduate- he knows the value of banks. He would let go of his other businesses like the preneed, real estate, and credit card companies but given a choice, keep the banks. Only if he was cornered and desperate would he give up his banks, all 13 of them. He must have said, “What the f—ck!” and without giving notice to his partners, closed the whole shebang. And that explains how Noggie ended up holding P18 million of investments and CTDs (unfunded?).

Rallying Inside a Makati Office

We were excited to hear Mrs. A. Lego's (she agreed to the use of her family name) account of her scheduled visit to PDIC SSS bldg. so I called her up today. She told us that she, again with her daughter, arrived inside the PDIC office at around 3.30 pm. She noted that the Makati rally (against ConAss) was building up all around, and here she was ready to conduct her own rally inside the PDIC premises.

As usual, she ended up in front of the information counter. She forgot to ask about Atty Elaine and talked with a customer assistance officer who told her to wait for a letter. She countered that she would not leave the office until she got her check, while waiving her ultrasound findings and her husband's senior's medicine booklet. The officer got her yellow slips, and told her to wait while he checked the status of her claims. He returned with the news that a check would soon be mailed to her, but for only one claim, the P100,000 time deposit that had matured last January, 2009. She requested that the claim of her husband be included, but was told that they could only settle one claim. She asked why they could not give her the check over-the-counter; she was told that checks are mailed. So Mrs. Lego is giving the PDIC until Tuesday next week to make good its promise.

Mrs. Lego's experience with PDIC provides us with two learning points:
a. If you are willing to create a scene in the PDIC office, and do it frequently, you may get a check mailed to you;
b. PDIC cannot pay all claims at the same time- Mrs. Lego and her children had a total of six CTDs but only one could be settled. This just confirms our contention that PDIC is insolvent despite its P61.5 billion DIF, and is settling claims based on its monthly collections from the banks. Using the verification process as an excuse is just that, a subterfuge to stall and delay paying legitimate claims.

Wouldn't it be interesting to know if or when Mrs. Lego actually receives her first check? Subaybayan...

How Many Visits Will It Take?

Mrs. AL called us up yesterday night , and she was so hyper. She said that she, together with her daughter, had just come from visiting PDIC SSS bldg office that afternoon. She admitted to creating a scene. She was crying and shouting in the information counter, first requesting, then demanding the release of a least one check. She has six time deposits, ranging from 50k to 100k, and she could not understand why it is taking PDIC so long to settle her claims.

She has a tumor in her breast, and needs a biopsy. She is now feeling pain in the other breast. Her husband recently suffered a third stroke, and manhid na daw ang left side of his face. Her son has a tricyle that is in danger of being repossessed because he is 3 months late in his amortizations. She has two daughters with kids who are late in their enrollment because of lack of funds.

Mrs. Al brought her ultrasound findings and the senior's card of her husband to show that it was filled up with entries of medicines purchased for his condition. She said that she would not leave the PDIC office until she got answers, and a check. The clerk told her that he would check the status of her claims but came back and told her that the computer system was down. Mrs. AL said that she resumed her crying but got a headache, which forced her to leave the PDIC office, but with a promise that she would be back.

We advised her to take it easy, that a headache could be a symptom of an impending stroke. It would not help any if she got a stroke, and if she survived it, she would be in the same condition like her poor husband. She said that is the reason why she left the PDIC office, in order to calm down. We suggested to her that the next time she goes back to the PDIC office, she should look for Atty Elaine Deticio, AVP for Claims, instead of talking to a clerk or desk staff. In our one and only meeting with Atty Elaine, she struck us as a sensible and professional individual who listened and cared, not only for the depositors but also for her staff. We cannot wait to hear from Mrs AL the next time we talk, and find out how she fared with a ranking PDIC officer, especially with Atty Elaine.

We can only imagine the tens of thousands of depositors who are in similar straits like Mrs AL who cannot understand why PDIC is taking its sweet time to return to return to them their hard-earned money to them. Mrs. AL knows that PDIC is not handling government funds, but money specifically intended to protect depositors like her. If there was such a thing as a small depositor (which there isn't per PDIC charter), then 65-year-old Mrs AL would be the epitome. And PDIC is the anithesis of an ideal insurer.

Figures don't Lie, but Liars Figure.

Remember Mrs. AL, the 64-year-old seamstress who went to PDIC SSS building on May 15 to beg for the release of a check to pay for a breast biopsy? She filed claims for six time deposits last March 24, 2009.

Well, she went back to the same PDIC office on Friday, May 30 to plead her case. Once again, she brought her ultrasound findings, and only got as far as the information counter. Once again, the poor woman was told to wait for a letter that would inform her of the status of her claims; the clerk told her that's the way it is. It has been almost ten long weeks since she filed her claims.

Mrs. AL is very desperate. Aside from her required biopsy, her 67-year-old husband Mr. RL suffered his third stroke last Sunday. When before he could talk though garbled, now he is mute. He needs to see a doctor, but his wife worries that the doctor would prescribe treatment that they can scarcely afford. It is a daily struggle for her to put food on the table and buy their maintenance medicines. She cannot understand why PDIC is taking so long to give her back her hard-earned money: they cannot even give her P50,000 which is the value of one of her CTDs.

It is therefore hilarious to read Mr. Nograles press release urging 34,000 account holders to file claims to speed up the processing of their claims. It is impossible to imagine that six months have already passed, but there are still a large 25% of the total accounts that remain unclaimed. And he wants more claims to be filed when PDIC has a hard time processing claims that were earlier filed. What game is he playing? The age-old game of Charade.

What is puzzling is his announcement that 51,847 accounts were already verified and are eligible for claims: of this number, 17,359 filed for claims, and 13,970 were already paid. Well, all these statistics mean nothing to Mr. and Mrs. RL who are in dire need of money- their money. Borrowing again the words of Disraeli and popularized by Mark Twain when statistics were used to bolster an argument: "There are three kinds of lies: lies,damned lies, and statistics."

And all that Mr. Nograles is trumpeting is this sad fact: that only those accounts below P15,000 have been paid out. Ask Mrs. AL and we are sure that she will agree to this Mark Twain quotation: figures don't lie, but liars figure!