Surigao del Sur Rep. Pichay convicted of graft over multi-million LWUA fund misuse

By Anthony S. Pagapulaan

PHOTO: Rep. Prospero Arreza Pichay Jr. (Facebook)/MindaNews

Surigao del Sur Representative and House Deputy Speaker Prospero Pichay Jr. has been found guilty with three counts of graft by the Sandiganbayan over the multi-million fund fraud during his time as chief of the Local Water Utilities Administration (LWUA).

In the decision of the 4th Division, the anti-graft court sentenced Pichay, along with former LWUA deputy administrator Wilfredo Feleo Jr., with 6 to 10 years imprisonment for each of the three charges, or 18 to 30 years in total, and disqualification to hold public office.

Records of the Ombudsman showed that of the P780 million worth of corrupted funds in 2009, P700 million were deposited in two tranches by Pichay and some agency officials in his time to an insolvent bank named Express Savings Bank Inc. (ESBI), a depository owned by The Wellex Group and Forum Pacific.

While the other P80 million was used to buy some 445,377 stocks in the ESBI, acquiring 60 percent of the voting stocks.

With these spendings, the court cited in its ruling that Pichay caused undue injury to the government for his failure to secure an approval from the Bangko Sentral ng Pilipinas and Department of Finance on the acquisition of ESBI, with his office even receiving warnings from the Monetary Board (MB). 

“As it later turned out, the risks led to losses, as ESBI was eventually closed, and there was no showing that LWUA was able to recover the full amount it spent in relation to the acquisition of ESBI,” the decision said.

On the other hand, because ESBI was the only bank engaged, Pichay noticed no obvious prejudice; while Feleo denied being part of the LWUA Board of Trustees, saying he was only tasked to negotiate with the bank for LWUA. 

Both stressed that the MB gave implicit consent, as evidenced by the letters between the bank and the agency.

“The fact that BSP and DOF have not been very blunt about the stubborn disobedience of LWUA to the mandate of the banking laws should not be perceived as a form of tacit approval, but simply an adherence to the old adage of parliamentary courtesy affording LWUA and its board due respect,” the court further stated.

In a released statement of the congressman’s camp, Pichay said that he was surprised by the verdict and is now discussing the issue with his legal team.

"This is a case of conspiracy for allegedly violating Section 3(e) of Republic Act 3019. Originally, there were 22 accused in this case which is why the recent decision of the Sandiganbayan came as a surprise," Pichay said.

RA 3019 is the Anti-Graft and Corrupt Practices Act, in which Section 3(e) states: "Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence. This provision shall apply to officers and employees of offices or government corporations charged with the grant of licenses or permits or other concessions."

"It is noteworthy that even the dispositive portion of the decision admits that no civil liability is adjudged against me in view of the fact that LWUA public funds invested in ESBI is under receivership and liquidation of the PDIC. So it is baffling: how can there be undue injury to the government?" he added.

In 2019, Pichay was suspended from office for three months in connection to the release of the same agency's P1.5 million sponsorship fund for a chess match in 2010.

While in 2020, along with Feleo and Emmanuel Malicdem, Pichay was sentenced 6 to 8 years imprisonment for the chess tourney scandal.

Earlier this year, the Supreme Court seconded the 2011 Ombudsman ruling to bar him from holding office, but he disputed the SC decision saying the Ombudsman has no obligation to oversee the members of Congress.

Pichay is the Secretary-General of Lakas-CMD, the political party of Vice President-elect Inday Sara Duterte that also carried the lineup of the late dictator's son and President-elect Bongbong Marcos Jr. during the 2022 elections.

Amidst the raps, Pichay eventually continued his bid for another term as Surigao del Sur's first district representative, along with his wife for governor. Yet, both of them lost to the leading lineup of the province's political dynasty of Pimentels.


Edited by Audrei Jeremy Mendador
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