With A Little Help From My Friends

“ I don’t need A,B,C,D or E or even FG to be successful”, said Bobby Ongpin following Sen. Osmena’s accusation that he had higher backing for the Philex deal.

In Nov. 2009, Delta Ventures Resources, an Ongpin company allegedly capitalized at P625,000, in days secured loans totaling P660 million from DBP to acquire 50 million Philex shares at 12.75/share. A month later Ongpin sold these shares to Manny Pangilinan’s company at P21.00 for a gain of P412.5 million.

The loan was fully paid with interest.

Rey David was then the President of DBP appointed by GMA.

Ongpin and David are friends who had transacted other deals. David sits as director of Atok Big Wedge, ISM Communications and Phil. Bank of Communications; all chaired by Ongpin.

DBP extended a mega loan to Ongpin’s group to buy Meralco shares which were subsequently sold to Pangilinan’s Piltel. GSIS, SSS and Landbank were major shareholders in Meralco.

David advised PNOC (what we now know to be absurd) when it sold its 40% stake in Petron to SEA Refinery, a unit of Ashmore represented by Ongpin. SEA subsequently sold its interest to San Miguel.

Ongpin was reportedly involved in the MRT deal. DBP and Landbank extended a $180 MM (P 7.9 billion) loan to Global Air Services, a shell foreign company, to acquire MRT shares from the original shareholders. GAS then sold the shares to DBP/LB apparently by offsetting the loan against an inflated purchase price. Details are shrouded because of a non-disclosure agreement (why the secrecy?) but the talk is it stank. It is worth a Senate enquiry.

This is the business model: One, identify companies where Government institutions have an important stake. Two, “persuade” these institutions to sell their position at a certain price. Three, locate a party that will buy the shares above this price. Four, acquire the shares for your account first using easy financing from Government banks. Five, flip the stake to the ultimate buyer at a gain. Six, buy loose shares in the market ahead of the transaction to further juice the profit.

A variant is to find an ailing company like MRT and stuff it to the Government on some economic pretext.

Step 2 is the heart of the matter. In the Philex case:

–  Why did DBP not offer its Philex shares to Pangilinan? The latter had officially announced five months earlier his desire to acquire upto 40% of the company. David, described by Ongpin as “one of the smartest bankers in the country”, had the legal responsibility particularly for an asset this size to get the best price through a transparent and competitive bidding process; yet he chose to deal exclusively with his friend -and now business associate and defender- Ongpin. The haste of the DBP loan further suggests the deal was wired all the way.

– Ongpin admits the loan was expedited because the market price of Philex was already at P12.75 thereby threatening the deal. Rather than fast track the loan should this not have prompted DBP to slow the process and rethink the price?

– Was there a conspiracy to defraud and by whom? Following the money trail might provide some answers.

Ongpin admits to being a friend of Mike Arroyo yet has “met him not more than 5 times”. This must be the definition of “friendship of convenience”.

Ongpin professes to love the Philippines and to have attracted billions in foreign investments. The nation might arguably be better off without either his love or his foreign money.

Cases have been filed against Ongpin, David and other DBP officials in the Philex matter. A word of caution to the Government: This Administration (and the public) is rightfully incensed at what is a blatant shakedown of our treasury. However, it should not let its heart get ahead of its mind: Don’t get mad, get even.

The cases should be driven by what will legally stick, not what will play to the gallery. Public anger generates the political will but it is the law that, hopefully, brings redemption.

The cases against the DBP officers are weightier than those against Ongpin (Hence his invitation: “Come after me, not Rey David”): Unless proven to be a co-conspirator, it is no crime to be granted  P660 MM loans in short shrift nor to be sold shares at below their true value. One simply says thank you and leave a little something on the way out.

The onus for protecting our national treasury is with our Government officials:  The Administration should nail the erring public servants preferably for a non-bailable offense and get them to squeal. Let’s then see what happens.

If a conspiracy to rape can be affirmed and by whom, it would force illegal profits to be disgorged.

It would also disclose whether friends indeed were involved and their position in the alphabet.


About Leo Alejandrino

The blog is principally a commentary on Philippine politics and economics.
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8 Responses to With A Little Help From My Friends

  1. raulrodrigo says:

    Nice piece. “GY” Alejandrino was your grandfather?

  2. manuelbuencamino says:


    Ever considered that MVP was the mark in this case? DBP made P1.4B and Ongpin made much more. MVP could have gone straight to DBP and done a cross-sale when the price was still at 12.75 per share instead he ended up buying out Ongpin and DBP at P21. Smart businessman or dope?

    • This is the crux of the matter; Suspiciously, David chose to deal exclusively with Ongpin even as he knew MVP (and by Ongpin’s admission GSIS and SMC) was interested in accumulating Philex.

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  4. Ed Roa says:

    This is a somewhat belated response because I was hardly aware or had little interest in your articles until some members of our e-group posted this article and a subsequent one “Anatomy of a…” for discussions. Below was my response:

    The DBP “behest loan” scandal involving Bobby Ongpin, Rey David and a sub protagonist, MVPangilinan is an unfortunate incident that has gone through the legislative grill, media grind and the political mill and may end up unjustly making mincemeat of the principal characters.

    What started off as what seemed like a witch hunt initiated by the new DBP officers against their predecessors. Nunez, the appointed head of DBP was forced into the slime light when one of the former officers of DBP, Atty Pinpin, committed suicide and had said in his dying declaration, a suicide note to his wife, that he could not endure the coercion by his superiors to sign a false testimony against former officials of the DBP.

    From there the Senators took over and grilled to no end Rey David. Bobby Ongpin was spared the process because he was abroad.

    I presume that we are all knowledgeable of the issues as a result of the intensive media coverage accorded the case and the numerous articles that sprung up after and still proliferating after the Senate investigations.

    You could dismiss most of the citations, conclusions and recommendations as mere speculation, innuendoes, tales to denigrate the characters of the protagonists and hindsight prognostications.

    What seems to be the crux of the matter is “Why did DBP (Rey David) not offer its Philex shares to Pangilinan where they could have a bigger profit?” Pangilinan was supposed to have officially announced his desire to acquire a 40% share of the company five months earlier. There was a P8.25 price differential from the price that Ongpin bought from DBP and the price that he sold it to Pangilinan.

    What is at issue here is whether Rey David wilfully and knowingly deprive the DBP the opportunity to earn more if the offer was made to Pangilinan who later bought at P21.00 instead of entertaining Ongpin’s bid to buy at P12.75 per share.

    The questions that arise from these are:
    Did Pangilinan make a tender? Desiring to acquire and making a bid to acquire are two different things.
    Secondly, was the P12.75 tender of Bobby Ongpin a generous one at that time and presented an opportunity for DBP to make a big profit from the transaction. Was urgent action required lest the opportunity pass? Ongpin felt that at P12.75 the price was on the rise which required expediting to avoid profit erosion.
    Why did Rey David not open it to a competitive bidding to get the best price? Very few can manage a deal this big, Ongpin was one and MVPangilinan and then some. To organize a bidding would probably take some time and this may have been an instance where acting fast was key.
    Was the price of 12.75 per share an attractive price at that time that DBP felt this was an opportunity which should be urgently acted upon. The price of P21. that Pangilinan paid was a month after, he probably could have gotten it at a lower price had he acted weeks earlier after Ongpin acquired the shares. Ongpin’s acquisition of the shares may have increased the share price considerably and the claim that the government lost so much was merely notional.
    These are all hindsight, market moves are made quickly and decisively, to hesitate may lose gain points or lose the opportunity completely. For those of us who have been in business, haven’t we found ourselves in situations where indecision and wishy-washiness lost us the deal? I still contend that Rey David acted with keen business acumen, worked within the fringes of the charter of DBP and earned the bank a lot money in the process. This is much more than what some GOCC heads can claim who either did nothing but earned fantastic salaries or did wrong to augment an already unjustified remuneration in their positions.

  5. If Rey David knew that SMC, GSIS and MVP were racing to acquire a majority of Philex shares, why was he in a hurry to sell exclusively to Bobby Ongpin? Obviously there was some collusion here.

  6. My take on this is that Ongpin, David, and MVP are certainly no dopes. They couldn’t have gotten away with their scandalous shenanigans without approval from not only FG but GMA.

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