STRICTER selection of state banks' board members will likely result from
the Senate's probe on the alleged behest loans extended to a prominent
businessman, a legislator said.
"We will... study different models [of selecting the board members of
state banks]," Sen. Sergio R. Osmeña III, chairman of the Senate banks,
financial institutions and currencies committee, told BusinessWorld in a
text message last Friday when asked about the legislation that will
likely result from the hearings on loans extended by the Development
Bank of the Philippines (DBP) to Roberto V. Ongpin, chief executive of
several companies and former Trade minister.
"Board members of government banks, unfortunately, are objects of behest
or desire letters from the Palace and are not subject to screening by
the Monetary Board... unlike [those of] private banks.
This is wrong," he added.
Nestor A. Espenilla, Jr., Bangko Sentral ng Pilipinas deputy governor
for bank supervision, said in a separate text message last Thursday the
probe should result in the "strengthening of the governance
arrangements" of government banks DBP and Land Bank of the Philippines
(Landbank).
"Primarily, the amendment on provisions pertaining to the board of
directors on how they are selected and their accountability," Mr.
Espenilla added.
According to the DBP charter, Republic Act (RA) 8523, which amended
Executiver Order 81, the bank's board should be composed of nine
members, all to be appointed by the President. The chairman shall
preside the meetings, and the president of the bank will serve as
vice-chairman and assist the chairman. Four members should come from the
private sector.
Qualification of the board members are as follows: natural-born
Filipinos, not less than 35 years old, of good moral character and
proficient in banking, finance, economics, law, agriculture, business
management or government administration.
The Landbank charter, RA 7907, which amended Republic Act 3844, states
that the bank's board of directors be composed of nine members, of which
the Finance secretary will serve as chairman, and the bank president as
vice-chairman. The secretaries of the Agrarian Reform, Labor and
Agriculture departments will serve as ex-officio members. The President
will appoint two members to represent the agrarian reform beneficiaries
and another two to represent the private sector.
As in the DBP charter, RA 7907 specifies that Landbank's board members
must be natural-born Filipinos, not younger than 35, of good moral
character and experts in banking, finance, economics, law, agriculture,
agrarian reform or business management.
The Manual of Regulations for Banks, in contrast, is very strict when it
comes to the board members of private banks. It specifies that at least
two must be independent directors. Directors must satisfy requirements
on "integrity/probity, competence, education, diligence and
experience/training."
Sought for comment, Leonora A. Fernandez, DBP first vice president for
corporate affairs, said in a telephone interview the bank is open to
changes to its charter. "Anything that will improve the charter and
would benefit the public is fine. If the Senate sees it fit to amend it,
we're open to that," she said.
Landbank officials were not available for comment.
The Senate is investigating the loans obtained by Mr. Ongpin from the
DBP, which the businessman used to purchase shares in a mining firm.
Mr. Ongpin later sold his stake in Philex Mining Corp. to the group of
businessman Manuel V. Pangilinan.
Mr. Osmeña earlier said the probe will also result in changes to the
Securities Regulation Code, Anti-Graft and Corrupt Practices Act and the
Corporation Code. -- A. S. O. Alegado
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