Philippine Deposit Insurance Corporation (PDIC) President Jose C. Nograles announced that the Corporation has brought its investigation of 13 Legacy-affiliated banks to a higher level by engaging the services of Punongbayan & Araullo, an audit firm with expertise in forensic fraud investigation, affiliated with Grant Thornton, International PA. This kind of investigation is geared towards uncovering transactions intentionally hidden in a maze of paper trail and deleted computer files. It aims to identify and document possible fraud schemes, irregularities and anomalies that may have been perpetrated against the banks and which may be used as basis for the filing of criminal, civil and/or administrative cases. It is also expected to establish a case management system to preserve evidence gathered during the investigation. Asset recovery and tracing will also be conducted to enable the PDIC to lay claim to the properties of Legacy owner Celso delos Angeles and other persons found to have committed fraud. Forensic fraud investigation is being used by other countries such as the United States. The Federal Bureau of Investigation’s Racketeering Records Analysis Unit uses forensic fraud investigation in cases covered by the Racketeering Influence and Corrupt Organization (RICO Law).

Nograles said that the Corporation’s own ongoing investigations that entailed combing through 2,000 boxes of voluminous documents, had resulted in the filing of several cases including syndicated estafa directly against delos Angeles as well as a collection case with request for writ of attachment of delos Angeles’ properties. In the course of said investigations, they have uncovered schemes of a different level of sophistication, requiring more expertise and in-depth investigations to unravel.

“We are dealing not just with individual banks, but with a group of companies composed of several banks and pre-need companies controlled by certain persons through dummy ownerships, enmeshed in a criss-crossing labyrinth of transactions. The endless combinations and permutations of these transactions have created a veritable empire of smoke and mirrors meant to cover up fraud and confuse regulators and the public alike,” Nograles said. “However, we are determined to closely scrutinize these transactions to unravel the web of deception that has been foisted on us all. Therefore, we have called in the experts to assist,” he added.

Punongbayan & Araullo is a member firm of Grant Thornton International, PA and is a leading professional services provider with a proven track record of high quality work in forensic investigation, tax advisory and compliance, and auditing. Moreover, Punongbayan & Araullo is affiliated with the Association of Certified Fraud Examiners (ACFE). The ACFE is an international organization that certifies fraud examiners. Two partners heading Punongbayan and Araullo’s Business Risk Services Group which is in-charge of forensic audit investigation, are ACFE members. Four of the five senior managers leading the 60 personnel assigned to PDIC are ACFE members. The investigations on the Legacy Banks will be conducted by these topnotch examiners in accordance with international standards.

Punongbayan and Araullo is currently working on 26 leads involving tangled deals that had rendered the transactions opaque. Untangling these deals could possibly result to findings of fraud and the filing of additional cases.

The initial coverage of the investigation will focus on bank transactions that are suspected as fraud schemes, irregularities and anomalies for the past five years for all banks, except Rural Bank of Parañaque, Inc., which will cover transactions for the past 10 years.

The fraud investigation will be conducted in the Rural Bank of Parañaque, Pilipino Rural Bank, Rural Bank of Bais (Negros Oriental), Rural Bank of San Jose (Batangas), Bank of East Asia, First Interstate Bank, Philippine Countryside Rural Bank, Dynamic Rural Bank, Nation Bank, Rural Bank of Carmen (Cebu), Rural Bank of DARBCI, San Pablo City Development Bank, and The Center Rural Bank. All banks except The Center RB were placed under receivership by the Monetary Board in December 2008. The Center RB is a Legacy-affiliated bank placed under receivership in February 2006.