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[av_heading heading=’AN INDEPENDENT VIEW ‘ tag=’h3′ style=’blockquote modern-quote’ size=” subheading_active=’subheading_below’ subheading_size=’15’ padding=’10’ color=” custom_font=” av-medium-font-size-title=” av-small-font-size-title=” av-mini-font-size-title=” av-medium-font-size=” av-small-font-size=” av-mini-font-size=” admin_preview_bg=”]
BY NEIL HONEYMAN
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ONE OF THE problems facing the financial services sector is the low penetration of many products and services being marketed by our financial institutions.
Some senior finance executives were fond of saying that this situation is all our fault; that we are financially illiterate. I have never subscribed to this theory. My belief was and is that of greater significance is that the level of probity in our financial institutions is too low (anything below 100 percent is too low).
Progress is being made. More financial institutions are recognizing that there is a well-founded lack of trust in their conduct. Several years ago, in a television interview, Sun Life CEO Riza Mantaring said to us, the audience: “You think it’s all a racket. Absolutely! I believe that Sun Life then confronted the lack of trust problem by demonstrating the ethical conduct of Sun Life and its representatives. Consequently, its market share has increased.
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The recent problem experienced by Metrobank is serious. Because the bank has adopted a damage control stance, many concerns and questions remain unanswered.
The scam is horrendous. Not only is the amount stolen from the bank, now officially reported as P1.7 billion but, more seriously, the defalcations took place over several years. The alleged scammer, Ma. Victoria Lopez, a Metrobank vice president, was arrested by representatives of the National Bureau of Investigation (NBI) in July and has been in custody ever since.
The basis of the fraud is that the bank official systematically siphoned off loans to corporate clients by diverting funds to bank accounts under her control.
One of the corporate clients whose name was misused by the fraudster is Universal Robina Corp (URC). I am saddened by this. The corporate culture of URC is to sell good quality products at reasonable prices. There is no suggestion that anyone from URC was involved.
Since the fraud was exposed, Metrobank president Fabian Dee has said that the bank has audited all high net worth and corporate borrowers handled by Lopez. Over 2,000 accounts were audited and, according to Dee, 99.4 percent of them had no issues. This is not reassuring; 99.4 percent of 2,000 is 1,988. This means that at least 12 accounts had “issues”, a euphemism indicating that fraudulent transactions took place.
Why wasn’t the fraud discovered before? Both internal and external auditors have some hard questions to answer.
Bangko Sentral ng Pilipinas (BSP) has suspended 12 fairly senior Metrobank directors and officials to between 30 and 120 days for “failing to perform adequate oversight and/or have been complacent or remiss of their duties and responsibilities.” Fortunately for Metrobank, BSP has allowed the bank to schedule the suspensions so that not all the 12 have to serve their suspensions at the same time.
I am intrigued by communications that may have taken place between Metrobank and clients whose accounts had “issues.” Were Metrobank lawyers involved in any dialogue that may have taken place with clients? How did BSP become involved? Or NBI? Were they approached by wronged clients? Did the lawyers attempt to bury the truth? Document falsification was involved.
I had a similar experience with a long-established insurance company, whose lawyer said that my assertion involving a falsified “quit-claim” form was “a serious allegation.” We know it’s serious but the lawyer does not deny that my signature was falsely applied by the insurance company. A similar “non-denial denial” issued by US President Richard Nixon’s office was used to belittle the reports of Washington Post journalists Woodward and Bernstein in 1972. Eventually, we all saw through the lawyers’ silly sophistries.
So far Metrobank’s damage control policy is to focus the fraud exclusively on Lopez within the bank, but hinting that she may have had external accomplices. Were there internal accomplices as well?
Will we ever know the whole truth?
No chance. (jbabueg@yahoo.co.uk)/PN
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