Prospero Pichay Suspended for LWUA Purchase of Thrift Bank

On 20 May 2011 (Friday) the Office of the Ombudsman ordered the suspension of Prospero Pichay, chairman of the Local Water Utilities Administration (LWUA), over the agency's purchase of the cash-strapped thrift bank, Express Savings Bank Inc (EXSBI) in 2008, which caused the government to lose P480-million.

Included in the criminal charges that Finance Secretary Cesar Purisima filed on 5 April 2011 are members of the LWUA boards Renato Velasco, Susana Dumlao Vargas, Bonifacio Mario Pena Sr., and Daniel Landigan for anomalous acquisition of a troubled thrift bank.

LWUA is a GOCC specialized lending institution for the promotion, development and financing of local water utilities, not of thrift banks, and as depository of the reserves for capital improvement of local water utilities.

EXSBI is a Laguna-based thrift bank with an authorized capital stock of P100 million divided into one million common shares, 86.7 percent of which were originally controled by the family group of Valenzuela Mayor Sherwin Gatchalian.

According to the Monetary Board, it suffered deficiencies since 2005. By the end of 2009, it posted a capital deficiency of more than P51 million. Without even obtaining the requisite approvals from the Department of Finance, the Office of the President, and the BSP Monetary Board, LWUA pushed through with the acquisition of 485,337 shares of stock, representing around 60 percent of EXSBI outstanding capital stock worth P80-million. [Source: SUNNEX: "Ombudsman suspends ex-lawmaker," SunStar Manila 20 May 2011]

The Office of the President, under former president Gloria Macapagal-Arroyo, approved the bank acquisition four months after LWUA got the bank. The Commission on Audit reported that the LWUA investments on the bank were contrary to the 2009 budget.

KUDOS
LWUA employees led by Rustico Tutol must receive heartfelt gratitude from the Filipino people for their courage in bringing up this corrupt transaction to the court of justice.

UPDATES
Ombudsman, under Acting Ombudsman Orlando Casimiro, Orders on July 4 Pichay Dismissal and Perpetual Disqualification From Public Office. [Source]
Suspension TRO Denied by Appeals Court
The Office of the Ombudsman ordered the dismissal of Pichay from service. Subsequently, the Office of the President ordered LWUA to implement the Ombudsman order. http://www.sunstar.com.ph/breaking-news/2011/07/18/palace-sacks-lwua-chief-pichay-167503