MANILA, Philippines - The Philippine Deposit Insurance Corp. (PDIC) has filed a criminal complaint before the Department of Justice against a former president and manager of the a closed rural bank for creating over P2.6 billion in fake loans.
In a statement, the PDIC said it filed the complaint against Rural Bank of Subangdaku, Inc. (RBSI) president Paz Radaza and bank-wide loans manager Julius Eullaran last January 13.
RBSI, located in Cebu, was placed under PDIC receivership by the Monetary Board on January 8, 2009.
The PDIC alleged Radaza, who is also a member of the RBSI credit committee, and Eullaran conspired to create 6,051 fictitious loans totaling nearly P2.6 billion from 2004 to 2008. These fake loans made up around 97% of all the loans supposedly released by the RSBI - Head Office during the period.
The complaint alleged the respondents created official receipts to make it appear that payments were made to RSBI, when no payment was actually received. These supposed payments were used to provide the purported source of the fictitious loan proceeds.
The complaint cited a sworn affidavit of RSBI's former loan officer, which said Eullaran and Radaza allegedly ordered their subordinates to create fictitious loans, "no questions asked" based on the list Eullaran provided. The list also contained information to be used in creating the fictitious loans.
This claim was supported by the findings of the expert forensic accounting team from Alba Romeo & Co., which the PDIC tapped to assist in the investigation.
The investigation also showed 5,470 of the 6,051 fictitious loans did not have the required credit information. There were also 581 loans that did not have any supporting documents.
The PDIC noted demand letters to the named borrowers of these loans were returned because of unknown addresses or because the borrowers did not exist.
"The Corporation continues to pursue legal actions against bank officials and personnel who have been found to have engaged in unsafe and unsound banking practices. These activities pose grave threats to the stability of the country's banking system," the PDIC said.