Key questions on RCBC mess

By Lito U. Gagni

As the hearings in the Senate wound up last week, with a pivotal closed-door session that the key player, Maia Santos Dequito, head of the Jupiter branch of Rizal Commercial Banking Corp., sought and which the Senate probers grudgingly granted, several questions deemed crucial to unravelling the mess that brought down Bangladesh’s central bank head remained unanswered and unasked. 

First, the way RCBC handled the situation evoked more questions than answers.

Second, the way RCBC officials, including President and CEO Lorenzo Tan, evaded answers to questions that the senators asked – with Sen. Teofisto Guingona Jr. fuming at one point – on the platform of bank-secrecy laws, remained puzzling to some personalities in the banking system.

Third, the laxity of RCBC is telling in the handling of the withdrawal of dollars and the subsequent conversion to pesos of the funds that went to the Philippines banking system after a supposed hacking of the Bangladesh central bank’s reserve funds kept in the Federal Reserve Bank of New York.

According to bank insiders, the RCBC mess is one for the books and it showed how lax the processes are in the bank.

For instance, when one withdraws dollars from a foreign-currency deposit unit, the serial numbers of the dollars are tagged and written on a slip of paper that is then validated as a receipt for the withdrawing depositor.

In the same vein, in purchases of dollars from the bank, each serial number of the dollars is also written down, before they are given to the buyer. Conversely, when one sells dollars or exchanges dollars with the banks, these are also logged and signed for by the depositor or the transacting party.

So how come RCBC failed to take these precautions? And in doing its transaction with Philrem, there is the logistical nightmare of tagging each dollar that went out and which were the subject of the transactions. The tagging of each dollar bill alone, would have consumed more than a banking day.

In the case of the invocation by Tan et al., of the bank-secrecy laws when they refused to answer simple questions from the senators about the paper trail of the dollar deposits, banking sources said Tan’s reasoning was erroneous since he was not the depositor of the bank account in question and, therefore, has no reason to invoke the bank-secrecy laws which protect the depositors.

The way Tan sought refuge on the bank-secrecy laws was something that did not sit well with the banking community which is cognizant of the processes that banks have to go through in connection with the rules under the Anti Money Laundering Act.

This was what led two US writers to mention the “murky banking system in the Philippines” that is said to be not in sync with other banking systems in the world. The country’s bank-secrecy laws are said to be the weak link in its battle with terrorism financing and drug-money laundering.

But the most telling in the probe of the laundering case where RCBC prominently figured was its laxity in observing the processes that the bank itself has put in place. Even the bank’s transactions regarding the $81-million heist are full of holes such that the RCBC would have to redefine its role in the banking system so that questions about its lax procedures would not resurrect once again.

Meanwhile, one other key and crucial question remains: where did the funds go and how was the transfer executed?