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.

Anti-Money Laundering Council probing Legacy owner

Posted in AMLC, Money Laundering, Pre-need Plans by Erineus on February 25, 2009

MANILA, Philippines – The Anti-Money Laundering Council (AMLC) is investigating Celso de los Angeles, owner of the failed Legacy group of 12 rural banks and three pre-need companies, for alleged money laundering.

AMLC executive director Vicente Aquino told the House committee on banks yesterday that the council initiated the investigation upon request of the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC).

He said the inquiry is based on two “predicate crimes” covered by the Anti-Money Laundering Law that the BSP and SEC claim De los Angeles and many of his company officers and personnel have committed.

“These are the crimes of violation of the Securities Regulation Code and estafa,” he said.

During the hearing, upon prodding by Albay Rep. Edcel Lagman, BSP officials promised to file a case for syndicated estafa against De los Angeles and his officers.

“The punishment for syndicated estafa is life imprisonment. And if the evidence is strong, bail is not available to the accused,” Lagman said.

He reminded BSP officials led by Gov. Amado Tetangco of the statement made by Deputy Gov. Nestor Espenilla that the Legacy group is a “syndicated organization” led by De los Angeles, which exploited “human nature and weak links” in the banking system.

“Mr. Espenilla made that statement two weeks ago. And yet, the BSP has not been able to file charges against the mastermind,” he said.

Tetangco said the statement, which he approved, “was based on our examination findings of the Legacy banks.”

He said BSP lawyers are now finalizing the estafa charges against De los Angeles and many of his Legacy officers.

Lagman also expressed dismay over the fact that nearly two months after taking over the shuttered Legacy banks, the Philippine Deposit Insurance Corp. (PDIC) does not know how much money the banks held when the BSP closed them in December.

PDIC president Jose Nograles informed the committee that they are still conducting an inventory of the deposits and assets of the Legacy banks.

“We are more interested in the cash because according to BSP’s findings, deposits were siphoned off to other Legacy companies through fake and questionable loans,” he said.

Nograles promised to give Lagman the information he needs in the next hearing on Monday.

Lagman warned Nograles not to be “hasty” in paying Legacy depositors lest the PDIC be perceived as covering up for De los Angeles.

The PDIC boss has estimated that his agency would pay Legacy depositors as much as P14 billion in insured deposits.

Responding to questions from Makati Rep. Teodoro Locsin Jr., De los Angeles denied BSP’s findings that deposits of his banks were transferred to other Legacy companies, including Legacy Motors, through fictitious loans.

He said the P3.7 billion that BSP claims Legacy banks paid to Legacy Motors for questionable motorcycle loans “never left the banks.”

“I have copies of BSP examination reports from 2004 to 2007. They never mentioned any fictitious loan,” he said.

At one point during the hearing, tempers flared when Camarines Sur Rep. Luis Villafuerte grilled Espenilla on his family’s shareholdings in the Rural Bank of San Jacinto in Masbate.

Opposition Rep. Rufus Rodriguez protested Villafuerte’s interrogation of Espenilla, saying it was not the subject of the inquiry.

“The focus of our investigation here is the failure of the Legacy banks and pre-need companies. I am one of the authors of seven resolutions calling for this inquiry,” Rodriguez said in a raised voice. – Jess Diaz

Updated February 25, 2009 12:00 AM
http://www.philstar.com/Article.aspx?articleId=443357&publicationSubCategoryId=63

Pre-need companies with seal of good housekeeping from SEC

Posted in Pre-need Plans by Erineus on February 16, 2009

I have been getting emails from concerned pre-need plan holders about whether or not a certain company is in trouble, and whether or not to continue paying.

By this time, I suppose most of you know that there are inherent flaws in the products themselves and structural as well as regulatory weaknesses.

Having said that, if you have money sunk in these pre-need products, the practical first step would be to find out if the company you bought is one of those in danger of collapsing, or whether it has been managing your money soundly despite the crisis.

Here is a list of the companies that have licenses to sell plans for 2009. If the company in the letterhead of your contract is NOT here, it has trust fund problems.

  1. AMA Plans, Inc.
  2. Ayala Plans, Inc.
  3. Caritas Financial Plans, Inc.
  4. Cityplans, Inc.
  5. Cocoplans Inc.
  6. Danvil Plans, Inc.
  7. Destiny Financial Plans, Inc.
  8. Eternal Plans, Inc.
  9. First Country Plans, Inc.
  10. First Union Plans, Inc.
  11. Grayline Plans, Inc.
  12. Himlayang Pilipino Plans, Inc.
  13. Loyola Plans Consolidated, Inc.
  14. Manulife Financial Plans, Inc.
  15. Mercantile Careplans, Inc.
  16. Paz Memorial Services, Inc.
  17. Permanent Plans, Inc.
  18. Philam Plans, Inc.
  19. Provident International Plans, Inc.
  20. Prudentialife Plans Inc.
  21. St. Peter Life Plan, Inc.
  22. Sun Life Financial Plans, Inc.
  23. Transnational Plans, Inc.
  24. Trusteeship Plans, Inc.

Compared with the 2008 list previously released by the SEC, it appears that Pacific Plans has been dropped from the list, as well as Legacy, Ideal Pension Plans Corp., and one—AMA– added.

Remember, a listing here in MoneySmarts is NOT a recommendation for you to buy any plans from these companies. I am merely publishing the list for those who want to know whether or not the company you bought plans from or planning to buy from, is licensed by the SEC.

The following list, on the other hand, is composed of companies willing to shell out more money to beef up their capital this year, in anticipation of difficulties in growing their trust funds due to the current rate of return of financial instruments in the market:

  1. Ayala Plans, Inc.
  2. Cocoplans Inc.
  3. Danvil Plans, Inc.
  4. Eternal Plans, Inc.
  5. First Union Plans, Inc.
  6. Himlayang Pilipino Plans, Inc.
  7. Ideal Pension Plans Corp.
  8. Loyola Plans Consolidated, Inc.
  9. Manulife Financial Plans, Inc.
  10. Mercantile Careplans, Inc.
  11. Pacific Plans
  12. Paz Memorial Services, Inc.
  13. Permanent Plans, Inc.
  14. Philam Plans, Inc. – *did not sign agreement because it says its trust fund is more than sufficient.
  15. Provident International Plans, Inc.
  16. Prudentialife Plans Inc.
  17. St. Peter Life Plan, Inc.
  18. Sun Life Financial Plans, Inc.
  19. Transnational Plans, Inc.
  20. Trusteeship Plans, Inc.

Those who aren’t here are in fact, saying, suko na. So guys, be money-smart!

Link: http://blogs.inquirer.net/moneysmarts/2009/02/12/pre-need-companies-with-seal-of-good-housekeeping-from-sec/

4 pre-need firms near collapse

Posted in Financial Services, Pre-need Plans by Erineus on February 11, 2009

MANILA, Philippines–Four more pre-need firms are said to be on the verge of financial collapse, the head of a group of plan-holders said Tuesday.

One of them is Pryce Plans Inc., said Philip Piccio, president of the Parents-Enabling Parents Coalition (PEP).

Securities and Exchange Commission Chairperson Fe Barin refused to comment on Piccio’s information at the resumption of a Senate inquiry into troubled pre-need firms, but Jose Aquino, director of the SEC Nontraditional Securities and Instruments Department, confirmed it.

Pryce had declared funding problems in 2005 and has not been allowed by the SEC to sell new pre-need products. The SEC confirmed that the company was still in operation but only to service clients’ claims.

Piccio refused to name the three other troubled pre-need firms lest he be sued for libel, but he challenged the SEC to make the public disclosure to warn plan-holders and protect the public from buying plans from them.

“It is their duty to announce the situation of every company,” he said. “The problem here is it is the federation [of pre-need companies] that is announcing, not the regulator. That’s the problem. Let the regulators regulate, see the problem, not the federation. But the problem is the federation says ‘we’re OK.’”

Piccio said he got wind of the impending bankruptcy of the three unnamed pre-need firms from complaints of their plan-holders. He said the companies were still operating.

Barin said at the hearing: “If the question is about the pre-need companies that are about to collapse, no, we are not at liberty to say that. In the first place, we have to go back to our offices and take a look.”

Piccio criticized the SEC during a break at the three-hour hearing. “That’s the biggest question — why are they withholding the information?” he said.

He said the SEC did not want to disclose the information “because they don’t want to create panic. But if it will collapse, it will collapse.”

In December 2008, three pre-need firms affiliated with Legacy Group — Legacy Consolidated Plans Inc., Scholarship Plan Philippines Inc. and All Asia Plans Corp. — ceased operations without SEC approval.

A list obtained from the official SEC website showed 27 pre-need corporations with 2009 dealer’s license as of end-January. Last year, pre-need corporations sold more than 250,000 educational, life and pension plans totaling P15 billion.

Barin confirmed to the joint committee that Pryce was no longer selling plans. “If you don’t have a dealer’s license for this year, then you should not be selling,” she said.

Barin also confirmed that the SEC had received reports that Pryce was giving plan-holders cooking gas and medicines instead of cash to service claims, a scheme dubbed “exchange of benefits.” She said this was not illegal.

Piccio said people were going to the PEP for help. “We know what these companies are, and yet the [SEC] is not announcing it,” he said. With Inquirer Research; edited by INQUIRER.net

By Michael Lim Ubac
Philippine Daily Inquirer
First Posted 02:19:00 02/11/2009

When banks, preneed firms fold

Posted in Banking, Investment, Personal Finance, Pre-need Plans by Erineus on February 3, 2009

THE LOW-GRADE fear of bank and other corporate failures that spread slowly last year has turned to reality for many who have been victimized recently by the record closure of rural banks last year and worries that the preneed industry is on the brink of disaster.

The Bangko Sentral ng Pilipinas has said P21.6 billion worth of deposits are virtually frozen inside the 25 rural banks padlocked last year.

That’s a big amount of money at a time people are losing their jobs.

Real fear

“There’s real fear among the people right now,” says Alvin Tabañag, a registered financial planner and author of “Kaya Mo Pinoy! 12 Steps To Build Wealth On Any Income.”

The timing couldn’t be tougher. If you’re fighting to keep your job or have already lost it, losing your savings is the equivalent of getting whacked in the head by someone you trust and being asked to pay for your hospital bill. These financial disasters rewrite for Filipinos what “safe” means.

Fortunately, all is not lost. When a bank is closed by the central bank, it is normally turned over to the Philippine Deposit Insurance Corp., which then examines the bank’s records to determine which deposits are insured. You can still get your money back—or at least some of it—if you know what to do.

Practical guide

Here’s a guide on how to get your life back after bank or preneed failures:

1. Bring proper identification. Both the PDIC and the Securities and Exchange Commission, the state regulator of preneed companies, say most delays are caused by lack of proper identification documents.

Some depositors bring ATM cards, credit cards, or membership cards in clubs to prove their identity. Cut the processing time by bringing any two of the following: Social Security System or Government Service Insurance System cards, Professional Regulation Commission license, driver’s license, senior citizen’s card, passport, company or school identification card, Taxpayer’s Identification Number card, a Philhealth card, and a voter’s identification card or affidavit.

If you are filing a claim on insured deposit in behalf of someone else, you need to bring the same documents, plus a special power of attorney (SPA). If the owner of the account is abroad, the Philippine consul where he lives must authenticate the SPA.

2. Bring evidence of your deposits or preneed policy. These include savings passbooks, certificates of time deposit, ATM cards, unused checks and bank statement, and other relevant documents. The PDIC will be double-checking the consistency of your signatures.

When claiming against preneed companies, bring a copy of the plan contract, the certificate of full payment, or official receipts of your payments so far, if the plan is not yet fully paid. In the case of plan holders of Legacy Consolidated Plans Inc., Scholarship Plan Phils. Inc., and All Asia Plans Corp., which have recently closed, you need to file a sworn complaint on or before March 31.

Document

Sources who asked not to be identified say many of the documents issued by these firms did not have signatures and appear to be spurious. Take a look at your documents and show them to a lawyer who specializes in financial transactions, if you think their legitimacy will be questioned.

“Asking is actually free compared with the money you stand to lose,” says Atty. Carlo Cariño, senior partner at the Cariño and Mabalot Law Offices. You also need to provide the SEC with your complete and updated mailing address and contact numbers. Go to the Non-traditional Securities and Instruments Department of the SEC. In the Ortigas head office, their landline is 584-6058 and the department head is Jose Aquino.

3. Continue paying your loan when PDIC sends you a letter of collection. You are not off the hook even if the bank you borrowed from closes. You may be slapped fees and finance charges if you don’t maintain your good credit standing even in a closed bank.

4. Collect issued post-dated checks and assume automatic debt arrangements are out. These checks are no longer valid, so replace them or arrange to pay some other way.

Processing claims

5. Fill up three copies of a claim form from the PDIC and sign the “Signature of Depositor/Claimant over Printed Name” under the “To be accomplished by the Depositor/Claimant” portion in the claim form. Again, what the PDIC will be putting under the microscope is the integrity of the signature, making sure none are forged.

6. If you are filing in person, go to either the branch of the closed bank where you deposited your money or another site designated by the PDIC, or the PDIC claims counter located at PDIC Ayala Extension office, SSS Building, corner V.A. Rufino Street, (formerly Herrera Street), Makati City.

7. You can also process your claim via mail through this address:

The Assistant Vice President,
Claims Processing Deparment
Philippine Deposit Insurance Corp.
2228 Chino Roces Avenue
1231 Makati City, Philippines

Some depositors get their insured deposits within an hour if the documents are pristine and the account is “clean.” That means any loans payable to the bank and taxes that need to be paid have already been deducted, and interests earned were already added.

A “clean” account also means there are no questions about the legitimacy of the deposit. It is not unheard of for bank employees to be in collusion with depositors in “splitting” accounts when they realize the bank is about to be closed. This hurts bona fide depositors because the presence of split and fictitious accounts makes everyone jump through hoops to get their money.

Auramar Calbario, head of corporate communications at the PDIC, says claimants are normally classified into three: “clean,” “document-deficient” and “for further verification.” Only claimants with clean documentation will be paid within an hour or at least the same day.

If you belong to the second category, you may be asked to present more documents to prove you are the real owner of the account. If you belong to the third, claim agents will interview you and this is where the actual depositor needs to appear personally.
A depositor’s relationship with a bank can get complicated. Aside from the usual savings, checking, and time deposit accounts, now there are unit investment trust funds and investment accounts. There are joint accounts, accounts held in trust, institutional accounts and joint accounts. Which of these are safe? And what if your account exceeds the insured amount of P250,000?

Depositors sometimes commit the common mistake of opening accounts in different branches in the same bank, perhaps one as a time deposit, one as a checking account, and another as a savings account, and expecting that each would be insured up to P250,000. This is a grave mistake because the PDIC will add up all your single accounts in a particular bank and apply the P250,000 limit to the total.

But if one of your accounts is a single depositor account, and another is a joint account with your husband, for example, your deposit will be insured separately from the joint account. The PDIC website shows exactly how this is computed. Unit Investment Trust Funds and investment accounts are not insured by the PDIC.

If your deposits exceed P250,000, you may still claim for the excess but you have to wait until the PDIC has filed with the liquidation court, has already disposed of the bank’s assets, is ready to distribute these assets, and there is enough to go around starting with preferred creditors like the government to ordinary depositors—yes, that’s you.

In the case of the Rural Bank of Parañaque and other banks under the bankrupt Legacy group that were recently closed, the verification of documents and claim time is much longer. PDIC has started payouts for small depositors first (those who have P120,000 and below) last Dec. 22. Those who have more than that will have to wait until mid-February. Claim forms are not yet available, as of this writing. Go to the PDIC website, one of the most helpful government websites, on how to follow up your requests.

Rebuilding savings

Tabañag says too many Filipino savers are still lured by easy money, which is why many are caught by bank failures and scams with their pants down. “Typical Pinoy. We want high returns quickly. We just want to sit back and wait. We find that it’s easy at first, but enjoy the rewards only for a short time,” he says.

The Legacy case is another big Ponzi scheme, he says. “Banks don’t have agents. The reason why Legacy’s agents were very confident especially in converting preneed plans into time deposits is they are expecting the PDIC to bail them out. Their practices were really not sound,” he adds.

Tabañag advised depositors and plan holders of Legacy to file a class suit against the company. Cariño says that “the more the voices, the more pressure” plan holders can exert on government and the owner. If the plan holders win their case, the owners may be personally liable to the people they defrauded.

Tabañag, a personal money management coach, also said that apart from waiting and praying, it is crucial now for depositors and plan holders to start rebuilding their educational and retirement plans and investing again—this time, in a smarter way.

“There is no other way but to start to save more again. You can do this by increasing your income, spending less or doing both. There are many ways Filipinos can do this,” Tabañag says.

“Forget the LV (Louis Vuitton) bags for the moment. You can go for UCB in the meantime. That means United Colors of Baclaran,” he says.

(For more personal finance articles, visit MoneySmarts at http://blogs.inquirer.net/moneysmarts.)


By Ma. Salve Duplito INQUIRER.net First Posted 21:13:00 01/25/2009

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Protect education funds from the crisis

Posted in Congress, Education, Investment, Legislation, Personal Finance, Pre-need Plans, SEC by Erineus on February 3, 2009

WHEN PRE-NEED COMPANIES selling educational funds started dying a slow death more than 10 years ago, many Filipino families turned to do-it-yourself investing to grow savings for their children’s education needs.

Now it appears that these alternative investments–mutual funds, unit investment trust funds (UITFs), stocks and bonds–are not living up to the hype. Last year, pooled funds were down around 40 percent and experts say investments in the stock market might take two or three years to recover.

Saving

These depressing events have shaken Filipinos’ confidence in this most basic principle in personal finance: Saving. Imagine this, just when you have conquered spending urges and socked away money regularly, the market turns and eats up most of your money pot. This has not been easy for one mother, who shared she lost most of her educational fund for her daughter to the closure of one rural bank.

“The Rural Bank of Paranaque is now closed. This makes me sick to my stomach. So, how should I prepare for my daughter’s college education? I have to invest in a better mattress to put my money under,” she says.

It’s truly a cosmic moment for many couples faced with the triple whammy of skyrocketing tuition fees, lower pay hikes if not job loss and shrinking savings.

But Micheas P. Dumlao, 45, who has two sons to put through high school and college, says it is still better to start saving early.

“It has been at the back of my mind for the longest time, but my wife Joyce and I realized just last year that it is time to prepare for my sons’ college education. If we don’t start now, it will be harder later on,” he says.

Micheas’ and Joyce’s son Michael Reuben is a first year high school student at the Philippine Science High School, the state’s premier school for intelligent children and tuition is minimal. If he gets into the University of the Philippines in three years, also another state college, tuition expenses could be at P1,500 per unit, or at least P22,500 to P31,000 per semester.

Micheas expects books, transportation, clothes, laptop and other expenses to add 80 percent of this cost. That means he needs more than P300,000 to finance his eldest son’s college education.

Challenging

Bankrolling their second son’s intellectual development will be much more challenging.

Jason Matthew is 9, now studying in a private school and wants to study at the Ateneo de Manila University. Historically, tuition fees outrun inflation at around 8-10 percent a year, especially for preschool, elementary and high school.

Micheas estimates that he needs to save at least P1.5 million to put his youngest son through college alone.

Fortunately, Micheas is also a life insurance agent in a multinational company and he knows his numbers. He plans to move his education money pot when it reaches P200,000 to a higher-yielding account, and supplement this with his investments in a single-pay variable life product sold by his company. Then he will look for more investment outlets.

All these financial maneuverings will not be successful if the entire family is not pushing together as a team, he says. To set aside P8,000 monthly, an amount that can already buy grocery items for one month for an average family of six, Micheas says the Dumlao family members had to change their lifestyle.

“Instead of Yellow Cab, we eat at Shakey’s and we don’t order drinks anymore. A P60 bottomless iced tea can already buy one siopao. You know, when I have to eat lunch in a mall, I buy my drinks inside the grocery,” he says.

When he has appointments in business centers in Metro Manila, Micheas says he has begun to plan carefully where to park his car. “You need to splash on a little bit of cologne before you go to your appointment, that’s true, but careful planning can save you quite a bit of money,” he says with a chuckle.

In the Filipino psyche, education is sacred. Parents will often singe their eyebrows to send their children to the best schools, and the Dumlao couple is no exemption. Micheas says they are also working on increasing their income, writing down their goals and making sure both couples are protected from sudden death or illnesses.

Investment tools used wisely

Marvin Fausto, senior vice president and chief investment officer at the Banco De Oro, says on top of more careful spending and saving regularly, Filipinos also need to learn how to use the right investment tools for the right purposes. You can’t expect to crack open coconut shells with a slender knife.

If you need the money for tuition in the next two to five years, the right approach would have been to move the money pot to money market funds and other conservative placements as the date for the need approached.

“Last year, I’ve seen a lot of people lose money in the market. They were lured by the historical high returns in the market from 2002 to 2007 that they forgot why they were in the market in the first place,” Marvin says.

Because too many investors were lulled into thinking the high returns would last forever, they gambled the money they would soon need, says Marvin.

“It is still true that mutual funds and UITFs are good long-term investments. But the right strategy would be to review your investment objectives and plans regularly. When the need is near, you move it to more appropriate investments. That’s the value of constant review,” he says.

Banco De Oro’s bond funds, for example, yielded 33 percent until 2008 since inception in April 2005. That’s still 11 percent per year, much higher than any time deposit return. Balanced funds gave 45-percent return since 2003.

“Equity funds are the ones that were really hit by the crisis at 4.5 percent since May 2005. You would have really lost money if you sold last year, but it also went as high as 100 percent in 2006 and if you took your money out that year, you would have doubled your investments,” he explains.

That’s the wisdom that comes from hindsight. Now, if you are already pinned down by the market turmoil, Marvin’s advice is to exhaust all other means to pay for tuition and other educational expenses, like getting subsidized student loans from schools, selling other assets like properties and earn additional income, paying monthly rather than annual installments.

“The worst time to sell is when the market is down. And that is now. If you have other means to get money for college education, do not sell your losing investments. Wait for them to recover,” he says.

Marvin expects the market to recover in two to three years. By then, he believes investments in equities, bonds and pooled funds to redeem their reputation.

“Attack your goals depending on the time frame when you need your money. If it’s a short-term need, put it in a money market fund in the biggest banks, so that even if the bank closes, the fund will still be there,” Marvin says.

(For more personal finance articles, visit MoneySmarts at http://blogs.inquirer.net/moneysmarts.)

By Ma. Salve Duplito
INQUIRER.net
First Posted 23:15:00 01/18/2009