To the Philippine elite, two ways to quick money are behest loans and bourse graft. In the United States, shoddy savings and loans borrowings and insider stock market trading are treated as crimes and dealt with accordingly by Federal regulators. But this isn’t yet true in this country: anything goes if you can get away with it. And this may be why the Development Bank of the Philippines (DBP) stands today at the center of a suicide after the new DBP board began sniffing at various suspicious transactions of the Arroyo regime.
Soaring gold and other mineral prices make a stock market-listed mining firm a prestigious strategic acquisition. Even better, a quick resale of shares provides for an excellent insider trade.
But the Filipino elite almost never risk their own cash even when risks are already minimal. As such, when a financial genius spots such a deal, he can go to yet another financial genius managing a government bank. The bank insider arranges for the needed cash, authorized of course by some powerful political figure always ready to make additional money. The behest loan is approved with undue haste, the mining firm acquisition is made, and an insider trade follows with a swift repayment of the bank loan supposedly the way to cover up any anomaly. The bank insider, the loan borrower and the political patron make a lot of money, probably recovering all losses in earlier transactions that were badly impacted by the financial collapse of big US and European financial houses a few years earlier.
Even if newspaper ads and PR campaigns can muddle the issues, the above hypothetical plot could be the simple explanation behind the current DBP media exchanges with a former trade and industry minister. It’s time for Congress to step in to enact laws that will level the playing field in Philippine business and protect all concerned from influence peddlers and insider traders.
—JOSE OSIAS,
jzosias@gmail.com