Dewey Dee,

Savings and Loan Corp., and Premier Finance Corp. Except for Pioneer, Finasia and Premier both went under with debts reaching P250 million. Mr. Gatmaitan was a known Disini associate and former president of Bank of Commerce when it was still named Combank. Mr. Gatmaitan’s ownership of Admiral used to be a well-kept secret until he came out in the open and sued then Central Bank Governor Jaime Laya for harassment when the CB was preparing a case against the bank, the official said.

Efren Lim, who used to run the bank, now operates the ritzy Manila Bay Nightclub along Roxas Boulevard, where Ms. Nite usually entertained her clients, a source close to the Bancap lady said. The report described Mr. Lim as a “known business sidekick” of Mr. Gatmaitan.

From Admiral, Ms. Nite transferred to Bancom Development Corp. (Bancom), where she reportedly gained exposure in the high-roller world of government securities trading. Bancom was then known as the “university” of financial wizards credited with introducing novel short- term financial instruments used in brokering between corporations with excess funds and those with very short-term needs. Bancom was then headed by Rolando Gapud, a top financial adviser of the Marcos administration; he is now holed up in Hong Kong and has provided vital testimonies to the Presidential Commission on Good Government on the recovery of the Marcos wealth.

Ms. Nite then moved on to perfect her craft at Asiatrust Corp., where she met her group that eventually formed the core of Bancap, most of whom were no longer strangers to her, having come from the same umbrella of failed financing firms.

The report said Harry San Luis, Bancap’s original incorporator and Ms. Nite’s boss at Asiatrust’s money market operations department, came from another failed financing company under the Gatmaitan group.

Esperanza “Beth” Garcia, who assumed the title “personnel officer” of Bancap but allegedly became Ms. Nite’s right hand in the company, also used to work for a Gatmaitan company, Premier Finance, said a Bancap employee who requested not to be identified. She said Ms. Garcia and Ms. Nite would occasionally have lunch with a “former boss” whom the two maintained close contacts with.

Virgilio Bruno, Bancap’s corporate secretary, “used to lawyer for many of these failed financing firms, including Premier Finance Corp. in Cubao,” the report said.

The Bancap employee said there were also office rumors that Nunelon “Nel” Bradley, Bancap’s vice-president, used to work with a failed company which also got involved in similar scams.

If state prosecutors had been vigilant in their past investigations, Bancap could not have sustained its operations for six years. There is reason to suspect a common thread runs in past scams related to government securities trading.

Almost all of the known scams took place between 1988 and 1991, exactly the years when Bancap was declaring huge losses with the Securities and Exchange Commission (SEC). When the book-entry system (BES) was adopted during Central Bank Governor Jose L. Cuisia’s tenure around 1992, Bancap began posting a turnaround. The BES virtually eliminated the need for actual physical delivery of T- bills, allowing traders the convenience of merely dictating the serial numbers of the T-bills to their clients over the phone, and the clients calling the Bangko Sentral to verify their existence. Said former Solicitor General Francisco Chavez, who acts as defense counsel of Ms. Magalona-Escalambre in the estafa case lodged by the government against her: “The situation was created by the Bangko Sentral itself. It was a disaster waiting to happen. How can (current Bangko Sentral Governor Gabriel) Singson play Pontius Pilate and wash his hands?”

The BES was instituted as a means to deal with several reported incidences of tampering, stealing and outright manufacture of T-bills in the secondary market.

One of the earliest scams involved the theft of P21 million worth of T-bills from the vault of the Development Bank of the Philippines (DBP) sometime in 1988. Industry sources said the incident was uncovered only when the Commission on Audit found out during a physical inventory that the ones stolen were substituted with tampered bills.

Incidentally, at that time, DBP’s head of treasury was Richard O’Santos Barreras, who was concurrently “senior special assistant to the vice-chairman.” After his three-year stint at DBP, Mr. Barreras joined Luis Juan Virata’s Exchange Capital Corp., also as head of treasury operations. He stayed there for four months, and then moved on to Bank of Commerce as senior vice-president for the financial management sector and became the immediate superior of Reynaldo Feliciano, the bank officer who took his own life when the Bancap scam was exposed. Bancommerce officers said Mr. Barreras recently resigned from the bank and joined an investment company.

Despite assurances from the National Bureau of Investigation that the perpetrators of the scam had been apprehended, the stolen DBP bills found their way into the hands of other institutions, which themselves became hit by subsequent scams.

One involved a T-bill with a face value of P10 million, which the Philippine National Bank (PNB) bought from a lowly capitalized securities dealer called Honphil Securities and Development Corp. owned by a certain Alfonso Gadia. According to a PNB internal memorandum dated August 20, 1992, a copy of which was obtained by BusinessWorld, PNB sold the same T-bill to Bancap in January 1991 with an agreement PNB will buy it back after 90 days. After the buyback, PNB tried to redeem the T-bill from the central bank, which then rejected the bill, saying it was tampered. PNB later found out the bill was part of those stolen from the DBP vault. It filed a claim against Honphil, which up to now is pending before the courts.

The one who reportedly brokered the deal was Manny Arnaldo, who was formerly from Credit Manila, believed to be a crony-owned financial institution acknowledged for inventing the T-bill market during CB Governor Jaime Laya’s time.

Another T-bill-related incident in 1990 reportedly victimized the Philippine Tourism Authority (PTA) to the tune of P360 million during the time of then Tourism Secretary Peter Garrucho, now chairman of Capital One Equities Corp., one of the institutions affected by the Bancap caper. The transaction involved the payment of a premium instead of a discount (which is what is normally used in the sale of T-bills) such that PTA posted a P180-million opportunity loss when it had to pay a premium every time it decided to invest its funds, a source said.

Reportedly the one who brokered the deal was Raul Pangilinan, who used to be a colleague of Mr. Arnaldo at Credit Manila. A check with Honphil’s corporate background reveals Mr. Pangilinan was among its original incorporators when the firm was then registered as Corasia Securities Corp. in 1982. The PTA’s financial officer and general manager at that time was Ramon Binamira, former chairman of the Green Revolution Foundation under the Marcos administration. Incidentally, it was during his tenure that Green Revolution invested P30 million in 1980 with the Silverio-owned Philfinance. A wellplaced source said the investment eventually went down the drain, along with Philfinance.

Yet another much-publicized anomaly which even became the subject of a Senate Blue Ribbon investigation in 1990 was the P150-million investment of the Instructional Materials Corp. (IMC), the division of the Department of Education, Culture and Sports, which handles the printing of school textbooks. The investment was negotiated through PNB and brokered by Eurotrust Capital Corp., headed by Elsa Reyes, a close friend of Ms. Nite. Significantly, one of Eurotrust’s directors, Edison S. Gabuna, was among the original incorporators of Bancap when it was still BSG Business Development Resources in 1982.

If the Senate Blue Ribbon committee probing the scam looked into the so- called detached assignments showing the original source of the T-bills, the market would have been alerted this early about Bancap. It was from Bancap where Eurotrust reportedly purchased P83 million in T-notes out of the total investment of IMC. The transaction carried a “buyback” agreement.

The dossier sent to Malacañang said before Eurotrust was able to sell the T- notes back to Bancap, it first offered them to IMC. However, instead of returning the securities to PNB, IMC’s custodian bank, Eurotrust allegedly “faked” the acknowledgment receipt and sold back the same T- notes to Bancap to complete the buyback. The case is now pending at the Sandiganbayan. Meantime, Eurotrust informed the SEC it would “temporarily cease its operations due to unfavorable business conditions” effective end-1991.

A confidential memorandum dated May 26, 1994, sent to President Ramos by a Palace informant and obtained by BusinessWorld, said “Eurotrust was later reported to have lent the money to Science of the Mind advocate Charley Barreto and to a certain Grace Eleazar, who then bought the Banco del Oriente, a small development bank in Mandaluyong — for P50 million.”

Ed Fajardo, who was senior vicepresident of PNB, used to be the president of Banco del Oriente and a known associate of Mr. Gapud, having been president of Credit Manila. Banco del Oriente is now reportedly run by Evelyn Singson, who has followed the career path of Mr. Gapud, serving as his executive vice-president at Bancom and then at Security Bank when the former was still president.

These “coincidences” are so glaring that tracing Bancap’s anatomy as a rogue trader may require the reopening of past cases. But who would dare lift a finger?

“Five years from now, somebody will think of another scam because there’s always the opportunity to make money,” said a veteran trader.