MANILA: A government-appointed special prosecutor yesterday ordered the filing of corruption charges against Philippine Central Bank Governor Jose Fernandez, who said he would contest them.

Ombudsman Raul Gonzalez said there was evidence to indicate that Mr. Fernandez had misused his office in ordering the closure of the private Pacific Bank in July, 1985.

He said the charges against Mr. Fernandez would be filed “within the week” in a special court for corruption cases, adding that a defendant could appeal such filings to the Supreme Court.

Mr. Fernandez is in New York for talks with the Philippines’ creditor banks on rescheduling US$9.4 billion (HK$73.5 billion) of the country’s foreign debt.

A Central Bank statement quoted Mr. Fernandez as saying Pacific Bank’s closure and sale “were in good faith.”

Mr. Fernandez said that some points may have been missed in the appreciation of the case, for which reason he will be filing a “motion for reconsideration of the (ombudsman’s) resolution,” the statement said.

Mr. Gonzalez said the judge who ordered that the Pacific Bank be reopened after hearing submissions from Mr. Fernandez and plaintiff Felma Pauag, the President of the employees’ union at Pacific Bank.

Ms. Pauag said Mr. Fernandez had acted arbitrarily in ordering the closure of the bank and placing it under receivership without giving Pacific the right to appeal, thus firing hundreds of employees out of work.

Ms. Pauag also said Mr. Fernandez had not withdrawn his holdings in Far East Bank and Trust Company, which took over Pacific Bank’s assets, when he became Central Bank Governor in January, 1984. Mr. Fernandez founded Far East in 1960.

She alleged Mr. Fernandez had misused his position by appointing two Far East Bank executives to Central Bank consultancies, giving them access to Pacific Bank information.

She also disputed Mr. Fernandez’s interpretation of Pacific’s accounts from January, 1980 to May, 1985, claiming the bank had made a profit in some of those years.

The Central Bank statement quoted Mr. Fernandez as stressing that Pacific Bank was “repeatedly operating on a negative capital side of the bank and the immediate need of putting up additional capital to rehabilitate it.”

It said the Central Bank tried to assist in a bid by Bank of Hawaii and Philippine Savings Bank to recapitalize Pacific Bank, but the negotiations collapsed “because of certain legal impediments.”

The Central Bank said Mr. Bank invited several banks to submit offers for Pacific’s assets. The winning bid by Far East was approved by the monetary board and not by Mr. Fernandez alone.

Mr. Fernandez was also quoted as saying that he had divested himself of all interests in Far East Bank when he became Central Bank Governor.

A Far East Bank spokesman declined comment on the charges against Mr. Fernandez.

In Tokyo, Japanese tax authorities have named one of Asia’s richest and most influential businessmen — and trusted Philippine President Ferdinand Marcos, jailed aide Yoshihiko Shibunari — and the national taxation agency had filed criminal charges against him for misrepresenting expenses as “entertainment expenses.”

Sources at the misrepresentation trial said he had failed to report some 1.5 billion yen (HK$71 million) of taxable income between 1984 and 1986.

Share this story