‘Estrada ordered PNB to grant loan to BW’

Former Finance Secretary Edgardo Espiritu charged yesterday that the Philippine National Bank (PNB) granted a P600-million loan to cash-strapped Best World (BW) Resources at the instance of President Estrada.

Resuming his testimony on the 21st day of the impeachment trial of the Pre-sident, Espiritu also revealed that Malacañang repeatedly tried to dissuade him from taking the stand.

Espiritu said he vehemently objected to the grant of the loan, saying documents submitted by BW to support its application showed the applicant was not qualified.

The witness also asserted that he may have angered the President when he questioned a proposal by business tycoon Lucio Tan - one of Mr. Estrada’s election campaign donors - to merge PNB, then the government’s flagship corporation, with Tan’s Allied Bank.

"I was called by the Pre-sident and he told me, ‘Ed, whatever Lucio wants, give it to him.’ Because of that, I made up my mind to resign," Espiritu said.

He pointed out that BW had a "negative net worth" when it applied for the loan, while a 21-hectare property in Tagaytay City offered by the firm as secondary collateral had "zero value" because it had no right of way.

Espiritu said the PNB president informed him they granted the loan "at the initiative of the President of the Republic."

The loan, Espiritu said, was granted in July 1999 when the publicly listed BW was experiencing a 5,000-percent stock price runup.

Former Chief Justice Andres Narvasa, acting as one of the key defense lawyers in the impeachment case, was PNB chairman at the time the loan was granted on July 16, 1999.

Espiritu told the tribunal headed by Chief Justice Hilario Davide Jr. that at the time, 11 members of the PNB board were nominated by Mr. Estrada.

Espiritu said as finance secretary, he had coordinating supervisory power over government financing institutions and this was how he got to know of the P600-million loan to BW.

However, the stock collapsed three months later, giving rise to the country’s worst-ever insider trading and price manipulation scandal that caused the near collapse of the stock exchange.

Espiritu also said that in one of his visits to the Palace, he noticed the presence of some suspected big-time smugglers, but declined an attempt by Senator-Judge Franklin Drilon to make him identify them for fear of his life.

The witness also talked about his desire to abolish the graft-ridden Bureau of Customs, Bureau of Internal Revenue and the Economic Intelligence and Investigation Bureau (EIIB).

He said the EIIB was eventually dismantled "but for the wrong reason"–its agents arrested a suspected smuggler who is very close to the administration.

Asked if he was not afraid of the Chief Executive who was on trial for alleged bribery, graft and corruption, betrayal of public trust and culpable violation of the Constitution, Espiritu replied he felt it was his duty to testify for the sake of the country and the young Filipinos.

In his testimony on Thursday, Espiritu said Mr. Estrada had personally informed him that he made a killing from the BW trading.

"Malaki na ang kinikita ko dito sa BW shares (I am making a lot of money from the BW shares)," he quoted the President as saying.

Espiritu, who was finance secretary from June 30, 1998 when Mr. Estrada assumed the presidency, to Jan. 5, last year, stressed that he could not believe what he had heard from the President.

Espiritu also said initially, he did not believe statements by Dante Tan, the acknowledged owner of BW, saying Mr. Estrada was his partner in BW.

But after the President’s admission that he raked in money from BW shares which were soaring in mid-1999, he felt there was, indeed, a partnership between Tan and Mr. Estrada.

Espiritu also said when the Philippine Stock Exchange (PSE) was about to collapse amid charges of insider trading and stock price manipulation involving BW shares, he discussed the problem with Mr. Estrada in the hope of resolving it.

To his disappointment, the President did not make any official move apart from complaining that he also lost in the plunge of the BW shares.

Espiritu admitted there he did not see any documents showing that Mr. Estrada held shares with BW and that he was merely convinced that the Chief Executive was a partner of Tan in the firm based on the unfolding events.

Through the testimony of Espiritu and other witnesses, the prosecution sought to prove that the President was guilty of betraying public trust by digging into the BW scandal.

The 11-member prosecution team from the House of Representatives meant to establish that Mr. Estrada intervened to clear Tan from charges of complicity in the BW scandal.

Espiritu also told the tribunal that at about noontime yesterday, he received a telephone call from newly installed Executive Secretary Edgardo Angara who allegedly conveyed to him the President’s offer to settle a case involving his son (John Espiritu) and the Westmont Bank.

Espiritu said he told Angara he was not asking for any help, adding that John himself had wanted the case to be resolved on the basis of merits.

He said he received similar messages from a certain Carmelo Santiago last Wednesday and from former Negros Oriental Rep. Miguel Romero and Roy Macasaet of the Philippine National Construction Corp. on Tuesday night.

Espiritu said because of the pressures, he became even more determined to testify.

He revealed that he divested himself of his minority holdings with Westmont when he accepted offers to serve in the government, although he retained one percent which was transferred to his son.

Espiritu also pointed out that the Westmont case was yet to be formally filed.

Yasay’s turn to hit back at Estrada

Former Securities and Exchange Commission chairman Perfecto Yasay Jr., who gave up his SEC seat at the height of the BW fiasco, testified that the President applied extreme pressure on him to clear Tan.

Yasay said Mr. Estrada even castigated him over the SEC probe on the BW mess and insisted that Tan was a victim rather than a culprit in the scandal.

PSE president and chief executive officer Jose Luis Yulo Jr. and PSE compliance and investigation head lawyer Ruben Almadro testified earlier that Mr. Estrada also pressured them to let Tan off the hook.

Yasay intimated that the Palace did everything in its power to yank him out of the SEC despite the fact that he has a fixed term of seven years until 2004.

Yasay stepped down on March 25 last year.

Flood of denials oozes out of Malacañang

Malacañang issued a number of denials regarding major issues raised by prosecution witnesses in the impeachment trial even as Ambassador Ernesto Maceda, acting as presidential spokesman on the impeachment trial, dared Yasay, Yulo, Almadro and Espiritu to present documents showing Mr. Estrada held BW shares.

A statement by the Malacañang Press Center quoted Angara as denying having tried to dissuade Espiritu to take the stand in the impeachment trial.

The statement said Angara called Espiritu on cellular phone after "mutual friends advised Angara that Espiritu might want a call from him after his appointment as executive secretary."

Angara also said the problem of Espiritu’s son cropped up in the conversation and he offered to look into it.

Maceda also played down Espiritu’s testimony, saying it did not fortify the prosecution’s case.

He quoted the President as commenting, while watching the impeachment trial on television, that Espiritu was a "liar."

Maceda has accused Espiritu of being a part of a "grand conspiracy" by the political opposition abetted by the rich and the elite out to topple the Estrada administration.

Commission on Elections (Comelec) Chairman Harriet Demetriou also denied having talked to Yasay regarding his problems with Mr. Estrada.

"It is true that Mr. Yasay and I accidentally met at Dr. Martin Camara’s Chiropractic Clinic located in Greenhills, San Juan and I remember we only talked about my legal opinion which President Estrada requested me to do regarding the legality of appointing a new Chairman pending Mr. Yasay’s preventive suspension by the Ombudsman," Demetriou said in a statement.

She said they did not talk about the takeover of the Philippine Long Distance Telephone Co. by the Metro Pacific Corp.

Yasay testified that Demetriou, formerly Chief Presidential Legal Counsel, informed him that the reason for his suspension was to pave the way for the takeover.

For his part, Social Security System (SSS) chairman and president Carlos Arellano also denied allegations that Mr. Estrada interfered in the agency’s decision to invest P7.5 billion in Equitable PCI Bank.

Arellano said the investment was made "under strict guidelines."

He said the decision passed "several layers of committee scrutiny before final deliberations and approval by the Social Security Commission, the SSS policy-making body."

"Malacañang never meddled with SSS investments. Our investments are in accordance with our charter," Arellano said in a statement.

He said during the first 11 months of 2000, the SSS earned more than P160 million in trading gains and dividends from its investment in the bank. The amount is P11.4 million higher than the P148.3 million it earned during the previous year.

Meanwhile, presidential brother-in-law Raul de Guzman informed the tribunal that he could not testify due to health reasons.

The prosecution had wanted to present De Guzman as a witness to testify on the so-called textbook scam involving one of Mr. Estrada’s several mistresses.–With Marichu Villanueva, Sandy Araneta