Feverish days

into the limelight and experienced bank runs, but no ExCap was on the list.

The second time its name surfaced in public was in May, when Bancap’s trader, Victoria Magalona-Escalambre, in a statement, told the National Bureau of Investigation ( NBI) that her clients were ExCap and Majalco Finance and Investment Corp., and that Bancap president Marilyn Nite warned her through her sister- in- law that Mr. Virata is “mamamatay- tao” ( murderer). The NBI has dismissed this alleged warning as “mere hearsay.”

Almost instantly, Mr. Virata issued a press statement denying ExCap’s exposure with Bancap and any knowledge of Ms. Magalona. “This must be a bad joke,” he said in a statement. “I would like to state categorically that I don’t know Ms. Victoria Magalona and that I have never met her, Nel Bradley, Marilyn Nite or anybody from Bancap — Exchange Capital Corp. has no exposure with Bancap.”

Mr. Virata was also invited to attend a Senate investigation on the scam, but he failed to show up. Vicente de Guzman, supervising agent of the Anti-Fraud and Action Division (AFAD) of the NBI, said the NBI invited Mr. Virata for questioning, but he did not show up either. The same goes for Julius Yan, one of the traders fired from ExCap, who was invited thrice by the NBI.

AFAD Director Fermin Nasol said the NBI has yet to gather any evidence linking ExCap to the scam. But others believe otherwise. Sources said the NBI has been fed with bank statements and photocopies of checks that could point to ExCap’s possible involvement. But Mr. De Guzman told BusinessWorld this is not enough to merit the filing of a case against ExCap.

“We’ve got information from bank statements that Bancap issued checks in favor of ExCap — But we have to establish that there’s no basis for Bancap to pay ExCap; otherwise, it would appear that Bancap is only acting as a front (of ExCap),” he said.

The NBI has instead pinned the blame on the banks, which they said refused to cooperate with the investigation and come out in the open. Its efforts are also being stonewalled by the Bangko Sentral, which invoked the Secrecy Law, thereby preventing investigators from prying into deposits and investments in government securities.

Despite persistent rumors, ExCap managed to stay out of the heat at the height of the scam. That is, until May 26, 1994.

That day, the Bangko Sentral invited the institutions victimized in a meeting to reconcile their claims under the supervision of accounting firm SyCip, Gorres and Velayo ( SGV). The rules SGV laid down before the meeting were spelled out in a letter to the Bangko Sentral dated Dec. 19, 1994. It states, “( 1) no written report on the summary of all the information we have gathered shall be prepared; (2) only a presentation of all the findings shall be made to the participating institutions as a group; and (3) no other presentations are to be conducted without the prior written approval of all the representatives of the participating institutions.”

Sources privy to the meeting said it was shrouded with an atmosphere of confidentiality as all those present were disallowed from taking notes during the SGV presentation and denied access to a consolidated report of all the transactions. In an interview, Bangko Sentral Governor Gabriel C. Singson said even the monetary body was not provided with a copy of the SGV presentation which illustrated the entire loop of T-bill transactions that occurred.

The sources said what struck them about the SGV presentation was that it revealed not one institution was running after Bancap and the risks and responsibilities on the nondelivery of the Tbills were eventually transferred mostly to Bank of Commerce (Bancommerce) and Planters Development Bank (PlantersBank). More surprisingly, they said, it appeared no amount was paid directly to Bancap.

“Bancap ended up not being part of the system,” said a highranking officer of one of the six institutions. “If it ran away with the money, it must have ( been) accumulated before.”

Another disturbing revelation during the presentation was that “there would not have been a system loss, except that the ones which must have been holding the money were not part of the discussion,” said another bank officer. The “leakages” in the system, they said, were in the form of payments reportedly made to several institutions, among them ExCap ( estimates range from P500 million to P700 million), Rizal Commercial and Banking Corp., and Traders Royal Bank.

The officers also found it mindboggling that a bank claimed it was directed by Bancap to issue payments to three institutions which the bank did not consider as its counterparties in particular transactions. These institutions were ExCap, Bancommerce and Capital One Equities Corp. Why the bank followed the instructions of Bancap in the first place is another story.

Speaking on condition of anonymity, a Bancap employee tasked with relaying Ms. Nite’s instructions to the banks told BusinessWorld. Bancap would normally ask an institution to make a check payable directly to another even if this was for an unrelated transaction. She said this happened during the heaviest transactions toward the end of April. By April 28, she said Bancap employees were already starting to take trading documents out of the Bancap office such that by May 3, the day after Ms. Nite reportedly left the country, the office was already abandoned.

If this was so, why were there subsequent transactions which banks claimed were brokered by Bancap? As documents furnished BusinessWorld show, two transactions amounting to P69.5 million were effected between Capital One and Insular Investment and Trust Corp. (IITC) as late as May 3. On May 2, when Ms. Nite was supposed to have gone on the lam, IITC and PlantersBank made two transactions amounting to P186.79 million, and PlantersBank and Bancommerce made three transactions totaling P98.94 million. The Bancap employee, who was also in charge of “pre-arranging” Bancap’s transactions upon instructions of Ms. Nite, denied any knowledge of these late deals.

Who was running the show on April 28 and 29, and on May 2 and 3? Significantly, these were to be the “most feverish trading days of Bancap” as it was during this period that the transactions began to be intertwined.

The Bancap employee earlier disclosed that as early as April 28, Bancap’s trading documents — particularly, “pre-signed” booklets of trading sheets, confirmations of sale and purchase and letters of undertaking — were already being taken out. Who took over?

It eventually became apparent that these transactions formed a single loop, with Bancommerce selling to PlantersBank, which then sold to IITC, then to Capital One. What made the reconciliation of claims more muddled was that each had outstanding balances against each other on previous dealings, and each tried to resort to a mere offsetting of claims. But, in the end, when some of the efforts to settle amicably failed, IITC had to sue both PlantersBank and Capital One.

As if these were not enough, sources said what further aroused their curiosity was the presence of ExCap Managing Director Luis Juan L. Virata and Malacanañg Presidential Legal Adviser Antonio T. Carpio in the SGV meeting. Were the financial claims of the six institutions of such grave importance to the State that it merited the intercession of the Palace?