Prospero Pichay, Jr., of Surigao del Sur, was found guilty by the Sandiganbayan of three graft charges in connection with the misuse of P780 million in financing for the Local Water Utilities Administration (LWUA).
The anti-graft court’s Fourth Division convicted former LWUA administrator Pichay and his then-deputy administrator Wilfredo Feleo Jr in a 66-page decision dated June 7 over LWUA’s 2009 acquisition of a 60% voting stock in Laguna-based local thrift bank Express Savings Bank Inc (ESBI) owned by the WELLEX Group Inc (WGI) and Forum Pacific Inc. (FPI).
As a result, Pichay and Feleo have been sentenced to six to ten years in prison for each count of graft, for a total of 18 to 30 years in prison, plus a lifetime ban from holding public office.
Prospero Pichay and Feleo, according to the Sandiganbayan, caused the government undue harm by acquiring ESBI without first obtaining approval from the President’s Office, the Department of Finance (DOF), the Bangko Sentral ng Pilipinas-Monetary Board (BSP-MB), and the Office of the Government Corporate Counsel (OGCC) as required by Republic Act 8791 or the General Banking Law of 2000 and Administrative Order No. 59.
Prospero Pichay guilty of graft over misuse of P780-million LWUA fund
“The prosecution was able to present sufficient evidence to prove that the irregular transactions carried out by the accused LWUA officials …were committed with gross inexcusable negligence. Ultimately, the absence of the requisite MB approval resulted in losses on the part of the government in the total amount of P780 million,” it said.
According to the anti-graft court, the BSP informed Pichay that the ESBI transaction would change the bank’s majority ownership, which would necessitate prior MB permission, DOF endorsement, or clearance and approval from the Office of the President, among others.
Under Prospero Pichay’s leadership, the LWUA bought 60 percent of ESBI’s outstanding shares for P80 million and accepted a P40 million down payment upon signing the Deed of Absolute Sale.
“It cannot be denied that the accused Pichay and Feleo knew of this requirement as they had been in consultation with the Office of the President, the DOF, and BSP. They were specifically advised to secure prior approval of the MB. This advice was given before LWUA purchased ESBI shares,” Sandiganbayan added.
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