TO ILLUSTRATE THE PROPRIETARY NATURE of Ferdinand Marcos? (FM) behavior towards Lucio Tan (LT) and his companies, last week?s column cited a letter from LT to FM, asking for the latter?s assistance in the former?s bid to acquire General Bank and Trust Co. (GenBank, now Allied Bank).

The specific assistance requested was for FM to ?persuade? the Philippine National Bank (PNB) to commit to issue a P310-million standby letter of credit (L/C) in favor of the Central Bank (CB), to secure the loans and advances made by the CB to GenBank. Sans this commitment letter, the bid would be disqualified.

The request, made on a Saturday (March 26, 1977), was urgent. The deadline for submitting the bids had been set by the CB for Monday (March 28, 1977) at 7 p.m.

FM must have acted immediately, because on Monday, March 28, PNB President P.O. Domingo did sign a letter, signifying the bank?s readiness to issue, ?at the request of LT? et al., the required standby L/C to the tune of P310 million. This, even though the PNB?s single-borrower limit was only P200 million.

As it turns out, this was not the only irregularity that accompanied the acquisition by LT of what is now Allied Bank. Both PNB and the CB seem to have bent over backwards to ensure that LT got what he wanted. As documents obtained by Catalino Generillo from the CB indicate. Yes, the Generillo who was kicked out of the Presidential Commission on Good Government (PCGG), at the behest of the solicitor general and LT, for doing his job too well.

There is a memorandum to the CB governor (Gregorio Licaros). Written on March 29, 1977, and signed by his top lieutenants?Senior Deputy Amado Brinas, Deputies Jimmy Laya and Gabby Singson, Special Assistant Carlota Valenzuela, Assistant Arnulfo Aurellano, and the director of the DCSB (something to do with bank supervision) Antonio Castro?the memo reveals the following:

1. The prospective bidders?Family Savings Bank (Gotianum), PB Communications (Go), Paramount Finance (Poblador), and the Lucio Tan Group (represented by Ramon Orosa)?were informed at a meeting on Saturday, March 26, that they must collateralize the emergency advances granted by the CB to GenBank with stand-by L/Cs issued by banks acceptable to the CB and ?that the names of the banks that will issue said LCs must accompany the bids.? It was only on Monday morning, March 28, that ?the Governor instructed us to advise the prospective bidders that they should submit together with their bids, the firm commitment of the banks that will issue the stand-by letters of credit. However, we were able to contact only PB Communications and Paramount Finance who were advised accordingly.?

Nota Bene: As of March 26, the requirement was only that the names of the banks who would be issuing the LCs were to accompany the bids. It was only on March 28 that the CB governor gave orders that firm commitments by (not just the names of) the issuing banks must accompany the bids. Yet, LT had already asked FM to twist the PNB?s arm on the 26th. He must have had advance information which even the CB deputy governors did not have. Given the sudden notice, the latter could contact only two of the prospective bidders, and LT wasn?t even one of them. Yet he was the only one able to submit that firm commitment, courtesy of PNB.

In fact, per the memo, LT was the only one who was able to submit a bid. How convenient.

2. The CB governor?s top lieutenants also ?respectfully invited? his attention to the rule that ?the total amount of the LC to be opened shall not exceed an amount equivalent to fifteen percent (15%) of net worth.? Well, the P310-million L/C issued by PNB was more than 18 percent of its net worth at the time (P1.7 billion). Laya et al. also pointed out that ?the party who opened the stand-by L/C shall not have any past due obligation with the issuing bank for the 90-day period preceding the date of the issuance of the L/C.? And that the stand-by LC shall be fully secured, with real estate mortgages and/or CB or national government bonds. Again, these requirements obviously were not met.

PNB broke so many CB rules in accommodating LT, at FM?s request. And the CB allowed it. Both not only bent backwards, they turned somersaults. Aside from the items detailed above, the Monetary Board (MB), on July 1, 1977 (Minutes No. 25), or after the expiration of the 90-day period within which to do so, deleted the requirement for PNB to issue the P310-million standby L/C. It also extended LT?s repayment period for those CB advances from two years to five years. And, instead of the required real estate and/or government and CB bonds as collateral, it chose to accept the tobacco leaf inventory of Fortune Tobacco.

Did LT manage to get CB and PNB to jump through the hoops on his own? If we are talking about today, the answer would be yes. The number of jurists, legislators and executives in his pocket is legend. But in 1977, LT was definitely not one of the big boys. He needed FM?and FM obliged. Even at the height (or depth) of our international debt crisis, when the government was scrounging around for foreign exchange reserves, FM obliged, directing the CB to deposit 50 million precious dollars in Allied Bank so it could pay its international creditors.

Because he loved LT? Or because he owned LT?