Perils of public office

The filing of criminal complaints last week against ranking officials of the Bangko Sentral ng Pilipinas and the Anti-Money Laundering Council again illustrates the risks that public officials face. It’s not that all those in government are scrupulous. It’s just that complaints against public officials are not that common and many are intended to harass the accused.

Businessman Roberto Ongpin has haled BSP Deputy Governor Nestor Espenilla Jr. to court for allegedly violating the Antigraft Law. In a complaint filed at the Office of the Ombudsman, Ferdinand Marcos’ trade minister assailed Espenilla for signing the AMLC resolution in September 2012 that sought a freeze order on his bank accounts. The Court of Appeals’ freeze in December of some 100 bank accounts linked to Ongpin caused the value of the shares in his companies to plunge. His lawyer claimed that nearly P9 billion in the market value of his shareholdings in Philweb Corp., Alphaland Corp., Atok-Big Wedge Co. Inc. and Philippine Bank of Communications had been wiped out. The complaint alleged that the freeze order damaged Ongpin’s reputation and ruined a potential $1-billion investment deal.

Ongpin, ranked by Forbes Magazine as the 9th richest Filipino, said Espenilla “acted recklessly and in clear bad faith” when he signed the AMLC resolution. Ongpin’s basis was what he termed Espenilla’s “contradictory” position—the BSP official allegedly cleared the businessman’s transactions with the state-owned Development Bank of the Philippines during the Senate hearings in 2011. “He acknowledged under oath during a Senate probe that from the point of view of the BSP as the regulator of banks, the sale by DBP of its 50 million Philex shares to a company beneficially owned and controlled by Ongpin was a ‘prudent’ and ‘positive’ transaction that resulted in ‘trading gains’ for the bank,” Ongpin said. Yet last November, Espenilla signed the AMLC petition for a freeze on Ongpin’s accounts. This was in connection with inquiries into P660 million in alleged behest-loan deals between Ongpin and DBP officials in 2009, when the businessman was reportedly in the good graces of the Arroyo administration.

The BSP has expressed concern that Ongpin was “singling out” Espenilla; the AMLC resolution was also approved by the heads of the Securities and Exchange Commission and the Insurance Commission who sit as members of the AMLC board. BSP Governor Amando Tetangco Jr. chairs the AMLC, but because he was abroad on official business when Ongpin’s issue was tackled, the freeze order was authorized by Espenilla, the BSP chief’s alternate.

The central bank has also pointed out that the AMLC freeze order was issued after the Court of Appeals found probable cause to act against Ongpin.

The case began as a “word war” between Ongpin and the BSP, after the businessman resigned as director of

PBCom when the central bank “deferred” his confirmation. The deferment, in turn, was due to legal questions on Ongpin’s purchase of Philex shares using loan proceeds from DBP. Ongpin has subsequently sold his stake in

PBCom, citing the need to make a “financial sacrifice” and spare the bank from any backlash that could arise from his legal battle with “a ranking central bank official.”

Ongpin has wisely steered clear of waging war with the BSP itself, emphasizing that he had “no rancor whatsoever” against it as an institution. The BSP had earlier described Ongpin’s allegations of partiality as “unwarranted and patently unfair,” saying that the central bank “has the responsibility to ensure that careful evaluation of critical elements is made before final decisions are promulgated.”

The BSP has long pushed for an amendment to its charter to exempt its officials from legal actions while in the course of performing their functions. This followed the numerous court cases filed against BSP executives by owners and officers of shuttered banks or financial institutions in trouble.

The central bank has noted that some of its officials were wasting much time attending court hearings, even in the provinces where some of the cases were filed. Worse, it said, its hands were often tied by restraining orders issued by various courts, prohibiting it from taking action against erring banks and their owners and officers. Perhaps it’s time to take a serious look at the BSP’s plea for immunity from suit.