JV to Villar: Account for “other public misconduct”

PRESS RELEASE. January 31, 2010.

Account for “other public misconduct,” Villar told

JV Bautista calls for audit of behest loans

Amid the controversy on the so-called “C-5 project scam,” a human rights lawyer and former party-list congressman is demanding that Senator Manuel Villar account for his other misdeeds and public misconducts, including his behest loans and “other financial accommodations” from the Bangko Sentral ng Pilipinas (BSP) to his Capitol Bank in 1998, when Villar was speaker of the House.

Lawyer JV Bautista, a former Sanlakas party-list representative, said aside from the findings of the Senate committee of the whole indicting Villar for conflict of interest, the billionaire senator must also be made to return the billions he owed the government.
“We must remember that prior to the C-5 case, Villar has already been accused of violating Section 16, Article XI of the Constitution when his Capitol Development Bank (now Optimum Development Bank) secured P1.5 billion loan in 1998 from the Central Bank even if he is a member of the Congress,” Bautista said.
Section 16, Article XI of the Constitution, entitled “Accountability of Public Officers” states that “no loan, guaranty, or other form of financial accommodation for any business purpose may be granted by any government or controlled bank or financial institution to the President, the Vice President, the Members of the Cabinet, the Congress, the Supreme Court, and the Constitutional Commission, the Ombudsman, or to any firm or entity in which they have controlling interest, during their term.” He is also criminally liable under the ethical standards and plunder laws.
The former lawmaker explained that Villar, within sixty days upon his election as a member of the 11th Congress, should have divested his and his family’s interest in Capitol Bank then in order to prevent “conflict of interest”.
“It is surprising that this issue never re-appeared in the Senate, despite the fact that it is Senator Joker Arroyo who revealed this himself,” he said.
Arroyo, then as a Representative of Makati, delivered a privilege speech on August 17, 1998 detailing constitutional violations of Villar’s business practices and methods.
Underpriced settlement

JV Bautista added that not only did Villar manage to secure the loan as a Congressman, but that the government lost P1.2 billion when Capitol Bank used an “underpriced” agricultural land in Norzagaray, Bulacan to settle the loan.
He explained that through a legal procedure called ‘dación en pago’, then Congressman Villar’s wife, Cynthia, and Ditas Magno as president and vice-president of Capitol Bank, respectively, settled the loan through a 483.97-hectare land in Norzagaray, valued at that time using Bureau of Internal Revenue’s zonal value assessment at 60 pesos per square meter or 600,000 pesos per hectare.
“This means that the land should have only been valued at P290 million, resulting to a net loss of P1.2 billion for the Bangko Sentral,” JV Bautista said.
It was during the 11th Congress, or Villar’s term as Speaker, that the New Central Bank Act, which details procedures and valuation of collateralized properties, was passed.
“Plethora of misconduct”

JV Bautista mentioned that Villar is also accused of “a plethora of public misconducts,” many of which “Joker Arroyo himself revealed.”
“These unscrupulous use of the government for private gain resulted to government losses, and even to the ballooning of our country’s debts, just as the C-5 insertion have surely bloated the government deficit,” he said.
Bautista said that on top of the behest loans from the Central Bank, Villar also secured loans from government financial institutions like Social Security System (SSS) and Government Service Insurance System (GSIS).
“Manuela Corporation, which was owned by the family of Cynthia Villar was granted P1-billion and P2-billion loans by the SSS and the GSIS respectively. This is the first time SSS granted a loan directly to a business enterprise. But P150 million of the P3-billion total loans went to the payments owed by Manuela to Capitol Bank, which the Villars themselves owned,” he added.
Ballooning debts

“These behest loans contributed greatly to the conversion of otherwise private debts into public ones, and surely have contributed to the country’s ballooning debt problem,” JV Bautista said.
Department of Finance reports that the public sector debt, the debt of the national government plus government corporations and financial institutions, is pegged at P5.27 trillion as of end first quarter of 2009, with public sector contingent debt at P611 billion. Both the national government deficit for 2009 and 2010 is expected to hover at around P290 billion.
“The solution would be an audit of all behest loans, sovereign guarantees, and other financial accommodations extended by administrations in order to unravel how much of our public sector debts are actually private debts which should be paid by private entities, such as Villar’s companies,” JV Bautista concluded.-30-


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