A Spate of Rural Bank Closures and a Bad Legacy

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A new wave of pessimism and outrage about rural banks and pre-need plans is engulfing the country including Bicol. This came about after the string of rural banks failed and the Legacy pre-need plans group closed shop without approval from the Securities and Exchange Commission (SEC). And Legacy is controlled by one Celso de los Angeles.

Who is Celso de los Angeles? Currently, he is the mayor of the small town of Sto. Domingo, Albay. But I heard that when he ran last elections the question was why a non-native would be running for mayor. I also heard the rumor that he needs it for “protection”.

It seems Celso de los Angeles has a checkered past to say the least. In the mid-80s he was barred by the Banko Sentral ng Pilipinas after three banks under his wing collapsed. The BSP cited him for unsound banking practices.

What the guy next did was to buy Legacy Scholarship Pension Plan and Consolidated Plans in the late 80s. Later the two firms were merged.

He next emerged as the chairman of the National Housing and Mortgage Finance Corporation (NHMFC) which is the government’s agency tasked in assisting the so-called housing businessmen. Vice-president Noli de Castro, who was Gloria’s “housing czar”, brought him there.

One will wonder how a banned person could be appointed to such position (It also speaks about Kabayan’s capacity to choose people.) And this is after Chavit Singson tagged one “Celso de los Angeles” as a jueteng operator.

He did not last long in NHMFC because malodorous smell immediately leaked. One of his executives got busted for extortion. The agency was immediately politicized–palakasan became the norm and politicians’ recommendations (and for sure there are no audits involved in this) became important in transactions. Another two officials were later charged in court in connection with a land-titling scam. Housing NGOs strenously complained and protested against his mismanagement of the government agency.

That’s when he metamorphosed into a town mayor. It seems the guy was born in the Year of the Butterfly.

Then 10 apparently disparate and geographically dispersed (in Bicol, Luzon and Visayas) rural banks began to fail one after the other. Those banks were offering “double-your-money schemes” in 5 years. And all were traced to be connected to the Legacy group of Celso de los Angeles, the guy banned by the BSP for unsound banking practices.

Now it appears that Legacy is dipping its hand into the coffers of the banks. A big chunk of the banks chain’s fund seems to have been loaned to Legacy. And now Legacy closed shop. If that is not a scam then what is that?

Now the PDIC (Philippine Deposit Insurance Corporation) buffer fund is threatened with the need to reimburse all these banks’ depositors (to the tune of up to P250,000). These types of rural banks have already learned to split big deposits into P250,000 chunks. So in the end it will be taxpayers who will have to pay for this scam.

At least Bernard Madoff was already arrested and now under custody of the court. And in the US the scammers have almost no way to wiggle out of the judgment of the courts. But here scammers are protected by a wall of lawyers, politician-patrons and TROs (temporary restraining orders).

Yes, the Philippines is a developing country. Developing in the wrong direction.

[Photo credit: Bullit Marquez, AP]

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