Wake Up, Philippines!

Cleaning up the Legacy mess

Posted in Graft and Corruption, Pre-need Plans, Scandal/Expose/Mess, SEC by Erineus on March 21, 2009

Updated March 15, 2009 12:00 AM

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Enforcement police of the Securities and Exchange Commission raided the other day the office buildings of the Legacy Group. Numerous criminal charges have also been filed against Legacy owner Celso de los Angeles, who could face life in prison if convicted of the offenses. Meanwhile, victims of the collapse of the rural banks and pre-need firms of the Legacy Group await relief from their woes, however limited, that can be provided by the Philippine Deposit Insurance Corp.

SEC Commissioner Jesus Marti-nez was forced to go on leave a day before his retirement after witnesses said he received lavish gifts including a house and lot from De los Angeles. Martinez is under investigation for corruption, and authorities are trying to determine if other SEC officials were involved in the scam.

Now what about the lawmaker who, according to the same witnesses who pinned down Martinez, received P100,000 a month from De los Angeles as consultancy fee? The House of Representatives, not surprisingly, has refused to touch Parañaque Rep. Eduardo Zialcita, who denied acting as Legacy consultant and claimed that all he accepted from De los Angeles were “donations” for his impoverished constituents. It is probably too much to expect that the House would approve rules prohibiting congressmen from accepting such “consultancy fees.” Speaker Prospero Nograles, who by De los Angeles’ accounting lost P18 million in the Legacy scam, prefers to leave the fate of Zialcita to the witnesses and Legacy victims.

Apart from Legacy bank depositors and pre-need plan holders, there are other victims in this scandal: responsible, legitimate rural bankers. Rural banks serve a need in communities that have not been reached or are not adequately covered by the big players in the banking industry. Public confidence is indispensable in banking, and with the Legacy mess, that confidence in rural banks is eroding. If regulators do not want more problems in their hands, they should look at the concerns of the rural banks affected by the Legacy scandal.

When the Legacy mess is finally cleaned up, those directly responsible should be behind bars and the coddlers punished. New measures must also be in place to ensure the soundness of the country’s banking system and regulatory environment.

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