PEP Coalition

We fight for truth, justice and good corporate governance!

RCBC’s ‘lack of prudence’

Business Mirror
6/28/07
Market Files
Lito U. Gagni

When the Monetary Board, the policymaking body of the Bangko Sentral ng Pilipinas (BSP), came up with a resolution that sets an imposition on Rizal Commercial Banking Corp. (RCBC), a listed firm on the Philippine Stock Exchange (PSE), of a “penalty for lack of prudence in the management of Pacific Plans Inc. (PPI) trust funds,” the collective view from complaining plan holders of PPI is focused more on their demand for justice.

This is why, in a press announcement where they bared the BSP findings, the plan holders, grouped under the Parents Enabling Parents (PEP) Coalition, say they “will further elevate the fight for justice to a different level.”

For the plan holders, the justice they seek is to be able to get the promised tuition support for which they spent their hard-earned money, not the paltry sum that they got when PPI went through a liquidity crunch brought about by what the preneed firm said was the runaway tuition hikes.

It has been more than two years since the complaining plan holders dramatized their plight before the government regulatory bodies and even the courts. Now, the MB resolution has given them a reason to continue the fight, though, they say “justice grinds exceedingly slow” for them.

What the PEP Coalition wants for now though could present a big headache for the Securities and Exchange Commission (SEC) and the BSP. What the coalition wants is for the regulatory bodies to remove from RCBC the trust fund of the PPI and for the fund to be transferred to another bank.

It has been their contention that the bank has not been promoting the interest of the PPI trust fund, a fact that is being disputed by the bank officials. It was actually this complaint on the trust fund’s handling that led to the coalition’s complaint which resulted in the May 17 MB resolution against RCBC.

The PEP Coalition cannot be faulted for seeking the transfer of the trust fund management to another bank. The coalition, which sought the help of the MB on the matter, cited several “specific unlawful acts of RCBC” regarding the PPI trust funds.

Specifically, the coalition cited three violations of the bank regarding certain sections of the General Banking Act. These are those involving violations on the “conduct of trust business” (Section 80), “prohibited transactions “ (Section 55), and on “conducting business in an unsafe or unsound manner” (Section 56).

For the coalition, there was “no adequate safeguard or compliance with interlocking relationship between trustees and trustor” and that the “interlocking relationships and structures among PPI, RCBC, Great Pacific Life Inc., Malayan Management and Investment Corp., GPL Holdings, Inc. and the Philippine Long Distance Telephone Co. [are] clearly visible in the records of the SEC, PPI, RCBC and PLDT for the years 2003, 2004 and 2005.”

That complaint also dwelt on the use of the trust funds for lending to “unnamed borrowers” which increased from P771 million to P1.1 billion in 1999, representing a fifth of total trust assets, of which P77 million was provided as allowance for bad debts.

Not only that, according to the coalition, “the loan portfolio of the plan holders’ trust fund included loans to related companies and Uniwide.

The loan to Uniwide was reportedly increased to accommodate the refinancing of the loan to the same borrower previously sourced from the PLDT Retirement Trust Fund, also managed by RCBC, after the original loan became delinquent.”

How the resulting MB resolution that brought a whiff of fresh air to the fight for justice by the PEP Coalition would evolve is still up in the air. For now, though, the coalition has received a reason to continue fighting, and its initial battle cry is for the transfer of the PPI trust funds away from RCBC. How this would be resolved provides a compelling narrative for the fight for justice that the plan holders have put up for the dreams they have woven for their children.

June 28, 2007 - Posted by | Columns and Editorials | , , , , ,

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