Ombudsman investigators disclosed yesterday that Garcia and a son "removed their personal investments over several days" at the AFP Savings & Loan Association Inc. Their AFPSLAI contacts informed them about it only late Friday afternoon when the last withdrawal was being made. Their boss Simeon Marcelo in turn was told of the move on Saturday when banks were closed.
Jt was unclear how many withdrawals were made to get P19 million. The AFPSLAI allowed it because there was no freeze order on the assets of Garcia, suspended last Monday on charges of corruption, gross misconduct and dishonesty. Reportedly the first withdrawals were in manager’s checks, which require three days’ clearing. AFPSLAI insiders grew alarmed Friday when the last multimillion-peso withdrawal was for cold cash, requiring the opening of the bank’s vault at Camp Aguinaldo.
Marcelo admitted that his office has no power to freeze bank deposits or real estate holdings of public officials they are investigating for graft. He said only the Anti-Money Laundering Council has the power to do so, but only upon approval by the Court of Appeals.
Congress, in its initial version of the Anti-Money Laundering Act of 2001, gave the Council powers to immediately freeze suspected bank assets. A freeze automatically was lifted if no criminal case was filed within 20 days. The law was amended the following year to lower the threshold amount for automatic investigation from P4 million to P500,000. But Congress revoked the Council’s freeze powers.
Marcelo said the withdrawals by checks easily can be monitored by the Council, headed by the Central Bank governor. "But the cash portion would be more difficult to trace," he lamented, "although authorities have ways to flush it out."
Four days after he filed an administrative case against Garcia on Sept. 28, Marcelo also charged him with corruption. On the same day he sent the papers to the Council. Under Ombudsman rules, indictment can come only upon the receipt within the required ten days of the reply of the accused. The Council, meanwhile, can rely solely on the Ombudsman’s findings or conduct further probes before going to the Appellate Court. The Court then determines prima facie evidence before approving a freeze.
A Council source believes the Garcia withdrawals are not beyond grasp even if a freeze order comes late: "Banks are very cooperative with us against money launderers. They tip us off about suspicious accounts."
The Ombudsman sued Garcia for failure to fully disclose his wealth in his latest sworn Statement of Assets and Liabilities. Among these: $1.42 million (P80 million) bank deposits in the US and P7 million investments in AFPSLAI. Investigators said the AFPSLAI limits individual investments to P7 million, but Garcia family members made their own deposits, running up to P19 million.
AFP chief Gen. Narciso Abaya, on Marcelo’s order, suspended Garcia for six months without pay. For transparency and because the Ombudsman already did its spadework, Abaya and Defense Sec. Avelino Cruz said they will let the antigraft body prosecute Garcia instead of court martial. Asked about Garcia’s whereabouts, the AFP said the general had sent word that he will surface anytime he is called before any investigation unit.
Garcia’s hidden wealth came to light when his two eldest sons were held on Dec. 19 at the San Francisco airport for sneaking in $100,000 (P5.6 million) cash. Their mother Clarita appealed to US Customs for release of the confiscated money. In a sworn statement, she said she knows the rules, and in fact declared the $100,000 she had brought in two days before, and larger amounts on other dates. She said her husband derives income from, among others, cash gifts from suppliers and contractors, as Comptroller in charge of all AFP fund releases.
Abaya got wind of the incident in Feb., and replaced Garcia although evidence was then scanty. US Customs sent the Garcia records in July to the Ombudsman, which promptly built up evidence. Clarita and their three sons are US citizens; the general holds a US green card for permanent residency: No. A-029430514.
On Jan. 12 Garcia himself wrote to US Customs, on his stationery as then-Deputy Chief of Staff for Comptrollership, to retrieve the $100,000. He said the money was for downpayment on a condo in New York, and came from his income as, among others, AFPSLAI board trustee.
AFPSLAI lends to soldiers and policemen at rates lower than other banks. Retired and active-duty officers also place their money in AFPSLAI time deposits because of the highest yield: 20 percent a year, net of tax.
When Garcia was comptroller, the military Ombudsman also grilled his budget officer Lt. Col. George Rabusa in 2002 for undeclared wealth disproportionate with his legitimate income. Rabusa allegedly held a P7-million time deposit in AFPSLAI, and another P3 million in his wife’s name. He claimed last week that the charges have been dismissed, but investigators said they only hit a legal snag and will still pursue the case.
Linawin Natin is on at 11 p.m., Mondays, on IBC-13. Tonight’s feature: AFP reservists.