Anatomy of a rogue trader Shades of Dewey Dee

is that the embezzlers got better, and the instruments, more sophisticated.

While Dewey Dee pulled off the scam by issuing nonexistent commercial papers, Bancap was issuing nonexistent Treasury bills. While Dewey Dee engaged in the double selling of a single set of commercial papers or promissory notes, Bancap was engaged in the so-called “kiting” operation, by which it was able to pass on the imaginary T-bills from one bank to another through so-called letters of undertaking (LoUs). And just as there were suspicions that Dewey Dee merely acted as personal courier for the Marcos regime tasked with bringing millions of dollars out of the country, there exist suspicions that the Bancap ladies — and a cast of thousands — were merely used as pawns. And lest one forget, both Dewey Dee and Marilyn Nite have yet to be extradited.

The 1981 caper was, however, easier to investigate. Dewey Dee was a known figure in local and financial circles. The Marcos- controlled financial system made it convenient for a known associate to accumulate million-dollar loans from government and private creditors. “The acquisition and transportation of an amount of money as big as Dee’s debts were made possible only through the approval and complicity of the highest offices in the country,” wrote Ricardo Manapat in his book, Some Are Smarter Than Others.

In Bancap’s case, a lady secretarial graduate heading an obscure P5-million firm made a mockery out of regulators’ and the entire financial industry’s system of controls. Worse, the scam happened in an era of electronic transfers, computer technology and democracy.

The Dewey Dee crisis created a ripple in the financial system and led to the collapse of 16 commercial banks, 12 investment houses, and 17 financial institutions, most of which have interlocking directorates. Among those which fell like dominoes were the financing firms of Marcos associates Herminio Disini (including the Commercial Bank and Trust Co., the forerunner of Bank of Commerce), and Ricardo Silverio (Philippine Underwriters Finance Corp. or Philfinance).

Practically all these financing companies operated a thrift bank as a subsidiary, which became a rich source of funds. The financing firms would borrow funds from the money market or receive advances from their bank subsidiaries and loan them out to shell companies of cronies which were never able to repay these loans and advances. Officers of these failed financing firms were then mandated to set aside large portions of their funds in what was referred to at that time as a “war chest.” A source who did investigative work on these companies said the “war chest” could have been used as seed money for the expansion of the cronies’ business empires, usually abroad.

A May 31, 1994 confidential dossier sent to National Security Adviser Jose Almonte by a Palace informant, a copy of which was obtained by BusinessWorld, tried to establish connections between Bancap and these financing companies. The report said Ms. Nite started her banking career as a marketing officer in the Admiral United Savings Bank, a bank located in Cubao, Quezon City which folded up sometime in 1983.

A former central bank official told BusinessWorld the bank was part of the financial empire of Antonio Gatmaitan, along with Finasia Investments, Pioneer