Unclosed
FIRST PERSON - Alex Magno (The Philippine Star) - January 19, 2019 - 12:00am

Maia Deguito has been found guilty of money laundering relating to the bizarre theft-by-hacking of the Bangladesh Bank in the amount of $81 million. But the case could not be considered closed. So many questions remain on the table.

No doubt about Deguito’s offense. As manager of the RCBC’s Jupiter branch, she enabled the opening of several accounts without sufficient client data. She violated every Know-Your-Customer (KYC) rule every banker ought to know by heart.

There is much Deguito has not told us. Why did she enable those accounts months ahead of the actual inflow of funds hacked from the Bangladesh Bank? Who was she dealing with? How much does she know of what is obviously an international syndicate involved in bank robbery by way of hacking?

It is not only the bank manager who is not telling us what we should know.

Three years after the $81 million cyber heist, Bang-ladesh Bank, that country’s central bank, refuse to release their findings on the incident. They claim issuing a public report on what happened could alert the culprits.

That is a lame excuse. The culprits know far more than the authorities in this case. They know how to break into a central bank, use supposedly secure international bank transfer systems to move the money and set up dummy accounts in any number of countries to launder the loot.

Early on, the Bangladeshi finance minister candidly admitted the heist was an inside job. The governor of the Bangladesh bank resigned. A security expert looking into the incident disappeared for a while and was eventually found dazed and incoherent.

If an insider conspiracy could not be proved, then there is the large number of security lapses attributable to Bangladesh Bank to look into. The central bank did not invest in cyber security. They used cheap switches and did not install a firewall in their system.

Furthermore, the central bank did not show urgency in addressing the theft. After the heist was discovered, all the bank did was to send out emails and faxes to the NY Fed. They did not follow up on those communications nor find the right contact person to coordinate with.

The NY Fed had its own failures. They did not spot glaring discrepancies in the transactions. The money transfers were incorrectly formatted. The money was being delivered to individual rather than institutional accounts. The requests were different from all the previous ones emanating from the central bank.

Only a fluke prevented the NY Fed from delivering the balance of $951 million order from Bangladesh Bank to the dummy accounts here.

Even more alarming, a report issued by SWIFT identifies a North Korean hacking group had used the system to squirrel away more than $1.1 billion stolen from at least 16 financial institutions since 2014.

All the world’s financial institutions will be vulnerable until we get to the bottom of this sophisticated network of hackers.

Shunted

That stray proposal to limit accreditation for building the 50,000 telecommunications towers we so direly need to only two players has been rejected by every voice that should matter. Representatives of the business community, legislators from both chambers and the DICT itself have rejected the proposal.

Deputy Speaker Prospero Pichay put the matter succinctly. The proposal to limit the number of players to only two “would likely be rejected by lawmakers because having more firms to put up cell sites is better for employment and business in our country.”

Senator Koko Pimentel was most articulate in his rejection of the proposal to limit tower construction to only two players. He called it a “stupid proposal.” Senator Grace Poe said the proponent of such a limiting policy ought to be sued if he persists.

If the Senate carries out its threat to remove the P75 billion infrastructure funds described as congressional pork barrel, this will have adverse effects on job creation and stimulating growth. One way of offsetting the adverse effects is to clearly adopt an open market policy on the construction of telecommunications towers. This will bring about investments inflows and job creation.

Happily, the DICT is well on its way toward accrediting at least five tower providers. Agreements have been signed with tower builders ISON, ECP and ISOC infrastructures last December. This month, agreements were sealed with Nigeria’s HIS Towers, Malaysia’s Edotco Towers and China Energy. More such agreements could be signed and sealed in the coming weeks.

Each tower builder will bring in fresh capital into our economy and employ a substantial workforce. It is estimated that, over the next seven years, providing the towers for our telecoms infrastructure could bring in investments amounting to P500 billion. This will more than offset the P75 billion in infra funds but which the Senate wants condemned as pork.

When in doubt, trust the market.

An open market policy allows the widest opening for private investments to come in and help us meet our infra needs. That is true for roads and bridges. It is true for power generation. That has to be true for telecoms towers.

The growth of domestic demand for data transmission services is growing exponentially. We have a young market. The technologies are rapidly developing. The trend will continue deep into the future.

Given that we need 50,000 towers today, there could be no reason to limit participation in this market to only two tower providers. That will not only create a new duopoly but an insane hindrance to our ability to meet our needs.

BANGLADESH BANK MAIA DEGUITO
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