Trust-fund abuse in preneed scored
Apr. 28, 2009
Legislators looking into the continuing saga of the preneed industry want to know why the receiver appointed for the collapsed College Assurance Plan (CAP) asked the court to allow two creditors—two companies owned by the Sobrepeñas—to be paid from the Metro Rail Transit bonds if these are sold the amount of $9 million.
“We are aghast at this because this will come from the trust fund, and it is our position that any fund that comes from the trust fund should only be used to pay the plan holders,” CAP plan holders’ counsel Jose Tomas Syquia told members of the House Committee on Banks and Financial Intermediaries in a hearing.
The committee is looking into the management and administration of preneed plans and the safeguard mechanisms used to protect the interest of the plan holders.
This prompted Independent Rep. Roilo Golez of Parañaque to ask Securities and Exchange Commission chairman Fe Barin if the misuse of trust funds may constitute fraud or syndicated estafa.
If he was expecting a quick answer, Golez was disappointed because Barin said they have to review the action to determine if a crime is about to be committed.
“We have been tackling this [problem] for years and the chairman of the SEC is telling us they still have to review what crime is being committed,” a flabbergasted Golez told committee chairman Lakas Rep. Jaime Lopez of Manila.
Golez was also dismayed by the nonappearance of receivers of troubled preneed companies in the hearing. “I am very suspicious because it is statistically improbable that all of the receivers will not be available. I have this belief that they are not cooperating.” Asked what the SEC could do, Golez said at the sidelines of the hearing the SEC can intervene anytime if it feels that the trust fund is not being used properly. “At their discretion, they can require that some of these accounts be converted to cash, bonds, certificates, especially when it comes to investments in companies suspected to be related to the owner of the preneed company.”
Also at the hearing, several plan holders told legislators that since 2004, CAP has been giving them only P400 per semester and that to get even this measly amount, they are still always given the run-around.
“Many of us had sickened, went almost crazy with what CAP is doing to us, giving us only P400 each semester. How far would that amount go?” Chit Baita, a plan holder, told legislators.
Baita said she and other plan holders brought the matter to Barin but was told the case is already in court.
This prompted PDP-Laban Rep. Teodoro Locsin Jr. of Makati City to ask SEC what assistance it can give to plan holders.
Barin sang a different tune and said the SEC can assist the plan holders in following up their case in the Supreme Court. Business Mirror
as of 04/28/2009 7:35 AM