By Melissa Luz T. Lopez, Reporter

Ombudsman to file graft, malversation, other charges against Pichay, Gatchalians

Posted on April 18, 2015

THE OFFICE of the Ombudsman is set to file graft charges against former water-utility officials and executives of two Gatchalian-led companies for the purchase of an ailing thrift bank using public money.

Assistant Ombudsman Asryman T. Rafanan said yesterday multiple graft and malversation charges, as well as charges of violating the country’s banking laws, will be filed against former Local Water Utilities Administration (LWUA) chairman Prospero A. Pichay, Jr. and several others for ordering the purchase of the Laguna-based Express Savings Bank, Inc. (ESBI) in 2009.

The LWUA officials acquired and infused P780 million capital to the rural bank from the agency’s funds, Ombudsman investigators said.

Also charged are executives of Wellex Group, Inc. (WGI) and Forum Pacific Inc. (FPI), among them William T. Gatchalian, his wife Dee Hua and their sons Sherwin, Weslie and Kenneth -- a business family also in politics. They allegedly received P80 million from LWUA for the deal.

“The injury suffered by the government due to the respondents’ actions is undeniable, as it deprived the government of the opportunity to use the illegally expended funds to instead fund the agency’s lawful projects,” Ombudsman Conchita Carpio-Morales said in a statement released Friday, adding that the investment made was rendered “useless” with the ESBI now under liquidation.

“In view of the bank’s precarious financial standing at the time of the sale, the windfall received by herein private respondents must be deemed unwarranted benefit, advantage or preference.”

The Gatchalians owned majority shares in ESBI, which was placed by the Monetary Board under receivership two years after the sale. Private auditors disclosed that the rural bank had been rendered insolvent since 2005 due to significant net losses and capital deficit.

Sherwin T. Gatchalian currently sits in Congress as representative of the first district of Valenzuela City, the family’s bailiwick. Weslie T. Gatchalian, meanwhile, serves as a party-list representative of Alay Buhay, a community development group.

The Wellex group denied the alleged anomalies in the ESBI deal, saying it was “unfortunate” that the company was dragged into dirty politics.

“The conclusion reached in the Joint Resolution that private respondents received unwarranted benefits from the transaction is based on the presumption that they received part of the consideration for the 445,377 ESBI shares. In truth and in fact, however, private respondents never benefitted at all from the sale, as there is no proof that they personally or actually received any part of the consideration for the subject shares,” Wellex said in a statement released after the Ombudsman’s announcement, adding that they are “sellers in good faith.”

“It is unfortunate, though, that FPI and WGI [were] sucked into the whirlpool of political vendetta against known political allies of the previous administration since former LWUA Chairman Prospero Pichay is known to be very close to detained former President Gloria Macapagal-Arroyo.”

“The LWUA Board’s apparent failure to secure prior approval for the purchase of the questioned ESBI shares should not prejudice FPI and WGI. Private respondents were impleaded in this case solely because they supposedly conspired with public respondents to commit the crimes charged. The above facts, however, clearly negate any claim of conspiracy.”

Five ESBI officials will also be charged for allowing the deal despite existing laws which require approvals from the Department of Finance, the Monetary Board, and the Office of the President for selling the bank. Four incumbent bank officers were ordered dismissed from service.