Timeline of bank transactions and red flags
Nov. 21, 2002: Then-AFP Comptroller Garcia and AFP Finance Officer Fernando Zabat issued a memo authorizing the withdrawal of P200 million from the Land Bank-Greenhills trust fund of AFP.
On the same day, Garcia issued another memo to open a bank account for an entity called "AFP Inter-Agency Transfer Fund" with Alfaro Branch of UCPB in Makati.
The UCPB-Alfaro account was a savings account (No. 132-1121-431-8) linked to a current account (No. 132-002-731-6) with an automatic transfer feature.
These "Premium" accounts are often time deposits in disguise. According to the UCPB website, clients of these type of an account earn higher interest on their money than the regular savings rate. The longer the funds stay on the account, the higher the yield. A passbook is provided to the client for easier monitoring.
RED FLAG: Mendoza said there is no entity called "AFP Inter-Agency Transfer Fund."
Bank officers should ensure that accounts are opened for transactions only when an account holder has established his/her/its identity via valid identification cards or regular corporate documents, such as those issued by the Securities and Exchange Commission or the Bureau of Internal Revenue.
"Knowing your customer" is one of the basic duties of banks and their officers under the "Anti-Money Laundering Act of 2001."
According to Section 9 of the law, banks and their officials are required to
"establish and record the true identity of its clients based on official documents. They shall maintain a system of verifying the true identity of their clients and, in case of corporate clients, require a system of verifying their legal existence and organizational structure, as well as the authority and identification of all persons purporting to act on their behalf.The provisions of existing laws to the contrary notwithstanding, anonymous accounts, accounts under fictitious names, and all other similar accounts shall be absolutely prohibited."
Nov. 28, 2002: A Land Bank-Greenhills check no. 261674 bearing Garcia's and Zabat's signatures was issued. The payee on the P200 million check was the non-existent "AFP Inter-Agency Fund Transfer".
On the same day, the following transactions occurred:
1. The P200 million-worth Land Bank-Greenhills check was supposedly deposited to the "AFP Inter-Agency Fund Transfer" account with UCPB-Alfaro.
This "transaction" was in keeping with the Nov. 21 memo/instruction of Garci and Zabat, and was documented on the "endorsement" at the back of the Land Bank check. (An endorsement is the required a stamp or other authorization if a check go between 2 different banks.)
RED FLAG: If the payee, "AFP Inter-Agency Transfer Fund", is a non-existent entity, why did the UCPB-Alfaro officials allow the transaction?
2. The auditors found that the P200 million went to separate accounts also on the same day:
- P50 million was deposited in the "AFP Inter-Agency Transfer Fund" Premium Saving Accounts No. 132-1121-431-8 in UCPB-Alfaro
- P100 million was deposited to another account: Premium Savings Deposit 1743 (PSD 1743), also at the UCPB-Alfaro, and with passbook bearing the serial number 347264. The deposit was covered by a savings account deposit slip.
- P50 million was supposedly deposited to the same Premium Savings Deposit 1743 but the passbook's had a different serial no.: 347266. There was no deposit slip, prompting Mendoza to call this a "fictitious" transaction. Later, this was traced as an account with the UCPB Tordesillas branch.
Since a check was involved, there should have been a 3-day clearing period before funds from another bank, in this case Land Bank, were reflected as available funds in the bank accounts of AFP in another bank, in this case UCPB.
Bank officials usually allow same-day clearing only if the AFP has a credit line with UCPB to ensure that UCPB still has recourse to run after AFP if the Land Bank check turns out to be a dud.
On the P50 million fund that was plunked into Premium Savings Deposit 1743, it is unclear how one bank account could have been issued two different passbooks by two different bank branches of UCPB -- and on the same day.
Passbooks are considered one of the banks' accountable forms that are not normally issued one after the other. Generally, another passbook is issued only if the pages of the previous one have already been filled with transaction entries made over time. (The principle is almost similar to how passports are handled: A new one is issued if the pages of the previous have been filled with immigration stamps.)