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Cracks in BF Retirement Fund, Inc.’s stonewall

(Article published in the Jun 29,2011 issue of Manila Standard Today) 

Here is a reader’s reaction sent in last week to the pieces I have been writing recently on the mysterious Banco Filipino Retirement Fund, Inc.:

 “This is Ramon Olivares.  I am currently assisting some minority shareholders of Banco Filipino, Ana Maria Aguirre Koruga, in her fight to assert her shareholder rights in Banco Filipino.  I have been reading your columns on the Banco Filipino Retirement Fund, Inc. with great interest for the past few weeks.

 I am sorry to have learned that a substantial chunk of Banco Filipino Retirement Fund's equity investments and cash deposits has been decimated by the closure of Banco Filipino. This situation reminds me of Enron's employees who invested a great deal of their their (sic) retirement funds in Enron stock prior to the collapse of the company because the company itself proved to be a massive fraud.  Even if Enron had not been a fraud, the employees did not diversify away from their main source of income, which was Enron, into other less speculative investments.

 Like you, we strongly suspect that the retirement fund was used by Banco Filipino management to support Banco Filipino operations.  However, we also suspect that the fund was used not just to pay legal fees to Yasay & Co. but also to advance money to Aguirre controlled entities or even to dummy corporations that became vehicles for loans to skirt DOSRI requirements.
 










     

 We are curious to know who were the incorporators or the trustees of the Banco Filipino Retirement Fund.  At the very least they did not exercise their fiduciary duty to preserve the fund's capital through adequate safeguards and diversification. At the very worst, they could be a significant enabler of the bank's collapse.  We suspect that the incorporators/trustees are former officers of Banco Filipino and/or friends or relatives of Banco Filipino management. In other words, the same cast of characters that have enabled the collapse of Banco Filipino.

 Perhaps we can share some information on these issues with each other some time in the near future, if you are willing to do so.”

 Of course, I am willing to share with you, and to whoever may be legitimately be interested,  whatever publicly available information may come my way regarding the Banco Filipino Retirement Fund, Inc.  For a starter, I would like to share with you the information that is easily retrievable from the website of the Securities and Exchange Commission using its iView portal.

 The Articles of Incorporation of Banco Filipino Retirement Fund, Inc., which is a public document, lists the following as incorporators: Teodoro  O. Arcenas, Conrado P. Banzon, Orlando O. Samson, Maxy S. Abad, Francisco A. Rivera, Roberta B. Afable, Dionesio M. Domingo, Jorge D. Yu, Emmanuel C. Banzon, Mila L. Valera, Yvonne S. Munar, Anna Marie F. Copobianco, Joselito H. Mora, and Ronnie Jason S. Marquez.

 Only seven of the above are members of the first Board of Trustees.  The seven are Banzon, Samson, Abad, Rivera, Copobianco, Mora and Marquez.

 The one and only General Information Sheet available from the SEC iView has, under the column for the Board, Banzon, as chairman, and, as members, Samson, Abad, Rivera, Copobianco, Mora and Marquez.   

I do not know any of them personally and I do not have complete information on their respective and, I presume, respectable positions in the bank. It can be gathered, however, from the TSN of the House Committee on Banks and Financial Intermediaries hearing of 17 May 2011, that Arcenas is the bank’s president and Abad its executive vice president. 

 On the assumption that the abovenamed were, directly or indirectly, the movers and shakers of the Banco Filipino Retirement Fund, Inc. from the time of its incorporation to the time that the Bank slid down to its second closure, I agree with you that there could be, generally speaking, some basis to fault them for failing to meet to the full the high standard expected of people holding fiduciary positions.

 A director’s fiduciary responsibility is heavy indeed.  According to a former chair of the Securities and Exchange Commission (not Perfecto R.Yasay, Jr.), a director’s fiduciary  duties include the obligations “(a) to exercise utmost good faith in all transactions relating to their duties to the corporation and its property, and in their dealings with and for the corporation, they are held to the same strict rule of honesty and fair dealing between themselves and their principal as other agents; (b) to act for the corporation and not for their own benefit; (c) not to profit as individuals by virtue of their position; (d) to ensure that profits received by them from the company’s property or business revert to the company and to hold the same as trustees for the benefit of the corporation and its stockholders; and (e) not to acquire an interest adverse to that of the corporation, while acting for the corporation or when dealing individually with third persons” (Rosario Lopez, The Corporation Code of the Philippines: Annotated, pp. 472-3). 

 Just precisely how each one of the directors of the BF Retirement Fund, Inc. may have been responsible and therefore susceptible of being made liable under Section 31 of the Corporation for their own specific acts or omissions will, to a great extent, be made manifest upon the reckoning that the PDIC is expected, by law, to make soon.

     

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