The Legacy Bank Mess: An Expose of PDIC (Part 1)

The legacy mess created by Celso de los Angeles has once again rocked the already ailing preneed industry. The sudden closure last December, 2009 of Legacy Consolidated plans and its two affiliated preneed companies added an estimated 30,000 victims to the legion of planholders holding useless educational and pension plans. Although this development spelled more bad news for the floundering preneed industry, it was not unfamiliar to the public that had experienced years ago the closure of CAP, Pacific Plans, and several other companies in the business. If for anything, legacy plans had just delivered the final blow on a moribund industry.

What is insidious and potentially catastrophic is the deleterious effect of the collapse of the legacy banks on public confidence and faith in the banking system. Surprisingly, it is not Celso that is the villain in this unfolding scenario that is fraught with serious negative implications for the country's rural banking sector. The Philippine Deposit Insurance Corporation was established in 1963 with a single overriding mandate – to ensure public confidence in the banking industry. This is achieved by providing all depositors in all banks with an insurance coverage of P250,000; and second, by acting as the ‘receiver’ of failed or closed banks. Up until the closure of several legacy banks, PDIC has been faithfully fulfilling its current overall mandate “to provide depositor protection and strengthen public confidence in the banking system.” Hundreds of banks have closed and been declared insolvent since PDCI was created, but it had remained the faithful guardian and guarantor of the depositors’ money.

The PDIC Occasional Paper No. 1 2005 mentioned that “notwithstanding problems arising from the poor quality of record-keeping, PDIC’s continuing efforts at expeditious settlement of claims has paid off in terms of a shorter period of time for payouts. The average number of days to start payouts from date of closure has improved from 289 calendar days in 1993 to 41 calendar days in 2002, and single digit levels beginning 2003.” However, this progress is all set to be reversed and retrogress with the convoluted manner that PDIC is now conducting the filing, verification, processing and payout of legacy bank claims. It is twisting and bending its own policy, rules and regulations, and conjuring a new set of procedures that are tedious and time-consuming. Since the closure of the legacy banks before mid-December of 2008, PDIC President Jose Nograles defends its actions by explaining in numerous press releases that PDIC just wants to make sure that only “legitimate depositors” are paid because bank officials have not only lost banks records but created fictitious accounts. We understand the need for precautions but it seems that Nograles, reading his innumerable sound-and-print bites, would rather not pay the depositor who in good faith banked his hard-earned money than risk paying a fraudulent claim. As of now, almost 150 days since the closure of banks, only a miniscule percentage of depositors have been paid. None of the 100k accounts above, which account for about 75 percent of the total 135,000 accounts, have been paid. PDIC had previously adhered to the necessity of prompt payment of insured deposit claims, not only to maintain credibility and confidence in the deposit insurance system but just as important, to help eliminate possible contagion effects of closure. So why would PDIC, under the leadership of Jose Nograles, deliberately ruin its excellent track record of single digit days payout and run the real risk of eroding public confidence? The answer is both political and financial but before we delve into the dark motives of powerful men and hidden interests of big commercial institutions, we first need to expose the myths and propaganda that PDIC is peddling to the general public.

Another legacy from Celso

Been absent for quite a while, not just because I am preoccupied with a lot of things- foremost is the preparation and filing of claims with PDIC- but simply because nothing really new has been happening regarding Celso de los angeles. Sure, there are a lot of cases being filed in court against him but that is to be expected considering the nature of his crimes. BSP started it or was it initiated by angry investors in his preneed buyback plans? then PDIC got into the swing of things by filing two cases against him for syndicated estafa. I even read that SEC also filed a case against this criminal mastermind. Of course, here in the Philippines there is a wide gulf between filing cases and actually getting the respondent found guilty.

However, this legacy imbroglio has spawned another crime and celso is mentioned not because he is the perpetrator but because his misdeeds have created another monster. PDIC is now emerging as the criminal, led by its mastermind, its president who goes by the name of Jose Nograles. If his name sounds familiar, it is- he is the brother of Speaker Prospero Nograles. What is his crime? that will be the topic of our forthcoming blogs.

Expedition: lost and now found

The return of the Ford expedition right at the front of PDIC was a calculated strategy. Celso planned it in such a way that it would be traced back to him. Never mind if he swore under oath in the senate hearing that he had a lot of expeditions but did not have one owned by one of his rural banks. He'd rather be called a liar in order to cover up his dear friend and protector, SEC commissioner Martinez. I really suspect that the expedition was used by Martinez or by his wife or by his son but when things got hot, Martinez asked Celso to arrange it in such a way that it could not be traced back to the Martinezes. There is no other explanation why a criminal mastermind would allow himself to get easily caught returning the "hot" vehicle. Of course, anyone parking a car in front of a government building at an unholy hour would attract interest from security guards patrolling the perimeter. I just pity the hapless driver of Celso who was ordered to park the car, and knowing Celso, he would be paying his driver minimum wages even after going through detention and grilling by PDIC authorities.

This incident serves only to prove that Celso and Commissioner Martinez are thick as thieves!!!

Properties of Celso

The senate hearing today details some of the properties of Celso. What is shocking is that the land and properties listed under the trust fund of the preneed companies are still under the name of Celso and used by him. He sleeps in the One Roxas Triangle condominium and his son uses the 2,138 sqm resort in punta engano. Senator Enrile divulged the damning info that Celso has been trying to sell his Ayala Alabang house and lot for P200 million. This is the property that is located in 303 Country Club drive, which I have always maintained belongs to him, and is different from the 3,000 plus sqm lot that he sold last December for P57 million. In fact, last night (Sunday), the lights of the Country Club drive house were switched on indicating that Celso was there last night planning his moves for the next day's senate hearing. Of course, Celso may not have been there but was in the One Roxas triangle condo, supposedly belonging to the preneed trust fund. What came out per Carolina Hinola's account was that deeds of sale for these properties were signed by Celso as vendor but were not notarized. So for all intents and purposes, Celso still owns these properties.

Same thing with the Ford expedition and the house sold by the son of SEC commissioner Martinez to a legacy company: supposedly sold by the son but still in the name of the younger Martinez' corporation. In other words, the younger Martinez still owns these assets and as Senator Roxas pointed out, this maneuver was a bribe to Martinez because the younger Martinez still uses the car and the house. You can fathom the devious mind of Celso from these relatively small scale transactions, and then extrapolate what he did to the funds of the legacy banks and preneed companies. The house and expedition cost a total of P6.5 million pesos, but the cost to the public and the government can easily top P13 billion or even P20 billion to include the preneed buyback investors.

The face of a criminal genius

Ano kaya ang nasa isip ni Celso when this picture was taken? He was in the House of Representa"thieves" and therefore was at ease among his species. Nothing to worry about since he has so many friends in congress, foremost among them is allegedly the Speaker of the House. Oh! I forgot, may mga congressmen pala na nakainvest daw ng millions sa preneed buyback plan at galit kay Celso at sa Speaker kasi hindi nababawi pa ang pera nila. And they know that the Speaker's millions have been returned by Celso. So therefore parang alert and wary ang expression ni Celso sa picture na ito.

Ito ba ang mukha na pagkakatiwalaan at paniniwalaan mo sa mga sinasabi niya? that he will find a way to return the principal to the preneed investors who are owed billions, not counting the double your money in interest income? Eh kung ang binigay niyang jewelry kay Regine ay binawi niya, ano pa kaya ang perang nasa kamay na niya?

Politicians we get

You start as a crook and then end up as a congressman or mayor. That is what Celso did- he started by going on a binge of buying undercapitalized banks and small-time preneed companies, ripping the banks and investors, and then ran for mayor of a small town. That is also what the news is reporting about Joc-joc Bolante who is reportedly thinking about running as congressman. That is what Virgilio Garcillano tried to do in the 2007 elections when he ran (and thankfully lost) for a congressional seat in his hometown of Bukidnon. Why do these crooks want to be politicians? Ask the Prosperos identified with Celso's legacy grooup of companies and you may get the answer from the horses' mouths. Or you can ask Kabayan Noli de Castro, who Celso campaigned for and supported and for that Celso was amply rewarded a high position in government. But then again, no need to ask when you already know the answer.

Unaccounted ayala alabang mansion ni Celso

Parang hindi alam ni Sen Mar Roxas na Celso still has a house in ayala alabang village. Ito ang bahay na ang address ay 303 Country Club drive- this is a house and lot estate. Iba ang nabenta na worth P57 million pesos- lot lang yun na may laking 3,000 plus sqm. This lot was sold first week of December 2008. Ito yata ang ayala alabang property na sinasabi ni Celso na part of the annulment settlement with his wife. Pero teka nga- di ba sa mga syndicated estafa cases na-file against Celso, kasama sa mga respondents ay ang asawa ni Celso na ang pangalan ay Maria Concepcion. Does it mean na hiwalay si Celso sa kanyang asawa sa kama pero kasama sila sa negosyo? O kuwento lang ni Celso na hiwalay siya sa kanyang asawa para matransfer ni Celso ang kanyang ari-arian to the name of his wife? Pero one thing is for sure, Celso has more properties here and abroad. He has reportedly disposed of his printing press. De los Angeles sold the Goss Community SSC printing press for an undetermined amount to National Press Club president Benny Antiporda, who acquired majority ownership of the tabloid Remate, which used to be owned by former congressman Prospero Pichay. Is this the same Pichay who had reportedly been seen attending parties hosted by Celso?

So the Cebu property that we featured last month sits on a 1,900 sqm lot and is located in punta engano, lapu-lapu city. The newspapers report that starlets Maui Taylor and Katya Santos had visited this resthouse that is built on top of a cliff. And the yacht previously named M/V Legacy has now been renamed The Sto. Domingo; obviously to prevent the yacht from suffering the same fate as the sunken holding company called what else- the Legacy group of companies. How about this sprawling resort located at the foot of Mayon Volcano? Does anyone know how big this is? And how big and expensive is the Black Sands Resorts which Celso (Legacy?)bought and now calls his home in Sto. Domingo, Albay?