WIKILEAKS CABLES: PHILIPPINE BANK SECRECY LAWS UNDER
FIRE
MANILA, FEBRUARY 11, 2012 (ABS-CBN) by Jojo Malig,
ABS-CBNnews.com - The US government had criticized Philippine laws and local
court rulings that block investigation and prosecution of suspected corrupt
government officials, according to several US embassy cables published by
anti-secrecy group WikiLeaks.
Unclassified cable 08MANILA622, dated March 12, 2008 and sent by then
Ambassador Kristey Kenney to the US Secretary of State, said anti-corruption
efforts in the Philippines were being hampered by local institutions themselves.
"Investigations are hindered by Philippine banking secrecy laws that limit
access to certain crucial financial information, and by poor protection for
would-be whistleblowers," said the cable, which was the US Embassy's 2008 report
on the Philippines regarding the International Anticorruption And Good
Governance Act.
Republic Act 1405 or the Bank Secrecy Act states that all deposits with
Philippine banks are "absolutely confidential" and may not be examined by any
person or government official.
However, it cited exemptions such as "upon written permission of the
depositor, or in cases of impeachment, or upon order of a competent court in
cases of bribery or dereliction of duty of public officials, or in cases where
the money deposited or invested is the subject matter of the litigation."
However, another law, Republic Act 6426 or the Foreign Currency Deposits Act,
prohibits all kinds of inquiry into bank accounts involving foreign currencies
"except upon the written permission of the depositor."
"In no instance shall foreign currency deposits be examined, inquired or
looked into by any person, government official, bureau or office whether
judicial or administrative or legislative, or any other entity whether public or
private," Section 8 of Republic Act 6426 states.
The Supreme Court on Thursday issued an indefinite temporary restraining
order on the subpoena issued by the impeachment court on the alleged dollar
accounts of Chief Justice Renato Corona in Philippine Savings Bank.
The Supreme Court based its decision on the Foreign Currency Deposit Act,
which has not been amended by Congress since it came into law on April 4, 1974,
just a year-and-a-half into the Marcos dictatorship.
Money laundering
The US State Department, in a 2012 report on the Philippines, said Congress
enacted an anti-money laundering law in September 2001 and followed through with
amendments in March 2003 to address legal concerns posed by the Organization for
Economic Cooperation and Development (OECD) Financial Action Task Force (FATF).
It said that the FATF Asia Pacific Group conducted a comprehensive peer
review of the Philippines in September 2008 and raised several important
concerns, including court rulings that inhibit and complicate investigations of
fraud and corruption by prohibiting ex-parte inquiries regarding suspicious
accounts.
"Legislation to address these deficiencies is pending in the Philippine
Congress, and has been designated 'urgent' by the Aquino administration, which
will accelerate its movement through the Congress," the US State Department
said.
The FATF's concerns regarding local laws and court rulings on bank accounts
were earlier echoed in a US embassy cable 10MANILA149 dated January 25, 2010.
The cable, titled "2010 Investment Climate Statement - Philippines," said
that some problems remain unresolved after the General Banking Law of 2000 paved
the way for the Philippine banking system to phase in internationally accepted,
risk-based capital adequacy standards.
"Some impediments remain to more effective bank supervision, including
stringent bank deposit secrecy laws, obstacles preventing regulators from
examining banks at will, and inadequate liability protection for Central Bank
officials and bank examiners," it said.
"There are a number of laws and mechanisms directed at combating corruption
and related anti-competitive business practices, although the enforcement of
anti-corruption law has been weak and inconsistent," it added.
The Carlos Garcia case
Cable 05MANILA84, a US embassy report on anti-corruption efforts in the
Philippines, mentioned how the Foreign Currency Deposit Act prevented the
Landbank from enforcing the Sandiganbayan's freeze order on the dollar accounts
of former Armed Forces comptroller Major General Carlos Garcia, who allegedly
amassed wealth while he served in the military.
Garcia was charged with plunder and corruption before the Sandiganbayan. A
military tribunal also found him guilty of violating the Articles of War.
The military tribunal said Garcia did not truthfully declare his properties
in his statement of assets, liabilities and net worth, and had a US green card
despite being a top Philippine military official.
"The Landbank froze Garcia's two peso-denominated accounts, worth nearly USD
120,000. Landbank Vice-President Rosemarie Osoteo, defending her company's
decision, publicly stated that the Sandiganbayan's freeze order did not apply to
the dollar accounts, which, she said, were 'confidential' and could only be
opened in cases of violation of the Anti-Money Laundering Act," Cable 05MANILA84
said.
Cable 05MANILA5927, meanwhile, asked if local financial institutions comply
fully with provisions of the Anti-Money Laundering Act (AMLA) of 2001.
The cable, dated December 22, 2005, said the Central Bank "does not have a
mechanism in place to ensure that the financial community is adhering to the
reporting requirements."
"While bank secrecy provisions to the BSP's supervisory functions were lifted
in Section 11 of the AMLA, implementation appears to be incomplete. Due to
Philippine 'privacy issues,' examiners of the BSP are not allowed to review
documents held by covered institutions in order to determine if the covered
institutions are complying with the reporting requirement," it said.
Prior notification
A 2008 cable, 05MANILA5927, cited the Supreme Court's strict interpretation
of bank secrecy laws.
"The Philippine Supreme Court has ruled that a bank account holder must be
given prior notification before inquiry can be made into their bank records
during investigation of money laundering or corruption cases," it said.
The case, G.R. No. 174629, involved the Anti-Money Laundering Council's
efforts to look into 8 bank accounts that were allegedly used in corrupt
activities involving the Ninoy Aquino International Airport (NAIA) Terminal 3.
"Both Philippine and US criminal law enforcement efforts may be negatively
affected by this decision," the embassy cable said.
The Supreme Court decision rejected the opening of the bank accounts and said
that except in cases of terrorism, kidnapping, and drug violations, the bank
account holder must be given prior notification before inquiry can be made into
their bank records during investigation of money laundering or corruption cases.
"In financial fraud and corruption investigations this will require the AMLC
to disclose the fact of its investigation and the evidence uncovered to the
subject of the investigation long before the government is in a position to file
criminal charges," the US embassy had warned.
"It will also allow the account holder to prevent effective investigation by
tying the proceedings up with litigation. Giving subjects of investigations
notice of the investigations at an early stage allows opportunity for the
destruction of evidence, the concealment of other assets, and the obstruction of
justice," it added.
"United States criminal law enforcement efforts will also be negatively
affected by this decision. Through our Mutual Legal Assistance Treaty with the
Philippines, the United States enjoys an excellent means to seek financial
records to support investigations of a wide variety of violations of U.S. law
including wire fraud, money laundering, counterfeit products, smuggling, and
computer fraud," the cable said.
"In most cases the U.S. investigations are not at stages where disclosure of
the investigation can be made without severely compromising the investigation,"
it explained. "Our ability to obtain necessary evidence from the Philippines in
such cases will be significantly reduced."
Chief News Editor: Sol Jose Vanzi
© Copyright, 2012 by PHILIPPINE
HEADLINE NEWS ONLINE
All rights reserved
PHILIPPINE HEADLINE NEWS
ONLINE [PHNO] WEBSITE
[Non-text portions of this message have been removed]
Follow us on Twitter: http://twitter.com/phnotweet
This is the PHILIPPINE HEADLINE NEWS ONLINE (PHNO) Mailing List.
To stop receiving our news items, please send a blank e-mail addressed to: phno-unsubscribe@yahoogroups.com
Please visit our homepage at: http://www.newsflash.org/
(c) Copyright 2009. All rights reserved.
-------------------------------------------------------------
