Monday, March 9, 2009


If Legacy president Celso Delos Angeles, who is alleged to have bilked millions of pesos from his pre-need company prejudicing hundreds of plan holders and investors, is following the footsteps of Bernie Madoff - who himself has defrauded investors in billions of dollars - our Securities and Exchange Commission (SEC) seems to be following also its couterpart agency in the United States in failing to heed signs of investment fraud that lead to catastrophic losses. Our SEC is, after all, patterned after the US.

The testimony of SEC officials during the recent Senate investigation on the state of the pre-need industry in the country is most revealing. Director Aquino of the SEC Non-traditional Derivatives Department, the department that directly regulates pre-need companies, revealed that Delos Angeles's license renewal application was delayed - filed only in March when the rules require it to be filed in November - due to failure to comply with several requirements, chief among them is the maintenance of a set amount of trust fund to answer for plan holders claims.

Pressed by Senate President Enrile's questioning, Aquino admitted that he did not bother to inquire as to what beset Legacy for its failure to promptly meet the requirments and seasonably file its application for renewal of license. It was also revealed that despite Legacy's failure to comply with other important requirements its license was nevertheless renewed.

SEC Commissioner Jesus Martinez, head of the oversight committee on pre-need that supervises the work of Aquino, appears unaware of this situation. Neither is SEC Chairperson Fe Barin. To top it all, Commissioner Jesus Martinez, supposed to oversee the operations of pre-need companies - or of the SEC departments monitoring them, if that is how he wanted his oversight functions to be characterized, was found to have been in constant personal contact with Delos Angeles whose Legacy company is supposed to be under the supervision, regulation and monitoring of the SEC. By the way, Martinez denied he ever had communication with Delos Angeles and Legacy's officers prior to the Senate investigation. He would later on claim that his contacts with Delos Angeles consisted merely of sending daily biblical text messages spanning a period of one year. Interesting.

But what gets even more interesting is the claim of former top Legacy officials that Legacy (1) purchased an expensive Ford Expedition from Martinez's son and (2) purchased a house for Martinez in the sum of P5 million. And yes, Martinez saw nothing wrong with that.

Not only were issues of corrupt practices and unethical conduct surfaced in this investigation, but also issues of gross negligence in the performance of duties of the SEC as an agency tasked to guard against investment and corporate fraud, and the protection of the investing public. Senator Biazon was right in saying that this Legacy mess falls squarely on the shoulders of Chairperson Barin, who failed to see the direction Delos Angeles's company is taking and to prevent the syndicated divestment of plan holders and investors' money. She may claim that she did not see this coming, but this all the more makes her incompetent and undeserving in retaining her post because the very reason why her agency was created is precisely to guard against this type of problem.

Clearly, there was failure of regulation. If Chairperson Barin was merely following the footsteps of her agency's counter-part in the US, perhaps she should also follow what its leaders did: step down from office. That goes the same for the other commissioners and enforcement officers who failed to protect the interests of the investing public they were sworn to protect.

Meanwhile, it will do our legislators well to focus more on the legislative aspect of the problem and stop acting like prosecutors or trial lawyers in the investigation they are conducting. It is a waste of taxpayers' money and time for them asking evidentiary details which are better reserved for our prosecutorial agencies like the DOJ and the Ombudsman. Their primary purpose in conducting investigations is to aid legislation; find out where the regulation failed so that measures can be instituted to prevent similar occurences in the future.

As for Delos Angeles, I hope he does a Bernie Madoff again by pleading guilty. Madoff just pleaded guilty to the charges against him which could put him behind bars for 150 years. This is, however, wishful thinking. Clearly, Delos Angles is without remorse for he even had the temerity to lash back at the senators who are investigating him by accusing them of engaging in political grandstanding, and for belittling the poor plan holders who confronted him during the investigation. This guy is something.

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