This is a thorough read but it will help make sense of everything behind the mysterious bank heist. Kudos to chempo for this great presentation.
It is important to get a background knowledge of the complexities of this scam before we can fully understand how I.N.C. is somehow allegedly involved in this as the presence of INC key players in the scam are starting to surface... unless ofcourse the case get's railroaded and eventually whitewashed since the members of the Senate Committee, as we all know, also beholden to the powerful and highly influential INC Administration. That is why it is crucial that we educate ourselves regarding this issue and be able to seek the answers because as the investigation goes, so does the saying goes... THE PLOT THICKENS.
One way or the other, the truth will come out no matter how Maia Santos DeGuito tries to escape from it, no matter Ferdinand Topacio tries to cover up for it, the truth will surface. INC members from the locale of Bel Air knows exactly who DeGuito is and every effort is being done to silence everybody and erase all links to INC. Same modus unfortunately, threats, coercion, intimidation and cover ups.
One can expect a denial from the INC Administration via the Ministers and all their media/social media mechanism, but it will remain to be obvious that the INC Administration will continue to protect her for "obvious" reasons, they wouldn't want her to spill the beans on who really are involved.
So for now, let's equipped ourselves with the knowledge on how to properly understand what all the hullabaloo is all about. Read on.
~ Antonio Ebangelista
This must have been The Great Train Robbery of the 21st century. Hackers were suspected to have been responsible for sending SWIFT FIN payment instructions from Central Bank of Bangladesh to the Federal Reserve Bank NY on Feb 4 to request transfers of US$1 billion. The Feds executed 1 payment of US$20mm to a bank in Sri Lanka and 4 payments of US$81mm to a bank in Philippines before they realized something was wrong and stopped payment.
(What is known as at 16 Mar 2016):
- 15 May 2015 – 4 US$ a/cs opened at RCBC, Jupiter Branch purportedly by, Michael Francis Cruz, Jessie Christopher Leprosa, Enrique Vasquez and Alfred Santos Vergara.
- 1 Feb 2016 – US$ a/c purportedly opened by William So Go.
- 4 Feb 2016 – US Federal Reserve Bank received 35 SWIFT payment instructions from Bangladesh Central Bank (BCB) for payments totaling US$951mm. The Feds executed 1 payment (US$20mm) to a Sri Lanka bank, and 4 payments totaling US$81mm to RCBC. Then they suspended payments.
- 5 Feb 2016 — (Friday – BCB closed) – RCBC saw the US$81mm inward remittances and applied the funds accordingly to the 4 beneficiary a/cs.
- 8 Feb 2015 (Monday – RCBC closed for Chinese New Year holiday) –BCC messaged RCBC to stop payment.
- 9 Feb 2016 – BCB resend messages to RCBC.
- 11 Feb 2016 – BCB called Bangko Sentral president, Anti-Money Laundering Commission started investigation.
- 19 Feb 2016 – NBI, Pangcor start investigation
- 22 Feb 2016 – RCBC Jupiter Br manager Maria Deguito allegedly had meeting with William Go
- 29 Feb 2016 – PDI broke the news.
- 1 Mar 2016 – Court of Appeals issues orders to RCBC, East-West Bank, BDO & PNB to freeze a/cs.
- 8 Mar 2016 – The Daily Star (in Bangladesh) broke the news
- 11 Mar 2016 – Immigration stopped RCBC Jupiter Branch Manager departure at airport
- 15 Mar 2016 – Philippines Senate conduct inquiry.
WAS BCB HACKED?:
Bank hackings have been in the manner of hackers gaining access to a bank’s system and having customers’ information and passwords (using methods like phishing) with which they then use to access the victims’ account and execute payments on the banks’ payment application, to their own designated account, mostly a fictitious vendor account. They do not need, and possibly cannot, break a bank’s encrypted data. If BCB had been hacked, then it’s of an entirely new mode in that they actually executed SWIFT payments.
BCB hackers would need to study in stealth the central bank’s activities. To do this they need to plant a malware. If it’s a keylogger malware, the virus will record all keystrokes info and relay that to the hacker. If it’s a RAT (remote administrative tool) virus, the hackers monitor in realtime on their offsite screens. The forensic sleuths now at the bank say there was a malware planted in January 2016. It is unlikely this malware is the culprit because it is simply too short a time for hackers to study the system. Perhaps the hackers had gained access much earlier and already covered their tracks well.
Was the SWIFT system at BCB hacked? SWIFT is a very secure system and is practically impossible to hack into. Under normal banking operations, it is almost impossible for a hacker to execute the SWIFT payments. In almost all banks, dedicated workstations would be used for SWIFT payments and this would sit in a physically secured room. All the payments can only be released by 2 authorized personnel (high level authorized signatories) each having one half of a 16 digit password (which is changed regularly). All messages are encrypted. SWIFT has a concentrator in every country that they operate in. All banks’ SWIFT workstations are connected by leased line to the concentrator. From there the data gets into SWIFT IP-network to either Brussel or US offices.
The only way hackers could access the SWIFT workstation is if there is internet access, either directly or indirectly. A good bank would have disabled the wifi, disk drive and USB of the SWIFT workstation to prevent mis-use. Some banks may have a SWIFT and inhouse system integration to facilitate auto-SWIFT message preparation, (an application to download payment transactions from inhouse banking system into the SWIFT system thus avoiding manual preparation) in which case the work station would be connected to their server, and exposed to the corporate network with internet access. Transaction volume is low for a central bank compared to a commercial bank so it is unlikely for BCB to have an integration application. It’s an issue of cost.
The BCB payment instructions had to be sent when the SWIFT machines are online, which means probably just before the close of business on Feb 4. It could be MT101 (batched payments) or MT103 (single payments). When the bank sends a SWIFT message, the system sends an “ack”, acknowledgement or confirmation. This “ack” determines the legal responsibility of SWIFT to deliver the message to the intended party. Thus during the day, when the printers start throwing out these “ack”, surely BCB would have been alerted.
This is why all banks in the world are waiting to understand how the hacking could have been done.
It is my belief there is a high probability that there was no hacking but an inside job. Another give-away of employee complicity is the payments made references to actual ongoing infrastructure projects in the country.
MIS-HANDLING AT BCB:
I find two things that point to management incompetence. Firstly, the central bank kept the government in total ignorance of the heist. They correctly contacted RCBC immediately on Feb 8, which was a holiday in Philippines, and followed up on Feb 9. But it was through a SWIFT message that betrays a lack of urgency. The BCB President called up Bangko Sentral president Tetengco Feb 11 about 7pm for assistance. The Bangladesh Finance Minister learned of the loss from the media one month after the incident. Secondly, why did the BCB keep a US$1 billion sitting idle in a current account? At the very least it should be in overnight deposits.
BCB and Bangladesh Finance Minister displayed embarrassing ignorance of banking practices when they said they will sue the Feds for negligence in releasing the first 5 payments totaling US$101mm. The Feds, as the paying bank, owes no legal obligation to ensure payments are in order. Their job is to make sure payments are properly executed as instructed so long as the order for payment is authentic. And the 35 payment orders were authentic SWIFT messages. It was not a case of someone recreating a look alike.
Note on Stop payment orders:
There is something most people do not understand. If you issue a cheque to A and then you place a stop payment order, your bank will act on it if the cheque has not been cleared. That’s straight forward. But if the cheque has been cleared, there is no legal basis for you to claim the return of the funds directly from A’s bank (say BDO). To BDO, your payment to A is a valid one because the cheque has cleared. But your request to BDO puts them in a very difficult position. They have now been ‘put on notice’. If your issue with A is a commercial one, it has nothing to do with them. If they freeze the funds and A issues cheques thinking they have the funds and BDO bounce those cheques, A may sue BDO. But if it’s a criminal issue and BDO release the funds to A, the bank may be called to answer for the consequences.
Another eg – If you make an ATM transfer to a wrong account and you rush to the bank to report that and ask them to reverse the entries, sorry, not so fast Jose. Your bank will need to go and ask the party that received that error transfer and have their approval to return the funds to you. That is because your ATM transfer was a valid one.
In the case of BCB, the circumstances are fairly obvious – a crime has been committed. It would be incumbent on RCBC to heed the freeze order immediately.
All banks in the world maintain operating accounts with banks located in the city where the currency is settled. For US$ all banks maintain accounts with other banks in New York city. These NY banks are known as the correspondent banks of those banks that operate those accounts. For example RCBC’s US$ correspondent is Wachovia Bank NY.
The US$ payment flows initiate from remitting bank (BCB) to their NY correspondent (Feds), to beneficiary bank’s correspondent bank (Wachovia NY) to beneficiary bank (RCBC) to designated branch (Jupiter Br) and to ultimate beneficiaries’s a/cs. (Sometimes, there may be a few more intermediaries).
As I mentioned in the previous US Debt article, no US$ currency left the US. In the Fed’s system, BCB’s a/c got debited and Wachovia NY a/c got credited. In Wachovia NY books they debit Reserve at Feds, credit Vostro (RCBC) a/c. In RCBC books they debit Nostro (Wachovia NY) a/c and credit customers’ a/cs.
FEDERAL RESERVE BANK :
The Feds raised the alarm when they saw the numerous payments to private individuals. It is not in the nature of central banks to make such payments. I applaud the Feds employees for their alertness. Those are quality employees. Bangladesh is 10 hours ahead of New York, so BCB was closed by the time the Feds smelled something fishy. So it means the Feds stopped payment on their own accord on Feb 4 and then inform BCB on next Bangladesh business day Monday Feb 7. This kind of situation puts the paying banker on the spot. They had to make a decision that carries certain risks. What if the payments were all legitimate? The Feds would have to pay compensating interest to recipient banks for 3 days.
The paying banker, in this case the Feds, owes no duty of responsibility to BCB so long as the payment instruction are authenticated, which in this case, they were. It is never the job of the paying banker to interpret and decide if payments are correct, if that were so, their job becomes untenable.
The Feds’ action of stopping payment is not a contractual obligation, but simply being a prudent and responsible bank. Instead of suing the Feds, BCB should be eternally grateful to the Americans for saving them US$870mm.
What I would like to know is – are there other recipient banks apart from RCBC and Pan Asia (the Sri Lanka bank)? If so, there are other scums in some other banks elsewhere. If not, then it’s absolutely unimaginable that almost US$1 billion could have been planned to be laundered through the casinos in Philippines.
THE SPELLING MISTAKE THAT STOPPED A BANK HEIST:
The payment of US$20mm to Sri Lanka was stopped because the beneficiary name was spelt incorrectly. Media reports are wishy-washy here. My guess is that the beneficiary bank is Pan Asia Banking Corp and the beneficiary is Shalika Foundation. Deutsche Bank must be Pan Asia’s US$ correspondent. The SWIFT payment indicated beneficiary name as “Shalika Fandation” so Pan Asia could not apply the payment because account name differs. They could have let it pass (because the a/c number must apparently be correct), but in view of the large sum, they prudently with-hold payment. Pan Asia would have reverted to remitting bank (BCB) for instructions, so on Monday Feb 7, all hell broke loose in Dhaka.
Notice that this scenario is different from the Feds. Here the payment is authenticated and the beneficiary bank has to apply the funds to the correct ultimate beneficiary. In the Feds case, the payments were authenticated and their responsibility is only to pay to the correct correspondent banks – they do not concern themselves with the beneficiary bank and ultimate beneficiaries.
WHO’S MINDING THE STORE AT RCBC:
The Remittance Dept at HQ is concerned basically with the paperwork and routing the flows to the various branches. They can in no way be considered as approving the transactions. How could they understand who the customers are and what those remittances represent? However, Feb 5 morning must have stirred some excitement in the Dept when they saw 4 remittances in $ millions. They most probably picked up the phone to pre-advise the branch about the huge remittances.
The responsibility for understanding the transaction falls on the front-office officials. They are the ones who know the customers and who has intimate knowledge of the accounts. They are the ones who process the transactions and apply the proceeds. That responsibility falls squarely on the Branch Manager. That does not mean that on Feb 5 morning when they look at the remittance forms they knew it was money laundering. However, put the facts together, the Branch Manager could not have arrived at any other conclusion other than that something was not correct. The facts were :
- The 4 US$ accounts have been dormant for 1 year.
- The a/cs were opened at the same time, similarly dormant, and now re-activated at the same time.
- The funds came from the same remitter.
- The remitter is a central bank (there is unlikely and Filipino has any dealings with a central bank at the individual level)
- The sums are extremely huge.
- At this stage, the Branch Manager should have suspended the transactions and reported up the line for further instructions.
Q1 – Did HO Inward Remittance Dept call the branch, and if so, what was the Branch Manager’s response?
Q2 — Did Branch manager call up HO? If so, who was called, and what was the response?
In the hackers’ world there is a term called “zero day”. It refers to the possibility of a bug in the system that has yet to be recovered and will pop up one day. So process weaknesses are something like that. Somewhere in the link may cause a problem by some incident which has never been experienced before. At which point (by whom?) should unusual transactions be alerted, and to who? Obviously, it should be the POI – point of inception (Inward Remittance Dept). What’s unusual – this is where experience comes in, but obviously large transactions would be one of them. The final responsibility for decisions of course lies with top management, but there should be a designated management level personnel who will take it off the FOI and do some preliminary investigation work. The internal audit manager would be a good candidate.
THE INWARD REMITTANCE PROCESS AT RCBC HO:
Operational procedures differ from bank to bank but in general, it should basically be similar. On Feb 5 morning, the HO Inward Remittance Dept would firstly tally their currency receipts and report to the Treasury Manager. Secondly, arrange to pay ultimate beneficiaries accordingly. If these beneficiaries are in branches, they make inter-branch transfers and forward the inward remittance to branches for action.
Separately, the HO Reconciliation Dept would sort through the previous day’s (Feb 4) transactions and confirm the balances in their correspondent bank’s balances or investigate discrepancies.
Ordinarily, top executives do not know anything of the hundreds of thousands of transactions they handle each day in the bank. Thus RCBC top management would know nothing of what transpired on Feb 5. The management level that would be the first to know something was amiss is the Treasury Manager because the Inward Remittance reported unusually large total US$ receipts, further confirmed by the Reconciliation Dept that they had large balances overnight in their US$ correspondent a/c. Whether the Treasury Manager will report to the CEO depends on circumstances. In money centers like Hongkong, Tokyo, London, Singapore or NY, US81mm is nothing exciting. At RCBC it probably mattered and it would have been reported up higher, as an exception, not necessarily anything wrong, because the remittances may probably be legitimate.
The unusual large balance in the Nostro a/c would have been advised by another source. Wachovia NY’s Relationship Management Manager would have called up the RCBC Correspondent Manager or if not available, the Treasury Manager, to advise them they had a huge overnight balance in the float. The reason is this represents un-utilised idle funds and it is also often due to some mistakes. If RCBC did not receive this call, they have a lousy correspondent.
So in all likelihood, top management should have been made been aware of the huge sums of dollars on Feb 5 morning. The question to ask is :
Q – Were the top management informed of the huge sum of $ received on morning of Feb 5? If so, who reported to who and what was the management’s response?
THE INWARD REMITTANCE PROCESS AT RCBC JUPITER BRANCH:
– Normal process should have been :
Upon receipt of inward remittances advice from the HO, the branch would apply the funds. HO a/c would be debited and customers a/cs credited. If the remittance advice indicate that beneficiary be informed, the branch will call up their customers and tell them your funds have arrived. And that would be end of the inward remittance flow.
– What actually happened :
The funds were credited to US$ a/cs of 4 unknown private individuals and then immediately reversed and 15% remitted to a remittance company (Philrem), the balance credited to the US$ a/c of William So Go which was hastily opened on Feb 1, 3 days prior to the heist in Dhaka. Go’s a/cs were subsequently debited on Feb 5 and Feb 9 to Philrem which will go on to execute the last mile delivery of the stolen money.
Original inward remittance US$80,882000 were credited to the 4 private individuals US$ a/cs (varying amounts for each one) on Feb 5 and taken out as follows:
1.1. Feb 5 – US$ 22,735,000 debited from the 4 US$ a/cs and credited to Go’s a/c.
1.2. Feb 9 – US$ 42,932,000 debited from the 4 US$ a/cs and credited to Go’s a/c.
1.3. Feb 9 — US$ 15,215,000 debited from the 4 US$ a/cs and remitted to Philrem (to their a/c at which bank we do not know, possibly at RCBC Greenhills – my guess)
Of the US$ 65,667,000 transferred to Go’s a/c, the payments and receipts made :
2.1. Feb 5 – US$ 500,000 Payment re FX 1
2.2. Feb 5 – US$ 40,200,000 Payment re FX 1
2.3. Feb 9 – US$ 20,000 000 Payment re FX 2
2.3. Feb 9 – (US$ 13,000,000) Receipt re FX 3
2.4 . Feb 10 – US$ 17,968,000 Payment re FX 4
All the US$ were remitted to Philrem, (to their a/c at which bank we do not know (possibly at RCBC Greenhills – my guess). FX 1,2 & 4 were remittances to Philrem with instructions to convert to peso and pay certain beneficiaries. According to Philrem, the transactions were all via verbal instructions from the branch manager. In other words, there was no FX trade done in RCBC.
FX 3 is the exception. Philrem did an actual FX trade with RCBC Treasury. RCBC sell peso/buy US$ with Philrem. FX trade involves several entries, for clarity we ignore them. It resulted in Go’s US$ a/c being debited, and Peso Cash a/c credited. We do not know from where Philrem paid RCBC, and we also do not where RCBC delivered the peso cash to (probably Philrem picked it up at Jupiter Br).
FX 3 is telling. Philrem said her instructions came from Treasury. In a FX deal, both counter-parties will instruct each other where they want their funds delivered. But this is funny, as Treasury sold the pesos, it was also telling Philrem where to deliver the peso to. It should be Philrem telling RCBC where they (Philrem) want to receive the pesos! Was there Treasury involvement in the whole affair? The answer is not necessarily. Retail FX originated from the branch. It is the originating dept who provides the Treasury all the instructions.
FX 3 is very troubling in this way. It involves the Treasury Manager, the Settlements Manager and the Chief Cashier and the sum we are talking about is 600,000,000 pesos. Hell, it even involved the Bangko Sentral. I can find no reason to explain how this could not have caused a ripple of excitement enough to reach RCBC top management’s ears. How did the Chief Cashier explain to the Bangko Sentral when they requisite for this huge amount of cash?
According to Philrem, they delivered this 600,000,000 pesos in several tranches from Feb 5-13. I think she got the dates wrong. It must be from date of FX 3, Feb 9, to Feb 13. There were 4 banking days here, so most likely Philrem had to deliver in 4 tranches because RCBC broke the cash requisition with Sentral Bangko to 4 tranches for 150,000,000 pesos each day to avoid scrutiny. Even then, the central bank would have queried at the large amount. The only way to avoid scrutiny was for the Chief Cashier to build up the cash hoard over several days (if so, I’m assuming it started on Feb 1, the day Go’s US$ a/c was opened at the branch). Had this happened, the Treasury Manager would most definitely be aware. Heaven forbid that that really happened because it screams COMPLICITY!!!
The detailed book-keeping may tell something. How could they execute FX 3 where the US$ is received in one day (Go’s a/c debited US$13mm on Feb 9), and the pesos delivered over several days?
Q1 – Were all the withdrawals properly documented? Did customers sign withdrawal slips in the branch?
Q2 – Were all outward remittances properly documented? Did customers sign remittance forms in the branch? Who authorized them? Were the large amounts in excess of the branch manager’s signing authority? If so, which higher authority counter-signed them?
Q3 – Where did all the US$ remittances to Philrem go to? Was it to Philrem’s a/c at other banks or at RCBC Greenhills?
Q3 – Who was the $/peso FX dealer in RCBC who handled FX 3? Did the Treasury Manager approve the trade?
Q4 – What was the response of the Chief Cashier? How did he requisite the 600,000,000 pesos.
Q5 – Did Bangko Sentral notice anything of RCBC’s cash requisition Feb 9 to Feb 13 ?
I could go on and ask tens of other questions. I would recommend a full audit of FX 3 alone.
PHILREM SERVICES CORP :
It is an established remittances company operating in a few countries. It handles about 100,000 transactions per month average US$500 each. So average turnover is US$50mm per month. (Don’t know if this is world-wide or just Philippines). Remittance companies work in close partnership with banks. Philrem CEO M/s Bautista was squirmish when asked how long was Philrem’s relationship with RCBC. It was 2 years, then 5 years then 3-5 years? She can’t remember.
Philrem remitted in the following manner (a/cs at which bank, we don’t know):
- Feb 5 Php 665,000,000 in 4 tranches to casino Solaire a/c Bloomberry (Kim Wong’s company)
- Feb 9 Php 8,000,000 === do ===
- Feb 10 Php 800,000,000 === do ===
- Feb 10 Php 1,000,000,000 in 2 tranches to Eastern Hawaii Leisure Corp
Payments to Weikang Xu (casino junket operator) were in cash in various tranches between Feb 5-13. Total cash paid:
- Php 600,000,000 (From FX 3?)
- US$ 18,000,000
Q1 – Where did Philrem park the US$ remittances remitted by RCBC Jupiter? With which bank did Philrem do the FX deal to convert to pesos? Was it also done with RCBC? Investigators should follow this trail.
Asked if she knew Kim Wong and Weikang Xu, Philrem boss M/s Bautista said dismissively she was introduced probably once or twice to Kim Wong, and met Weikang Xu only once.
Asked about how she does her cash delivery, she said the first few times she delivered herself, and most times by messenger. That’s contradicting her meeting him only once. For those kind of deliveries, short of an armored car you probably needed 2 security guards!
She disclosed woefully that RCBC has closed all Philrem and other related personal accounts. RCBC indicated they are willing to disclose the reasons why if Philrem would sign a full disclosure release letter.
Philrem processes as described by M/s Bautista conveyed absolute cavalier and lessez faireattitudes when everybody knows that in Philippines when it comes to cash transactions, it is anything but. According to her, instructions from RCBC were verbal via telcon, cash deliveries by messengers. That may well be so. In the underground dark business, transactions are often without evidence. Unfulfilled obligations end in some dark alleyways. Her giggling, squirmish and girlish outward demeanor at the inquiry seemed to me more like a fox throwing crumbs to confuse the hound on its trail.
The foxhound tells me that investigation into the money laundry part should be directed towards where it’s noose is pointing – Philrem. That was my immediate feeling, the Senate inquiry reinforced it.
This is a remittance company and it seems they do black market FX transactions. In the murky shadow money changer and remittance business, millions and millions of $ are moved around the world unrecorded and untracked. They operate out of little holes in the wall but their volume is shocking. That they have the muscles to do this type of deals indicates a vast network. A certain William Saunders moved billions of pesos worth of gold via this conduit some 30 years ago.
Where did the US$13mm cash that they delivered to Weikang XU came from? The whole population of Manila money changers could have run out of dollars those few days! Surely they couldn’t have got hold of those amount of cash in those few short days? It must have been planned somehow because it needed sourcing, logistics, guarantees or banking lines, etc. In other words….COMPLICITY.
BRANCH MANAGER COMPLICITY?:
M/s Maya Santos-Deguito’s complicity is a certainty. It’s just a question of whether she was taking instructions from higher up in the organization and if so, who. It is incomprehensible that she did not realize something was wrong with the 4 remittances. Her failed holiday trip to Japan with husband and wife can certainly be construed as a flight attempt. Who in their proper mind would go for a holiday at such a time?
Is Mrs Deguito the sole insider, did she feel confident she could pull it off without higher management awareness? We would be insulting her intelligence to think that she believed so.
She has indicated that top management up to CEO knew everything, which she later recanted, saying that what she meant was she assumed top management is aware. She has mentioned that she is just a small guy and that the remittances were approved by HO Remittance Dept – this was just a blame game, as I indicated above, Remittance Dept was merely doing paper-routing work. She has indicated the CEO recruited here from another bank 2 years ago, which was rebuffed by the CEO as he had no hand in personnel recruitment. This bank heist scheme may or not have involved an insider at the remitting bank side, but it definitely required an insider at the recipient bank side. She was not co-operative in the inquiry but pledged to tell-all in an executive (private) Senate hearing.
One critical point – The CCTV at the branch conveniently malfunctioned Feb 4. Was that to protect players who obviously visited the branch, or to protect the branch manager?
RCBC TOP MANAGEMENT COMPLICITY?
With unabated breath we await the outcome of the various investigations that are ongoing. It is incredulous that any top level management could be complicit in something like this, knowing full well that the funds will be traced to RCBC easily. But then again, Philippines is full of such audacities.
These questions may provide some tell-tale signs :
Q1. Did the Treasury Manager report the huge cash, to whom and what were the re-actions?
Q2. Was there a huge reconciliation item in the US$ nostro a/c on close of business Feb 4? (If there is’nt, it meant Treasury was expecting the huge remittances and they utilized those funds, (such as place it out interbank overnight which is what they would have done ordinarily) meaning someone else obviously knew what was happening.
Q3. Who handled the SWIFT message of Feb 8 from BCB in the morning of Feb 9? Who passed the message to who and what was recipients response? (Lots of payments on Feb 9 could have been prevented!!). This is where a big fish could be caught.
An investigation into FX 3 would probably provide some answers.
THE 4 US A/CS:
(Michael Francis Cruz, Jessie Christopher Legrosa, Enrique Vasquez, Alfred Santos Vergara).
These a/cs were opened 1 year ago and has been dormant ever since. Invitations to attend the Senate inquiry were in vain and revealed they do not reside at the given addresses. These are of course ghost a/cs, their sole purpose was to break the inward remittances into smaller amounts to avoid attention.
WILLIAM SO GO COMPLICITY?
Mrs Deguito is acquainted with Go who is a customer of a bank she previously worked for. She said the a/c opening by Go was done outside bank premises, which banks sometimes do for valued customers. This is more an exception than a rule. Go has vehemently denied that the a/c was his and that signatures were falsified. He said Mrs Deguito met with him on Feb 22 where she offered him Php 20m to officially close down the a/c. She has denied this. I think Go shot himself in the foot here.
AMLC’s explanation at the inquiry consistently referred to “Go remitted xxx US$ to Philrem”which I think she was just referring to Go’s a/c being debited for the transfers out. Philrem consistently said instructions came from branch manager except for FX 3 which came from Treasury.
Q: If the a/c is fictitious, why would Mrs Deguito plead with Go to close the a/c? She could just as easily close down the a/c herself if it’s a fictitious a/c.
“The time has come, the Walrus said, to talk of many things”
This is so typical of Philippines , all talk and no action. There are so many investigations going on — Anti-Money Laundering Commission, National Bureau of Investigation, RCBC and Casinos. The interest of the state would be better served to allow AMLC to do their work and collate all info from the other investigations, all out of the public eye until such time when their work can be publicized. A public Senate inquiry serves no purpose :
- Many personalities will declare Philippines version of the 5th amendment and clam up.
- Others cannot contribute because of Banking secrecy laws
- This inquiry will not end in legislation because they do not have enough time.
- It’s only benefit will be crooks of all sorts who will learn of Philippines’ banking processes and weaknesses. (Much like disclosing military tactics in the Mamasapano inquiry)
If it is in aid of legislation, dear senators, do the following :
- Pass the amendment to the anti-money laundering act to include casinos.
- Whilst you are at it, include also NGOs, charities, money changers, remittance companies (these organizations have often been used to launder money as well).
- Amend the banking secrecy act, stop the law from protecting the crooks.
If it is in aid of legislation, there was one bright moment. Senator Recto noted it took AMLC a long time till Mar 1 to obtain a court order to freeze accounts and he asked “Is there anything we can do?”. AMLC explained it has to do with “ex-parte” issues they needed to collect sufficient evidence. Unfortunately, this question will be buried by all the showmanship.
PHILIPPINE DAILY INQUIRER:
No, No, don’t worry, they are not complicit. It’s strange that PDI had the scoop and broke the story on Feb 29. Bangladesh and NY were able to contain the story pending investigation, but Filipinos have loose tongues. The PDI story did not explode on the world – was it because no international agency reads Philippines media? It only became world news when BBC and Reuters carried the news Mar 2 or 3.
There is no doubt M/s Deguito is in the center of the storm and a possibility there are some others in RCBC who are privy to and participated in the misdeeds. In the scheme of things, the branch manager was designed to take the fall.
We do not know where the US850mm remittances that the Feds stopped were destined. That the 5 payments that went through arrived in Sri Lanka and Philippines is no coincidence. Both countries are weak in their anti-money laundering regulations in as much as casinos are not covered. Both have several casinos operating in the land.
All law abiding citizens actually do not need banking secrecy legislation. That is because all banks have a fiduciary relationship with their customers. Just like a doctor does not divulge patient info, nor a reporter his source, so too a banker his customers’ info. Philippines has a banking secrecy act that protects the crooks. Many are the times we have witnessed investigative officials rendered inutile by banks that refuse to provide critical information. Banking secrecy is fine, but where it comes to criminal investigations, the law must be on the side of those who uphold the law. An amendment is long overdue to override banking secrecy in the event of a criminal investigation. This will be a tough act for a lower and upper house full of legislators who themselves are tainted. Blame dwells on the voters who put them there.
In Philippines the legal process is always the stumbling block. It always guarantees the crime busters arriving at the stables long after the horses have bolted. Mayor Jun Jun’s suspension was effected after several months giving him time to shred all documentary evidences. In this case, AMLC swing into action the moment Tetangco received the call from the BCB president on the evening of Feb 11. It was only Mar 1 that AMLC was able to secure freeze orders from the Court of Appeals. By then, old mother Hubbard discovered the cupboard was bare.
There is fear this incident may lead to Philippines being put back on the TAFT gray list again. Banks all over the world may not want to deal with Philippines remittance companies if they are not linked with foreign banks. The repercussion is increased cost for remittances by OFWs. Strange that this immediate impact possibility is quick to draw the ire of OFW associations, but voting in the wrong candidates that may damage Philippines in credit agency ratings with wider implications for the country do not resonate with the same segment of the population.
Bank heist and money laundering syndicates are a breed of extremely intelligent criminals. We need to work on the ex-parte proceedings. The war is lost if judges are not prepared to wake up in the middle of the night in their pajamas to sign search or arrest warrants or freeze orders, on the basis of their prosecutors’ judgment and recommendation that time is of essence, but instead prefer to dwell on legal decorums, on evidences or other proofs or witnesses or authentic documents or affidavits, or proper notarization.
Great train robbers will know this is a good place to be.
(Note: This article was updated to incorporate new info out of the Senate inquiry Mar 15. A lot of numbers were floating in the senate hall and I’m sure all those tuned in would have got lost in those numbers, particularly its relationship to FX conversion. I sorted through the numbers to present a meaningful picture of the money trail)