The Ongpin Investigation

MANILA

Former Marcos trade minister Roberto V. Ongpin found himself in hot waters lately after an alleged behest loan from the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LBP) got blown out to the public. The loan was used to buy shares of Philex Mining Corporation, where he used to be its chairman. He is #21 in Forbes' 40 Richest in the Philippines in 2010 with a net worth of $300 million.

The point of investigation centered on the sale of 50 million shares of Philex Mining Corp. that DBP owned. Through DVRI, Ongpin acquired a loan from DBP. Using this loan, another Ongpin company Golden Media purchased the shares from DBP, which it later sold to Twin Rivers of Manuel Pangilinan.

Meanwhile, Pangilinan managed to corner 20.6 percent of Philex shares from other sources on 28 November 2008. With the acquisition of additional shares from DBP, Pangilinan gained control of Philex.

SENATE INVESTIGATING COMMITTEES

Blue Ribbon Committee. Senator Teofisto Guingona III (head)
Committee on Banks, Financial Institutions and Currencies. Senator Sergio Osmeña III (head)

COMPANIES INVOLVED

Global Air Services (GAS). A British Virgin Islands-based company, GAS only had an authorized capital stock of $2. But despite that normally suspicious financial standing, LBP president Gilda Pico admitted that the two banks extended the $180-million loan on 14 December 2008. This gives away an influential hand involved in the approval of this loan, which overrides the expected caution for discretion.

Delta Ventures Resources Inc. (DVRI). Long-time personal secretary Josephine Manalo admitted before the Senate Blue Ribbon Committee that she fronts for businessman Roberto V. Ongpin in obtaining loans from two government financial institutions (GFIs), namely the Development Bank of the Philippines and the Land Bank of the Philippines. Officially, Manalo owned 24,996 shares of DVRI out of the 25,000 shares available, a virtual single proprietorship. On 12 December 2011, she admitted she assumed ownership of record of the shares obtained from the GFIs as far as SEC records are concerned. However, in fact, all these shares have been endorsed to Ongpin.

Golden Media. A company of Ongpin.

GF INSTITUTIONS INVOLVED

Development Bank of the Philippines (DBP). Former DBP president Reynaldo David who led the bank when it extended the loans to Ongpin became a member of the board of an Ongpin-led bank, Philippine Bank of Commerce. After testifying before the Senate, he however resigned from the board on December 9.

BEHEST LOAN

INSIDER TRADING

Instead of dumping the DBP shares of Philex Mining to the market, the government-owned bank sold its 50 million shares to a ready buyer in Ongpin at the prevailing market price of P12.75 per share. This comprises 50 percent of DBP holdings in Philex.

In order to purchase these shares, DBP granted Ongpin the first credit accommodation to his DVRI (amounting to P660-million) and Two Rivers of the First Pacific group. This made for DBP a total of P1.397 billion.

Evidence indicated that Ongpin accumulated a block of shares from DBP and others in order to sell it to Pangilinan. Senator Juan Ponce Enrile, whose law firm had been involved in the setting up of Philex, said on record that the transaction between Pangilinan and Ogpin to corner the Philex shares from DBP was already a done deal even before the actual sale of shares to Ongpin’s DVRI. The transactions concluded in Shangri-La Hotel in Makati where he shook hands with Pangilinan for the price of P21 before he was able to accumulate and he never shared this information to DBP, and to the other stock holders.

David testified that even Social Security System president Romulo Neri wanted to sell SSS shares in Philex for the same price. Neri knew that Ongpin sold a block of shares at P21. But that’s too late, Ongpin cornered the market using insider information, Enrile said.

Ongpin’s name however did not appear in documents of DVRI submitted to the joint hearing. Instead, it was Josephine Manalo.

Sources

Karl John Reyes: "Ongpin secretary admits fronting for behest loans, Osmeña says," InterAksyon 12 December 2011 [read report]
Christian Mendez: "Insider trading in DBP deal?" The Philippine Star pp. 1, 13, 16