Feverish days,

Except for its public denial of Ms. Magalona’s statements, ExCap never really came into the picture. Mr. Virata’s presence in the SGV meeting thereby fueled speculations. “Buboy ( Virata) did not have any business being there,” said a top bank officer who attended the meeting.

Asked why Mr. Virata was invited by the Bangko Sentral, Mr. Singson said “I don’t know. Probably he has a transaction. I don’t exactly recall.”

The lawyer-turned-monetary chief could not even recall if he was present in the May 26 meeting. (Incidentally, Messrs. Singson and Virata currently sit on the board of PR Holdings, Inc., the consortium controlled by taipan Lucio Tan and which controls Philippine Airlines. Mr. Singson was chairman when Mr. Tan first gained control over management of the airline. Mr. Virata recently took over the chairmanship.)

Explaining his presence in the meeting, Mr. Virata told BusinessWorld, “I volunteered to go to see how we can help. I was advised not to attend anymore because we were squared. We were not told what the agenda was for the meeting.” (Although “officially,” he said ExCap has denied any involvement in the scam, Mr. Virata consented to an interview with BusinessWorld on condition this will be joined in by ExCap’s lawyer, external auditor and public relations consultant. Those who sat down in the interview were ExCap’s “head of sales and trading” Laarni J. Goseco, public relations consultant Jose Ayllon, and an auditor from SGV who refused to be identified. Mr. Ayllon made an observation on how nervous Mr. Virata was during the interview.)

Mr. Virata started out his account of ExCap’s alleged involvement with a story on Julius Yan, whom he said eventually “turned out to be a rogue trader.” He said Mr. Yan, a former grade school classmate at Xavier School, was doing agricultural work when he came to him asking for a job. Mr. Yan joined ExCap sometime in October 1993 as a trader and was earning a monthly salary of between P16,000 and P17,000.

At that time, he said “there were brownouts, as a result of which our records were not catching up with our manual activities because the volume was getting bigger.” Ms. Goseco claimed ExCap even had to transfer offices because of the brownouts and had only one computer encoder, resulting in significant delays in the reporting system. She suspects this “was done on purpose because before they ( Mr. Yan’s group) came here, there was nothing wrong with our system.”

At the same time, ExCap’s volume of transactions was growing and profits were being reflected in the manual records “so, supposedly, everything looks better. Our records were being doctored,” Mr. Virata alleged.

He said ExCap’s huge exposure with Bancap came unnoticed, especially since “by January, February, March, I was traveling almost every week — because of the road shows.”

Sometime in January 1994, he said, they discovered there were undelivered T-bills from Bancap. “At that time, we were thinking it was not that large, about P100 million to P200 million, (at least) that was the representation made to us, that it was going to be covered,” he said.

The amount of ExCap’s exposure to Bancap, he said, “became too large ( when it was) supposed to be several entities ( ExCap was dealing with. It reached a point when they) were all concentrated with Bancap. That was January, February, March. There were ( transactions with) others, but the big bulk was with Bancap.” Ms. Goseco said it appeared eventually that Bancap was Excap’s only source of T- bills.

By March, “when I discovered the situation,” the undelivered T- bills already amounted to P500 million, related Mr. Virata. “What alarmed us was the change in (Mr. Yan’s) lifestyle; we could not account for the undelivered T- bills, profitability ( such that) the spreads became questionable, and he was giving away rates when the market was much higher,” he said.

“When Julius came back from a long Holy Week break, we already had a ploy. Our ploy was to ask him to cover the position (for ExCap) to get a clean bill of health. If he is able to cover the position, he’ll get promoted,” he said. By the time SGV was commissioned to conduct an audit of Excap’s books, it found Excap’s transactions with Bancap to be above-board.

A source who has inside information on ExCap told BusinessWorld Mr. Virata allegedly promised fat bonuses to the traders if they could “regularize” the transactions; when they finally did, they were fired. Mr. Virata said “because of loss of confidence, we fired Julius” and another trader named Steve Bernales, who used to work with SGV.

Within a week, Bancap was able to pay ExCap between P500 million and P600 million for the nondeliveries, Mr. Virata said. “So our maneuver worked,” he added. The payments reportedly were in the form of checks drawn against several banks, the bulk of which was against Bancommerce.

“We cannot say anything against ( Bancap) because they paid us. Our relationship was completely closed,” he said. Ms. Goseco said ExCap was “squared in a sense” since whatever was the amount that Bancap failed to deliver, ExCap was able to compensate with the T- bills it was able to buy from Bancap earlier.

They claimed ExCap was able to close its exposure to Bancap as early as April 4, 1994.

A “regular audit” conducted by the Securities and Exchange Commission ( SEC) on ExCap for the period January to March 1994 shows the company has outstanding T- bill claims from Bancap worth P15.6 million based on the ending inventory as of March 31.

A “physical count of the company’s T-bills on hand as of June 10, 1994” showed ExCap has in its possession P60 million worth of T-bills which were all delivered by Bancap, according to the audit report on ExCap prepared by the SEC’s Money Market Operations Department, a copy of which was obtained by BusinessWorld. A subsequent audit report covering the period April to December 1994 shows these P60-million Tbills were sold to Security Bank and Trust Co. (P42 million) and to Golden Crown Realty and Dev’t Corp. (P18 million), a firm owned by Mr. Virata.

This means even as ExCap was able to close its exposure with Bancap as early as April 4, its inventory of T- bills delivered by Bancap increased by P44.4 million barely two months later. If these were late deliveries made to “square” ExCap’s position, it does not jibe with the company’s claim that Bancap paid them in cash.

The SEC audit report states “though Bancap Development Corp. is already inexistent, the inventory on hand delivered by the same worth P60 million would shoulder for the outstanding Treasury bills amounting to P15,639,400.85.”

A breakdown of ExCap’s Tbill transactions for the period shows the company’s net exposure ( volume purchased minus volume sold) with Bancap as of end-March reached P2.23 billion — over 440 times that of Bancap’s P5- million authorized capitalization and more than 20 times that of ExCap’s P100- million capitalization. ( Incidentally, in his Senate testimony, Bancap director Harry San Luis reportedly estimated the total industry loss at P2.3 billion.)

If this was indeed ExCap’s “open position” with Bancap as of end-March, how was Bancap able to raise P2.2 billion to offset ExCap’s claims in a matter of four days? Four feverish days.