Senate witnesses detail Legacy-SEC ‘connections’
March 9, 2009
by Butch Fernandez / Reporter
SENATE probers on Monday heard the testimony of two former executives of the failed Legacy Group of banks and preneed schemes, establishing the connection between a Securities and Exchange Commission (SEC) member and businessman Celso de los Angeles. They said this reinforced their theory that SEC regulators failed to stop a multibillion-peso scam that duped preneed plan holders and investors because of such connections.
Senators also allowed several aggrieved clients of Legacy’s preneed plans to confront de los Angeles, and roundly lambasted him for dashing the dreams of poor, ordinary people, including that of a 58-year-old widow raising four children.
At the resumption of the Senate’s Legacy inquiry, Senate President Juan Ponce Enrile sought the resignation of SEC Commissioner Jesus Martinez, who wields oversight powers over de los Angeles’s business schemes, on learning that Martinez, through his son, got “beneficial deals” from the Legacy Group on at least two occasions.
“There is evidence now that Legacy paid for a [P3.2-million] house and lot in BF Homes Parañaque that ended up with the SEC commissioner’s son,” Enrile said,
“Martinez should resign,” the senator insisted, adding de los Angeles, for his part, deserves to be imprisoned for the scam. “If he cannot go to jail for swindling, he can be held for tax evasion…honor dictates these people should go.”
Enrile cited the testimony of Carolina Hinola, former Legacy Group chief operating officer, that she personally handed over P1.475 million to Commissioner Martinez at the Linden Suites in Ortigas “upon the instructions of Mr. de los Angeles” for an Expedition sport-utility vehicle. The vehicle was supposed to have been bought for the Rural Bank of San Jose, but was being used by de los Angeles.
Both de los Angeles and Martinez denied any wrongdoing, with Martinez insisting the two transactions actually involved not him, but his son who was in the buy-and-sell business.
Martinez argued that he committed no irregularity as he had nothing to do with both transactions. The SEC official explained that the sale of the Expedition to Legacy’s Rural Bank of San Jose was made by his son, who happened to be a friend of de los Angeles’s son, Nicolo. “It [Expedition] is in the name of the buy-and-sell corporation of my son,” Martinez told the committee.
“I know for a fact that Mr. de los Angeles is well-connected with the SEC, the regulatory body in charge of preneed companies as he [de los Angeles] is a close friend of Commissioner Jesus Martinez of the SEC,” Hinola said in a sworn statement submitted to the Committee on Trade and Commerce, chaired by Sen. Mar Roxas II.
Hinola said the “close” relationship between Martinez and the Legacy Group owner was “a matter often mentioned and boasted by Mr. de los Angeles in our meetings.”
Hinola said she was able to confirm this personally on February 14, 2006, when she and other Legacy officers, Ms. Namnama Santos and lawyer Ricardo Salomon, met for lunch at the Japanese Restaurant at Shangri-La Hotel in Makati where Commissioner Martinez, accompanied by Parañaque Rep. Ed Zialcita, “asked if we have any problems with the SEC that he [Martinez] could help us with and at that time, I informed him that as far as I know we had none.”
In her sworn statement, Hinola admitted she handled the department in charge of processing claims, policies and reinstatement, and coordinated with rural bank presidents “on matters relating to our products such as the double-your-money, pa-kotse program and preneed buy back.” But, she added, she did not have power to make company policy.
She insisted it was de los Angeles who continued to run the company even after he was elected mayor of Santo Domingo town in Albay. In fact, she added, de los Angeles was “able to withdraw money”— P30 million—from Legacy trust funds, and that the letter authorizing the withdrawal from the trust funds is “now under my possession.”
Senator Roxas, for his part, said, “it is now clear that Martinez had two transactions with Legacy, a house and lot and an Expedition; one transaction could be a coincidence but two deals?”
“These could be seen as big favors that substantially benefited Martinez’s son,” Roxas added. “Commissioner Martinez cannot disclaim responsibility because the Legacy scam happened under his watch. Preneed is one of the areas Martinez was supposed to watch as head of SEC oversight body.”
SEC Chairman Fe Barin, however, told Roxas it was the first time she heard about the Martinez-de los Angeles connection, and promised that “difficult as it is, we will conduct hearings on the case [of Martinez’s links to Legacy].”
The second witness, Namnama Santos, informed Senate probers they decided to come out and tell the truth about the Legacy scam after realizing that “de los Angeles would only protect himself.” She had worked as assistant vice president at Legacy Group.
Wrapping up Monday’s public hearing, Roxas denounced the complicity of public officials in the pyramiding scheme that defrauded hundreds of thousands of Legacy Group investors and plan holders even as he slammed de los Angeles for attempting to thwart the Senate inquiry.
“The brazenness of this Legacy scam is hair-raising. I pity those who were used by these scoundrels to enrich themselves,” Roxas said. “It is crystal-clear how de los Angeles swindled his plan holders and investors with the help of corrupt public officials. It is infuriating to know that even the agency that should have protected the interests of the victims was part of this collusion,” he added.
In a separate testimony, Santos, former Legacy finance officer, detailed how de los Angeles allegedly diverted company funds to his personal accounts and his mayoral campaign during the 2007 elections.
Roxas told reporters that the testimonies, as well as the documents including checks and vouchers submitted by Hinola and Santos to the committee, are strong evidence that could be used to nail down de los Angeles, and hold SEC’s Martinez criminally and administratively liable for the anomalies that brought down the Legacy Group.
“It is now apparent why the SEC was so useless in the case of Legacy. De los Angeles has a protector inside who fixes his problems with the agency. I am sure there are more people involved in this and we will find out who they are,” said Roxas.
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