Tuesday, May 31, 2005

Explanatory Note on the AIG article

The AIG article was put up for each reader to reflect on. When this coalition was first organized, one of the questions put on the floor was "How far are we willing to go to prosecute this fight?"

If fraud and pyramid scams have become commonplace in our country, it is also because we are to blame by allowing these things to happen.

"It doesn't affect me, why should I get involved?", is a common refrain.

As a result of this nonchalance, if not apathy, swindlers go scot free. For example, when was the last time you saw a bank executive go to jail for the failure of his bank. We must have had fifteen closures over the last fifteen years and not a single conviction.

The SEC report stares us in the face because it is as factual as they come.

Fraud and bad faith are conclusions that now form part of that report and are now in the public record. We are certainly beyond the stage of pushing and shoving. YGC has pushed very hard (and will continue to pull every dirty trick out of its black bag) to deprive planholders of their entitlements and was caught red-handed. Question is, how hard do we shove back and what are we going to do now that the SEC report has spelled everything in black and white and all we need to do is to draw the right conclusions?

Will it ultimately be another case of "pusong mamon" and take pity at the last moment on the perpetrators? These perpetrators will most likely be people we know, we are friends with, or we are even related to.

If we are truly fighting for our children, then we should look to set an example. True justice and equity can only happen if there is also resolve and a strong measure of sternness to see and desire that the punishment meted out.

If we have impoverished our country it is because we, the people that can make a difference, have allowed our system of government and justice to be dysfunctional. That's why YGC had the guts to attempt this misadventure in the first place -- to take value away from us and to squirrel it away for themselves. That story is as old as the story of our moneyed elite.

This fight is as much a test and judgement on YGC, its individual and collective character and ethics, as it is on ourselves.

Monday, May 30, 2005

Comparing Notes

The Associated Press
Updated: 3:18 p.m. ET May 26, 2005

ALBANY, N.Y. - New York Attorney General Eliot Spitzer on Thursday filed a civil suit against American International Group Inc., accusing the nation’s largest insurance company and two former top executives of using “deception and fraud” to boost the company’s stock price.

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The suit filed in state Supreme Court in Manhattan accused AIG’s former chief executive, Maurice “Hank” Greenberg, and former chief financial officer, Howard I. Smith, of orchestrating an accounting scheme that made AIG’s financial picture appear brighter than it was, misleading both investors and state regulators.

The irony of this case is that AIG was a well-run and profitable company that didn’t need to cheat,” Spitzer said. “And yet, the former top management routinely and persistently resorted to deception and fraud in an apparent effort to improve the company’s financial results.”

************************************************************************************************

We thought we would clip this article from the Associated Press to illustrate an analogous situation in the U.S. We can see how the case is being handled by the government which is clearly moving to protect investors and maintain the integrity of the insurance industry.

The similarity with PPI case is the fact that neither of the companies were in financial difficulty (as the cash dividends of PPI solidly prove). However there are yet undisclosed reasons which motivated the senior management and owners of both institutions to commit fraud.

At least in the U.S., the judicial system has a proven record of putting white collar criminals behind bars. And that is not true just for developed countries. Our neighboring country, Indonesia, recently sentenced and jailed the bank president of the largest commercial banks.

And what outcome can we expect from this unfolding, misbegotten adventure called PPI?

Thursday, May 26, 2005

Whom the Gods Wish to Destroy They First Make Mad

By Zinnia B. Dela Peña
The Philippine Star 05/26/2005

The Securities and Exchange Commission (SEC) cancelled yesterday the registration certificate of Lifetime Plans Inc., the spin-off unit of the troubled Yuchengco-owned pre-need firm Pacific Plans Inc., for failure to comply with certain registration requirements.

In its order, the SEC said it has withdrawn its approval of Lifetime Plans’ certificate of incorporation due to the firm’s failure to submit documents to support its capitalization.

Among these requirements include the submission of proof of collection of receivables worth over P40 million and transfer of ownership of transportation equipment worth around P6 million.

Benito Cataran, head of the SEC’s Company Registration and Monitoring Department, said Lifetime Plans failed to submit the required documents despite sufficient time given by the SEC. The company was given until September last year to comply with the remaining requirements.

In the same order, the SEC has directed Lifetime Plans’ trustee banks Rizal Commercial Banking Corp., ING Bank N.V., and China Banking Corp. to preserve the trust fund of the pre-need firm until further orders of the commission.

With the order, it is expected that the assets of Lifetime Plans shall revert to Pacific Plans.

Meanwhile, the Yuchengco Group has decried the SEC decision, saying this has put in jeopardy the interests of over 400,000 Lifetime Plans planholders.

"This move by the SEC, which ironically is supposed to safeguard the interests of pre-need planholders, has effectively put in limbo the payment of benefits to the more than 400,000 planholders of Lifetime Plans," the Yuchengco group said in a statement.

Lifetime Plans said it would not take this matter sitting down and will, in fact, appeal the SEC decision.

SEC Commission secretary Gerard Lukban said the ball is now in the hands of the court as the SEC has already done its part in safeguarding the interest of the investing public and ensuring that its rules are complied with. "It is now up to the court to decide on the issue. As far as the SEC is concerned, we’ve already done our job."

The Yuchengco Group, however, said the SEC decision may cast doubts on the rehabilitation of Pacific Plans. As a result of the order, Pacific Plans said it is withholding payment to its planholders until all issues brought about by the SEC order are cleared and resolved.

Prior to the SEC order, Pacific Plans had distributed P591 million in cash to planholders, P250 million of which came from the personal resources of Ambassador Alfonso Yuchengco, the patriarch of the Yuchengco Group of Companies.

Pacific Plans said that if the court approves its rehabilitation plan, it will also initially provide a liquidity window of another P300 million to its traditional planholders.

Pacific Plans legal counsel Jeannette Tecson pointed out that the pre-need firm’s move to file for rehabilitation was not meant to defeat planholders’ claims but to ensure the expeditious and orderly payment of planholders" claims.

Tecson said Pacific Plans is ready to answer all charges levelled against it by the SEC.

The SEC has asked the Makati Regional Trial Court to dismiss Pacific Plans’ petition for rehabilitation for lack of merit. In its opposition, the SEC said" there is no necessity for Pacific Plans to undergo corporate rehabilitation and that the said petition was merely resorted to by the company to evade its contractual liability to planholders."

The SEC cited the financial statements submitted by Pacific Plans which showed that the pre-need firm is solvent and liquid. As of end-Dec. 2004, Pacific Plans even exceeded its trust fund liquidity reserve requirement by P3.77 billion.

According to the SEC, Pacific Plans had a total Net worth of P657.84 million and P119.08 million as of end-Dec. 2004 and March 31, 2005, respectively.

The SEC said it was because of Pacific Plans’ healthy financial condition that it agreed to the pre-need firm’s proposal for the spin-off of its pension, education and memorial businesses into a separate company called Lifetime Plans.

It also questioned Pacific Plans’ disbursement of P18.46 million in the last quarter of 2004 as management service fee to Lifetime. It also noted the pre-need firm’s allocation of commissions and bonuses to its agents and employees.

The SEC likewise pointed out that Pacific Plans deliberately failed to disclose any indication that it was indeed facing serious liquidity issue.

It also accused Pacific Plans of doctoring its books as it submitted a different set of figures in its audited financial statements as of May 31, 2004 to the Bureau of Internal Revenue.

Moreover, the SEC said the new fixed plan offered by Pacific Plans amounts to a novation of contract and therefore cannot be forced upon the planholders without their consent.

************************************************************************************

Child psychologists will tell us that under stress, we all become what we were when we were three years old.

The SEC report has already confirmed what this weblog has been asserting... that there is enough money to go around within the old PPI. With the revocation, SEC has restored us to that state of affairs.

The three year old in us will insist on the logic that it was perfectly feasible for the much crippled PPI to be making tuition support payments but at the same time, find it impossible now that it has been re-endowed with its original resources.

The three year old in us will throw a tantrum and say that it's the fault of the SEC and not ours and that is the reason why we cannot make the payments we were happily doing last week.

And the three year old in us will call the SEC a liar when the SEC shows us the same documents we submitted and were caught cheating.

Clearly, YGC seniors have triggered another potentially destructive spiral by suspending payments (they're being cute when they use the word withhold). They have chosen to ignore the warning that ACCRA gave in their opinion should they choose to pursue this course of action. With revocation, PPI is once again a healthy, solvent, and liquid company and their misguided decision to suspend payments raises issues of opening themselves to creditor challenges not to mention gross negligence or willful misconduct.

Which leads us to think that the reason that YGC was so obsessive about this spin-off was that it wanted to stuff the trad plan holders with the consequences of their collective decision to put money into bad investments. It could also be the reason why they could not come up with the necessary explanations in time to meet the compliance requirements of the SEC.

Would anyone at PPI or RCBC care to step forward and comment on this hypothesis?

Wednesday, May 25, 2005

The Beginning of the End

Or is it the end of the beginning. Furnished below is the SEC letter revoking Lifetime Plans' Certificate of Incorporation....a body blow to PPI's and their lawyers' best laid plans.

Atty. Tecson on TV today had to put on her best face to claim that the SEC's presentation of this document at the Makati RTC was a publicity stunt that they weren't aware of.

AWWWW, Come on....The Yuchengco family was burning the telephone lines till late last night imploring the SEC not to issue this revocation. But they were informed of the Commissioners' decision last night...

Some items to think about and subject for further investigation:

a) There must be a particular feature, transaction, or requirement for lifting the escrow that PPI found difficult to regularize. We can rule out oversight or forgetfullness because there was nothing more critical than the need to spirit away the treasure into Lifetime. What could that irregularity be?

b) The stipulation for compliance was 30 days from 12 August 2004. It is again now plainly obvious that YGC was calling in all sorts of favors in order for the deadline to be continuously postponed;

c) What rehab are we talking about? Lifetime has ceased to exist. Or more correctly put, never existed in the first place because the escrow period was a conditional state of existence;

d) The sales of Lifetime were executed during the escrow period. May be another case of fraud for selling something that one was not yet legally entitled to do???

e) It is for the SEC to comment but our recollection is that revocations like this are rare and are usually reserved for scams, pyramiding, or Ponzi schemes.



revocation - p.1 Posted by Hello



revocation - p.2 Posted by Hello



revocation - p.3 Posted by Hello

A Tarnished Reputation

REMOVING THE TARNISHPosted by Hello


A picture is worth a thousand words. We happened to catch this gentleman at work at the Grepalife headquarters on Sen. Gil Puyat. We swear on a stack of bibles that this photo is neither posed nor doctored (except for the obvious magnification of course).

If only fixing an utterly destroyed reputation were as easy as buying a small bottle of brass polish and putting in a little elbow grease.

At least, one thing that YGC can truthfully say is that they hire HONEST people.


Tuesday, May 24, 2005

prayer rally 25 may 2005

REMINDER: PRAYER RALLY
VENUE: ST. ANDREWS PARISH, SAN MIGUEL VILLAGE MAKATI
TIME: 0830h 25 MAY 2005

In order not to cause traffic within the immediate vicinity of the church, participants are advised to give ample allowance so that they can park their vehicles elsewhere and proceed to the church on foot.

ACCRA OPINION OF 9 MARCH 2000

There is validity in the carefully worded pseudo-denial that PPI issued. The opinion they sought from ACCRA was not on rehabilitation but rather on their initiative to cease honoring the secondary transfers of plans.

Having stated that, the issues and maneuvers that PPI was contemplating way back in 2000 eerily foreshadow the controversy surrounding them today. The issues are uncannily the same.
We now know with certainty that these legal issues are not new to them nor are they defensible...



accra opinion - p1 Posted by Hello

PPI was selling traditional plans up to 1995???? This is either an unfortunate typographical error or Atty. Tecson and Mr. Garcia are deliberately misrepresenting the facts regarding their cessation of activities in 1992.



accra opinion - p2 Posted by Hello


Actuarial assumptions (right or wrong) are the full responsibility of PPI. PPI has been claiming that their alleged 1992 deregulation destroyed all of their investment assumptions. Unfortunately their failure to correct them would still constitute negligence for which they can be held fully accountable for.




accra opinion - p3 Posted by Hello


From the above highlit passage, it is now clear to all why PPI chose to employ this lame excuse by stating the government chose to deregulate in 1992...only to be disproved as later on as an erroneous line of reasoning.

It also explains why they engineered the split into two companies. As a single company, PPI had the wherewithal to answer for any and all claims that came its way because of its profitability. By engineering the mutilation, then they can now attempt to argue that the deliberately weakened PPI does not have the resources to continue to meet its obligations.


accra opinion - p4 Posted by Hello



A highlit section above provides unfavorable opinion to say the least.


accra opinion - p5 Posted by Hello

ACCRA has invoked the "prudent man" test and informs PPI that their contemplated course is hardly defensible.


************************************************************************************

Four years later, armed with another law firm (who apparently believe that ACCRA may have been less than knowledgeable) who were prepared to accept the challenge, PPI decides to force these issues anyway.

The intervening legal strategy has become more complex and more brazen. Rather than attempt to cease honoring their representations, they seek to redress the weakness of their legal position by "hollowing out" PPI and then argue that the weakened shell of a company is unable to carry on.


************************************************************************************
These documents provide a critical historical basis for understanding the events as they currently unfold. What we are seeing for ourselves is the sickening revelation that all of these issues were well known and properly documented by PPI. It is also understandable now how and why the SEC was misled...PPI could certainly not have a frank and open discussion with SEC could they given all of this information that they had!? A true case of bad faith (as has been subsequently called out in the SEC report).

The fact that they proceeded with it anyway shows full knowledge and premeditation and betrays a cynical, sinister, and ruthless side of YGC that none of us knew could even exist.
************************************************************************************

We welcome the YGC implementers, apologists, flatterers, and sycophants to put their most cheerful spin on the documents presented above. They should also ask themselves, "do they hate these defenseless schoolchildren so much that they would put their talents in the service of such a company?" ...

************************************************************************************


"...for they have sown the wind, and they shall reap the whirlwind"

Vigilance is Critical at the Makati RTC




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DEMAND AND SUPPLY By Boo Chanco

The Philippine Star 05/23/2005

" Now, everything is coming home to roost. As I told Helen Yuchengco Dee, their big problem is that they allowed their lawyers to call the shots in this crisis of their lifetime. I told her that it was pretty sneaky of them of try that gambit of creating another company and subjecting the original Pacific Plans company to court-ordered rehabilitation.


I read the letter they sent to Pacific Plans subscribers and if that letter was addressed to me, I would naturally be enraged. One of my friends showed me the letter he got and the letter said that unless my friend responds in so many days, it would be assumed that he has agreed to be paid many years down the road and only at seven percent interest. That’s extremely sneaky legal ruthlessness, for which the Yuchengco family will end up paying dearly..."


"...If this is the way the Yuchengcos are going to handle this case, Helen should take the advice I gave her: Quickly sell their holdings at RCBC, Grepalife and Malayan while they still have value. They cannot continue being in the business of providing financial services with this big blotch on their reputation"


**************************************************************************************************

The coalition has to brace for the worst. Over the week-end, we have been thoroughly appalled by the fact that rather than admit its serious lapse of judgement and offer of rescinding its rehabilitation plan, YGC has continued to be confrontational, indignant, and unrepentant.

This can only tell us that neither moral suasion, such as the one which Mr. Chanco is attempting, nor a highly critical SEC report will succeed in restoring YGC's sense of amor propio and delicadeza. We can only assume that they are highly confident of winning their appeal and having their way, together with their legal henchmen, with the Makati RTC and have chosen to put all their eggs into the basket.

Unless we witness an 11th hour spiritual conversion, it already appears that between reputation and love of money, love of money has triumphed. As we speak, YGC is now prepared to defend in court, the value it spirited away from PPI.

YGC and their legal cohorts would do well to re-read Dante Alighieri's "The Divine Comedy" and read closely those souls who descend to the eight ring of hell.


Monday, May 23, 2005

A Curious Denial



May 18 Phil. Daily Inquirer PPI Denial Posted by Hello


These paragraphs were quoted by a commentator to one of our previous posts. We thought that it was worth reproducing the original section as it appeared in section A6 of the Phil. Daily Inquirer dated 18 May 2005.

We thought it was curious that PPI should have taken it upon itself to deny the existence of an opinion that Accra was supposed to have issued regarding the rehabilitation that PPI was contemplating. We looked for a letter to editor of PDI on the mentioned date but were not able to find any. Anyway, even if it were there, ACCRA probably does not need any lawyering on its behalf (pun intended).

Is it a case of "where there's smoke, there's fire?"... Worse, what if such an opinion were actually there and ACCRA was just too gracious not to put YGC in a worse position than it already it is in. Meaning, YGC can do the denial but not ACCRA itself...

Focussing on Judge Romeo Barza

Motion to Inhibit Posted by Hello


The integrity of the judicial system now suddenly falls on the shoulders of RTC Judge Romeo Barza. Several thousand planholders are now painfully aware of the hard and fast ethical rules that the judicial imposes on its members. Impartiality and objectivity above all.

The question now before Judge Barza is: follow the canons of judicial ethics and instill much needed confidence in the country's judicial system. Or turn a blind eye and plunge his profession and the judiciary into further turmoil and controversy.

For better or for worse, history will be written on the 25th of May.

Let's all be together on Wednesday and make our presence and prayers felt.

Additional Tuition Support Checks at PICC

We are posting this comment that was sent in today:

***************************************************************************************
Attention: All Availing Planholders
If you were able to get your 1st and 2nd check, have the two checks totalled, the sum of which should be the amount of the availment you got last year, IF NOT, call 816-0000 and complain, you can still have your THIRD CHECK.

FYI, PPI is now issuing check starting today till May 31, 2005 at Rm.11 3RD flr., PICC, Roxas Blvd.

Monday, May 23, 2005 12:47:46 PM
***************************************************************************************

We've had a chance to talk this afternoon with some planholders who have gotten their 3rd installment check for "tuition support" . The information is accurate. PPI's fulfillment level seems to be running at 91% of their obligations for SY 2005-2006.

Based on the comments given, the tuition support is only equivalent to last year's payout. In addition, we understand that the Lifetime staff at PICC were requesting that the planholders who got their 3rd installment if they were agreeable to indicating that PPI had already "PAID IN FULL". The planholders we talked to did not agree to the request.

Biznews - May 23 - 29, 2005

What If? Ambassador AY and Biznews Posted by Hello


This headline article on Biznews was the first thing that caught motorists' eyes on their way to work this morning. This particular copy was purchased at the cor. of Ayala Ave. and Makati Ave. -- right in the heart of the country's financial district.

Oh dear, the PR team of YGC have been asleep again. We'd like to think that this cartoon is what the scene may have looked like at their offices this morning.

Based on other comments that we've seen where the posters asserted that the truth was in the printed media, this example must not count ( or at least an exception to their rule).

No further comments necessary.

Sunday, May 22, 2005

Reviewer 10 - The Corporate Veil (using legal maneuvers to escape responsibility)

In all of the commotion of the last five weeks, it was a major challenge to try and understand the motivation behind the legal shenanigans that YGC and its legal henchmen were up to. Now that the SEC report is out, we can see the following timeline.

Pre Aug 2004 - PPI is a subsidiary of Grepalife Assurance;

12 Aug 2004 - PPI creates Lifetime under the pretext that PPI will be the holding company; non-trad businesses are sold by PPI to Lifetime on a "with recourse basis"

20 Aug 2004 - GPL purchases Lifetime

9 Sep 2004 - GPL creates Exemplar

25 Jan 2005 - Exemplar buys PPI

If we were then to diagram all of these actuations, we come up with the diagram below:

Firewalling Grepalife Posted by Hello


By all accounts and using YGC's own promotional material, PPI was a 30+ year pioneer of the preneed industry and a much admired jewel within the YGC's collection of financial services companies. One could almost analogize the diagram above as no different from rich parents dishinheriting their child and having them classified as "illegitimate" to boot.

How else does one understand the carefully chosen statements of Amb. Yuchengco that he has no outright corporate obligations to PPI?

Is it because the legal team wanted to make sure that rowdy but otherwise insignificant planholders could not demand that the rich parent meet up with its obligations once the rehabilitation plan was sprung on them?

As noted in the previous posting, in doing so, the minority sharholders of Grepalife must have had to take a beating so that the series of separations could be executed. The "good businesses" are now in the hands of GPL Holdings and Exemplar and have likewise spirited away from Grepalife.

Is the diagram an unfortunate coincidence or a true reflection of what really went on behind closed doors at YGC seniors' meetings? It is the government's duty to find out.




Reviewer 9 - YGC Financial Alchemy - Turning Gold into Lead

Example


There has been great coverage of the scathing and damning report issued by the Securities and Exchange Commission last week. With the report out, we thought it might be useful to provide illustrations so that the readers can appreciate the mutilation that PPI has undergone. To paraphrase the SEC report, there really is no need for rehabilitation as PPI.


From One Fund Into Two Posted by Hello
At the risk of being repetitive...CALLING the CENTRAL BANK... What were the trust managers thinking when they agreed with PPI and stuffed the traditional plans pool with Napocor Bonds? They had already declared to the SEC that they were going to put liquid instruments and / or cash to backstop traditional plans. (RECALL THE APRIL 22 DONG PUNO show where Mr. Jose Cuisia stated that his company's policy was to ensure that the majority of their assets were government securities and cash -- sorry NAPOCOR bonds don't cut it).


GPL Black Hole Posted by Hello


GPL Holdings is the big black hole and has sucked up all the value created by the original PPI. We also need to point out that the original PPI was a crown jewel subsidiary of Grepalife. In turn Grepalife is owned by House of Investments, a publicly listed company.


CALLING INSURANCE COMMISSION:

Are Grepalife minority shareholders aware of the mutilation and measly monetary consideration that they got in exchange for the engineered series of sales involving PPI and the subsequent evolution into Lifetime, GPL Holdings, and Exemplar.

CALLING PHILIPPINE STOCK EXCHANGE:

Mr. Peter Favila should mount a major investigation. The SEC report is extremely troubling and raises serious corporate integrity and governance. The trust activities of a listed bank (one of the PSE's clearing banks, we believe) raises questions as well as the potential lack of proper valuation regarding related party dealings between or among the investee companies of HI.

We know it is ticklish to ask good friends or relatives at YGC all of these tough questions. However, to quote High Noon, "a man's got do what a man's got to do".


Thursday, May 19, 2005

REGAINING ONE'S HONOR

MEIYO - The Japanese Kanji Character for Honor



By virtue of his educated upbringing as well as being our nation's ambassador to Japan, Ambassador Alfonso Yuchengco is highly versed in the ways and behavior of the Japanese people. Like himself, the Japanese people pride themselves with their high sense of honor and integrity.

Given the judgment rendered by the Securities and Exchange Commission this week, a classic corporate Japanese reaction would be to bow deeply and apologize for the mistake, redress the wrongdoing (in this case, rescind the filing at the RTC and reverse the breakup of PPI), and have the head of PPI resign.

If that means his daughter accepting the consequences of the debacle, then so be it.

Ambassador Yuchengco is in the twilight of his years with a lifetime of stellar achievements. YGC officers (as admonished by Mr. Wilson Lee Flores in the Sunday Inquirer) do a disservice to the ambassador by allowing this "unneccessary problem to drag on".

The Japanese do not go to court to clean up their name and reputation. The same will be true for the Ambassador.

Wednesday, May 18, 2005

Reviewer 8 - Trust Responsibilities

Attached below are a series of official memoranda exchanged between PPI (which then becomes Lifetime), the Securities and Exchange Commission, and RCBC as the trustee bank. Also included is Sec X403 of the Manual of Regulations for Banks that outlines the guiding principles of the trust management business.



August 24 Letter from PPI to SEC




Oct. 14 letter from SEC to Lifetime Posted by Hello



The readers will see from the abovementioned memorandum that the SEC is concerned about prudence and fairness of the proposed segregation of the assets which are to be given to the respective plans. Notice that the SEC wants to hear about the principles and methods of segregation from the trustee banks and not from Lifetime.


Oct. 21 Letter from RCBC Trust to SEC


This is the letter response of RCBC to the request of the SEC. Several things stand out in the reply:

a) Although RCBC is the trustee, PPI still appears to be the entity responsible for determining the segregation policy and execution.

b) There is no misunderstanding at all between the SEC and RCBC that the traditional plans were to be benefitted by having liquid assets in the trust and which could easily be converted into cash (as one should reasonably expect since the product is already mature and already has periodic cash obligations).

c) The marginal notes are equally revealing in questionning the presence of Napocor bonds in the portfolio which are thinly traded (i.e. difficult to locate purchasers or buyers and suffer from wide swings in prices).


At this point, it is important to understand the guidelines which the BSP requires banks to follow in their trust activities. Sec X403 is reproduced below:


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FROM BOOK 4 OF THE BSP MANUAL OF REGULATIONS FOR BANKS
*************************************************************************************
Sec. X403 Definitions. For purposes of regulating the operations of trust and other fiduciary business and investment management activities, unless the context clearly connotes otherwise, the following shall have the meaning indicated.
a. Trust business shall refer to any activity resulting from a trustor-trustee relationship
(trusteeship) involving the appointment of a trustee by a trustor for the administration, holding, management of funds and/or properties of the trustor by the trustee
for the use, benefit or advantage of the trustor or of others called beneficiaries.
b. Other fiduciary business shall refer to any activity of a trust-licensed bank resulting from a contract or agreement whereby the bank binds itself to render services or to act in a representative capacity such as in an agency, guardianship, administratorship of wills, properties and estates, executorship, receivership, and other similar services which do not create or result in a trusteeship. It shall exclude collecting or paying agency arrangements and similar fiduciary services which are inherent in the use of the facilities of the other operating departments of said
bank. Investment management activities, which are considered as among other fiduciary business, shall be separately defined in the succeeding item to highlight its being a major source of fiduciary business.
c. Investment management activity shall refer to any activity resulting from a contract or agreement primarily for financial return whereby the bank (the investment manager) binds itself to handle or manage investible funds or any investment portfolio in a representative capacity as financial or managing agent, adviser, consultant or administrator of financial or investment management, advisory, consultancy or any similar arrangement which does not create or result in a trusteeship.
d.Trust is a relationship or an arrangement whereby a person called a trustee is appointed by a person called a trustor to administer, hold and manage funds and/or property of the trustor
for the benefit of a beneficiary.
e. Trust Agreement is an instrument in writing covering the terms and conditions of
the trust.
f.
Trustee is any person who holds legal title to the funds and/or property of a trust.
g. Trustor is any person who creates a trust.
h.
Beneficiary is any person for whose benefit a trust is created.
i. Fiduciary shall refer to any person or entity engaged in any of the other fiduciary
business as herein defined where no trust or trustee relation exists.
j. Agency shall refer to a contract whereby a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter.
k. Principal shall refer to the person who grants authority to another person called an
agent, under a contract to enter into transactions in his behalf.
l. Agent shall refer to a person who acts in representation or on behalf of another with the latter’s authority.
m. Trust Department shall refer to the department, office, unit, group, division or
any aggrupation which carries out the trust and other fiduciary business of a bank.
n. Trust Officer shall refer to the designated head or officer-in-charge of the trust department.
o. Trust account shall refer to an account where transactions arising from a trusteeship are kept and recorded.
p. Common Trust Fund (CTF) shall refer to a fund maintained by a bank authorized to perform trust functions under a written and formally established plan, exclusivelyfor the collective investment and reinvestment of certain money representing participation in the plan received by it in its capacity as the trustee.
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In this instance, the trustor is PPI, the trustee is RCBC and / or ING, and the beneficiary(ies) are the planholders. As can be surmised from the above guidelines, the trustee's loyalties should always be with the beneficiaries.

Based on the foregoing, we would again likewise request the help of the Bangko Sentral ng Pilipinas to uphold investor protection due to the asserted shortfalls in the trust assets of PPI that have led to the PPI's initiative for revising the payouts for the traditional plans.

Specifically, we look to the BSP to conduct a comprehensive and transparent audit of the activities of the trust operations in order to validate compliance with X403 for the benefit of the beneficiaries.

The SEC Moves to Protect PPI Planholders

Phil. Daily Inquirer - May 18, 2005 Posted by Hello



Tuesday, May 17, 2005

Reviewer 7 - PPI's Numbers Are Getting Clearer

Yesterday, some planholders trooped over to PICC and were able to get additional "tuition support" from PPI courtesy of the PhP 250 million convertible loan that Mr. Yuchengco gave to PPI last week amidst much PR.

Several new facts were surfaced following interviews conducted at PICC:

a) the customer support staff were not PPI but rather Lifetime employees;

b) PPI management adopted a policy to "ration" out the Php 250 million to all availing planholders with the knowledge that even with Mr. Yuchengco's loan, PPI's payables for SY 2005-2006 were still not going to be fully extinguished.


WE COULD BE WRONG, BUT best guess estimates using available facts:

a) PPI can only meet 81% of its contractual payables to availing planholders for SY 2005-2006. This percentage is arrived at by totaling all of the tuition support payouts received by planholders inclusive of yesterday's payments;

b) There are 15,000 availing planholders (per PDI article dated 11 May 2005). Dividing that number into PhP 250 mm, we arrive at a number of PhP 16,667 in terms of the second tranche of Tuition Support;

c) That means, that on average, the total payable of PPI per planholder for FY 2005-2006 is PhP 54,762. Since PPI can only meet 81% of its actual obligations, that means it still owes PhP 10,317.46 per planholder or a total of approximately PhP155 million.

d) Assuming that they will pay this balance on 2010 with 7% interest, then that would be equal to PhP 217 million that they will need to have available.

e) We need to add now the 19,000 planholders who are still on non-availing status, we can now estimate the total payout on 2010 using 4 years as the average number of school years and Php 54,762 as the average tuition support that PPI wishes to use. That number comes out as PhP 4.162 billion as the payout for 2010.

f) We can now add the PhP 217 million with the PhP4.162 billion to come out with an all-in payables total for 2010 as 4.379 billion.

g) To support this payout, PPI has the much touted Napocor bonds that have a face amount totalling USD$ 52 million. Using current exchange rates, we only come up with PhP 2.830 billion to meet up with the 2010 obligations! PPI would still be short PhP 1.549 billion

h) It would seem that the only reasonable explanation for this interesting investment strategy is that the trust managers are expecting a 35% or more devaluation in the peso / dollar exchange rate. And that is assuming that money losing Napocor does not restructure come 2010.

i) Even for the sake of argument, that the rehab plan were to be entertained, the game that PPI has established still seems to be set up to fall short and fail. (So anyway you look at it, the planholders lose)


CALLING BANGKO SENTRAL NG PILIPINAS AND THE MONETARY BOARD!!!

We need HELP!!!! in understanding how PPI has ended up with this set-up. As we understand it, the investment manager is duty bound to look after our interests. As the beneficial owners, we are entitled to and expect the BSP to act with deliberate haste and agree to an request from the planholders to do A COMPREHENSIVE AUDIT of the trust management policies and procedures.

What the PEP Coalition has done so far

With the whirlwind of events that have come and gone over the past couple of weeks, we in the PEP Coalition feel it is a good time to reflect on all the accomplishments and milestones we have achieved since our first informal organization meeting.

1. Congressional Lobbying:
    • Lobbied with members of the Congress that resulted in a resolution being filed by Sen. Pangilinan calling for a Senate inquiry on PacificPlans, Inc. This matter has since been referred to the Committee on Banking and Finance chaired by Sen. Angara. Fist hearing I scheduled for May 31.
    • Cong. Zialcita filed a resolution calling for a Congressional inquiry on Pacific Plans, Inc. in aid of legislation on the pre-need code under the Banking and Finance Committee headed by Cong. Lopez

2. Meetings with concerned national government agencies:

    • Meeting with Department of Finance Sec. Purisima
    • Meeting with SEC Chairman Fe Barin where she assured the Coalition representatives that the SEC will look ensure that the sanctity of the contractual obligation between planholders and PPI, Inc. is upheld

3. Media campaign

    • TV appearances (Dong Puno, Debate, Cito Beltran, Reporters Book, etc., radio interviews, print articles)
    • Not to mention our very effective use of the new media - the Internet campaign =)
4. Incorporation of PEP Coalition with SEC and setting-up of headquarters at Unit

6-A, Sayoc Bldg 100, Sen Gil Puyat Avenue, Makati


5. Organization of school (Xavier-ICA, Ateneo, Metro Manila South schools and

provincial chapters (Davao, Batangas, etc.)


6. Gained support of Fr. Robert Reyes, the running priest


7. Held 2 general assemblies (April 25 and May 14)


8. Last May 13, filed opposition to the PPI petition for rehabilitation


WHAT CAN YOU DO: BE PRO-ACTIVE

1. Continue massive information dissemination (text brigade, fliers in churches, schools, e-mail/fax, coalition position paper, etc.)

2. Organize by schools, offices, provinces. Get in touch with Coalition for assistance.

3. Volunteer in Coalition working committees (see list and contact persons)

4. Send in your stories so we can document PPI rehab plan effect in our lives.

5. Join coalition activities…the next upcoming event is on May 25, we are holding a Prayer Rally at St. Andrew’s Parish, Bel-Air Makati at 8:30 am. We encourage all of you to wear a white T-shirt with black arm bands. Bring placards.

We would thank all of you fellow parents, grandparents, aunts and uncles who have banded together to help all fellow planholders. Let us hope that our joint cries for justice will resonate and that our endeavors bear fruit for all of our children.

Big Time Al and the Small Time Check

It's good to understand what the Php 250 million check is all about...

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NOT BUSINESS AS USUAL By Margaret Jao-Grey
The Philippine Star 05/17/2005

Did you know 1: Three International School Manila seniors, including the grandson of a banker, have been caught cheating. It seems they hacked into the computer of a teacher and downloaded the contents of a scheduled test.

Now, the $64 question is not whether ISM will allow them to walk up the stage in early June but whether ISM will disseminate that information to all schools, including the American universities which have already accepted the three seniors for the school year that starts in September.
* * *
Did you know 2: The recent two-day bank run of a large commercial bank was quickly cauterized after a couple of foreign banks, which do a lot of business with the local bank, quietly agreed to support it at the interbank level, with the corresponding interest, of course.

The local bank did not turn to the Bangko Sentral for an emergency loan for two reasons. One was sheer pride. The other was, well, everybody and his mother would have known about it.
* * *
There’s talk that HSBC Phils. is scouting around for a senior vice-president in charge of corporate banking, now that Isidro Alcantara has accelerated his decision to move his family to Canada.

As a bonus, the new SVP might end up as HSBC Philippines’ first Filipino chief executive officer, something that current CEO Warner Manning has been quietly pushing for.
* * *
There’s talk that plan holders of Pacific Plans Inc. will soon file a class suit against the pre-need company affiliated with the Yuchengco group. Basically, the plan holders aren’t too excited about the P250-million personal contribution of Alfonso Yuchengco to help resolve PPI’s current inability to meet the tuition requirements of its open-ended plan holders. Here are two reasons why.



One, Al Yuchengco isn’t giving away the P250 million but just lending it to PPI. That means plan holders will end up paying the loan anyway, after being appropriately grateful to Mr. Yuchencgo.



Two, the money may help planholders pay their children’s tuition for the 2005-2006 school year or for the first semester of 2005 but more money will have to be raised if PPI intends to pay the tuition paid for in advanced by planholders for the succeeding years.


* * *
Here are indications that incoming Bangko Sentral Governor Amando Tetangco Jr. is open to the needs of the banking sector even if he’s never been a member of the Bankers Association of the Philippines.

Last week, the Monetary Board, which was chaired by Say Tetangco as Bangko Sentral officer-in-charge (since Governor Rafael Buenaventura is still in the United States), has agreed to allow banks to sell linked products or derivatives.

There’s also talk that the Bangko Sentral will soon drop the moratorium on the opening of bank branches now that its objective to encourage mergers and acquisitions among banks has been achieved.

While there are still banks out there that are mismanaged and may, therefore, face closure, these are too small to affect the industry on the whole.

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Monday, May 16, 2005

Exhibited below is the 12 July 2005 letter from Pacific Plans indicating a fundamental change in intention in the proposed reorganization of Pacific Plans.

This memorandum generates several interesting insights:

a) The marginal notes of former SEC Chmn Bautista are already noteworthy. There is a note to Commissioner (Fe) Gloria to check on the qualified financial statements (i.e. Punongbayan's qualified statement that was already discuss elsewhere in this weblog).

Revision of Rehab Plans - PPI Letter to SECPosted by Hello



Revision of Rehab Plans - PPI Letter to SEC p.2 Posted by Hello




b) The memorandum is now signed by a mere employee of Pacific Plans rather than by the owner (who initiated the original request for reorganization);

c) The trust fund for the fixed value and traditional plans was consolidated as a single trust account. Note that PPI is asking the SEC to confirm its mode of consolidation. In the marginal note, however, SEC Chmn Bautista correctly asks why the SEC should be asked to confirm said mode.

As subsequent events have shown, it is this MODE OF SEGREGATION that has created the firestorm of controversy. Obviously, there is no discussion at this point of the tortured twists and turns that would befall PPI, such as the management buyout nor the future role of GPL Holdings and Exemplar in the sordid affair.

In Literature, we believe that we can look at this memorandum as a FORESHADOWING of events yet to come.

**********************************************************************************

foreshadowing

adj : indistinctly prophetic [syn: adumbrative, prefigurative] n : the act of providing vague advance indications; representing beforehand [syn: prefiguration, adumbration]


Sunday, May 15, 2005

Reviewer 6 - Recusal

INQ7 Article - 2002


FIRM-SPOTTING - Hyperlinks

INQ7 Sept. 2002 Article on Villaraza and Angangco

Manila Times Online Oct. 2004 Article on Candidacy of Atty. Romeo Barza for Court of Appeals

(Other former partners in government establishments) University of the Philippines web site

************************************************************************************

RECUSAL definition – a recusal is where a judge disqualifies or withdraws from a case where his or her impartiality might be questioned.

************************************************************************************

excerpt below is taken from Commonwealth of Virginia Judicial Ethics Advisory Committee Opinion 01-8 issued 16 July 2001

"The judge must also consider

"the public's perception of his or her fairness, so that the public's confidence in the integrity of the judicial system is maintained."
Buchanan v. Buchanan, 14 Va. App. 53, 55 (1992)."

************************************************************************************************

ed. It is for the lawyers reading this weblog
to confirm that the Philippine judicial system looks to the US judicial system as a model for best practices.





Saturday, May 14, 2005

Too Close for Comfort (or Delicadeza???) - repost

Text Excerpted from Victor Agustin, Inq7, 13 May 2005

"THE REINA Emperatriz of the Yuchengco empire, Helen Y. Dee herself, will personally meet and answer any and all questions from the Pacific Plans holders in a no-holds-barred open forum -- this we gathered from the pro-Yuchengco grapevine.

There is but one fine print: The lawyers from the firm of Villaraza and Angangco have advised her to wait, so as not to jeopardize the rehabilitation petition now pending with the Makati Regional Trial Court.

According to the pro-Yuchengco grapevine, Dee believes that the law and the equities of the case are on their side and that, after all the kicking and screaming in this difficult denial stage, the Pacific Plans holders would come around and agree that the return-the-payments-plus-seven percent tax-free, compounded-interest-earnings proposal represents a fair solution, given the ticking time bomb that the open-ended plans now threaten not only the country's first pre-need company but the multibillion-peso industry as well.

In the meantime, anyone who wishes to comment or object to the rehabilitation proposal may file his comment or opposition with Makati Judge Romeo Barza..."

Excerpt from Boo Chanco's Interview of Helen Y.Dee - repost

Text excerpted from Boo Chanco's Column in Philstar May 13, 2005 online edition


Helen Y. Dee
"...But Helen emphasized that contrary to what many people may think, they did not mismanage Pacific Plans. She didn’t compare what is happening to Pacific Plans with the other pre-need plan companies in trouble today. But she didn’t have to. A week or two ago, the bank managing the trust fund of that other pre-need plan came out with the revelation that they lost over a billion pesos by investing in a related real estate company. In contrast, Helen assured me that their investment portfolio at Pacific Plans can be defended at Plaza Miranda...."

Friday, May 13, 2005

SPECIAL POWER OF ATTORNEY FOR OPPOSING REHAB


VERY IMPORTANT INSTRUCTIONS TO ACCOMPLISH YOUR

SPECIAL POWER OF ATTORNEY (SPA):

1. Make at least three (3) copies of the SPA form below. Click on the pictures attached below (there are 2 pages) and zoom in to actual size by clicking on the picture after it has loaded. Click FILE>PRINT on your Internet Browser.

2. Fill up all applicable blanks accurately, including the Acknowledgement on the second page (i.e. your name, CTC no. and its date).

3. Sign both pages of all copies. Have your two (2) witnesses do the same. For the first page, all sign on the left margin.

4. Make at least three (3) clear photocopies of all documents you enumerated in the SPA Form (your Educational Plan Agreements (EPAs) for non-availing and Certificate of Full Payment (CFP) for availing). These will be the annexes attached to your SPA, to substantiate your position. Attach one set of these photocopies to each copy of your SPA.

5. You then have your SPA notarized. The notary public will keep one copy and give the rest back to you. Then please bring, send or mail one notarized copy, complete with annexes, to the PEP Coalition office at:

Unit 6A, 6th floor, Sayoc Building 100,

93 Sen. Gil J. Puyat Avenue, Makati City, Metro Manila.

6. OR, if you have no access to a notary public, please bring or send all three copies of the completed SPA form and the photocopies of your EPAs to the PEP Coalition office. We shall have your SPA notarized for you. Please bring P50.00 for the notarial fee and a Xerox copy of any government issued ID (driver’s license, SSS/GSIS, Passport, Senior Citizen, Philhealth etc.)


Special Power of Attorney - 1 Posted by Hello

Special Power of Attorney - 2Posted by Hello



explanatory notes

1) SPA is not mandatory for coalition members. However, if the arguments in this weblog have made sense to you, then use the SPA to oppose the rehab.
2) SPA will not be used for filing of criminal charges