LandBank on graft raps: No deal, no crime

THE Land Bank of the Philippines on Sunday  denied giving unwarranted benefits, advantage or preference to Global 5000 in the P9-billion  Meralco shares deal.

The LandBank maintained there was no violation of Republic Act 3009 or the Anti-Graft and Corrupt Practices over the transaction of its Meralco shares because the sale    between    them did not push through.

“Hence, there is no basis for a criminal indictment or administrative sanction against former members of the Land Bank board of    directors, including some incumbent bank officers,”  the bank said in a statement.

Bank executives had already filed their joint counter affidavits last Feb. 16 to answer the Nov. 14, 2014 findings of the Office of the Ombudsman’s Field Investigation Office.

 “At the time of the signing of the special power of attorney, the Meralco shares were trading at P58 per share. Clearly, LandBank could have earned trading gain of about 210 percent or about P2.8 billion, more or less, exclusive of the fixed interest of P554 million provided in the SPA,” the statement  read.

 According to LandBank, the Department of Justice issued Opinion No. 86 series of 2012 on Dec. 15, 2012 explicitly stating that the implementation of the SPA is not in violation of RA 3019. The Justice Secretary opined that “ the contract was entered into in December 2008  where the prevailing market price of the shares of stocks is valued at P58.00 per share. The SPA provided for a purchase price of P90.00 per share which is considerably much higher than the prevailing market price of P58.00 per share. Had the transaction been pursued as scheduled, it cannot be denied that the government would certainly be earning P32.00 per share from the proceeds of the sale.”

The  LandBank-Meralco deal did not materialize  “mainly because unknown to LandBank and Global 5000, LandBank’s P42 million shares in Meralco were illegally transferred to Josefina Lubrica (Lubrica), assignee of Federico Suntay (Suntay), on Nov. 28, 2008 to satisfy the 2001 decision of Department of Agrarian Reform adjudicator Conchita Miñas (Miñas) awarding P157 million to Suntay, as just compensation for an agricultural land in San Jose, Occidental Mindoro, which was acquired pursuant to the government’s land reform program.

“Although the judgment award in favor of Suntay was only P157 million, LandBank’s 42-million shares in Meralco, then valued at about P2.4 billion, was illegally garnished, cancelled and transferred to Lubrica,” it said.

It invoked a Dec. 14, 2011 Supreme Court decision citing that the 2001 decision of Miñas was not yet final and executory and could not be implemented, and that the 42 million Meralco shares belonged to LandBank’s corporate assets    that cannot be garnished to satisfy a judgment in a just compensation case.

“In that ruling, the Supreme Court also directed Meralco to restore LandBank’s ownership of the 42 million shares of stock. Land Bank has so far recovered 38.63 Million shares    out of the 42 Million shares illegally transferred to Lubrica. It was after the Supreme Court decision became final and executory in September 2012 that one Emilio Suntay III reportedly filed a complaint before the Office of the Ombudsman against officials of Land Bank and Global 5000 for alleged violation of the Anti-Graft Law in connection with the execution of the SPA in December 2008,” it added.

The complaint was just a reaction to the SC decision“with the intention to    vex and harass Land Bank officers after Land Bank obtained that favorable decision from the Supreme Court, according to the statement. The bank earnings from its dividends from the Meralco shares now reached P2.1 billion without surrendering its voting rights to Global 5000 since the latter did not tender or pay the down payment as agreed upon in the SPA.

Despite  the non-implementation of the deal, the SPA even provided the bank protection in the event Global 5000 failed to comply with its obligations, Land Bank said.

As to the allegation that Global 5000 had no track record having been incorporated 10 months prior to the transaction, the bank said    Global 5000 (now SMC Global Power Holdings Corp, a wholly owned subsidiary of SMC) is allied with SMC, which also purchased other GFIs’ substantial number of holdings in Meralco, even before the Land Bank’SPA was executed.

“The persons or incorporators (i.e., Roberto Ongpin, Iñigo Zobel, Joselito Campos, Jr.) behind the company are all well known in the business community; thus, there could not have any doubt on Global 5000’s ability to source the funding for the sale.

Further, on the claim that the transaction was undertaken in a matter of 10 days, Land Bank clarified that it made the proposal to sell the Meralco shares on November 7, 2008 but the SPA was executed on December 2, 2008. Prior to these dates however, Landbank had already been in constant negotiation with other parties for the said sale,”it said.

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