Is Sen. Kiko Pangilinan Right to Question Landbank's Approval of P500-Million Cash-Outs?
State lender Land Bank of the Philippines is in the hot seat as Senator Francis “Kiko” Pangilinan wants it to answer questions about massive withdrawals, including one for as much as P500 million, tied to the flood control projects controversy.Pangilinan raised his concern during Tuesday’s plenary session as the Marcos government’s investigations into the corruption-ridden infratsructure projects intensifies.
Despite Landbank's insistence of these transactions being legal, Pangilinan said it skirted accountability in greenlighting the suspiciously massive transactions.
“Landbank strongly refutes any insinuations that its handling of government contractor accounts, particularly those related to the Department of Public Works and Highways’ (DPWH) flood control projects, involved any irregular or unlawful activity,” the bank said in a statement, justifying what it deems legal transactions. It added that it has to observe its ‘Know Your Client (KYC) protocols, risk management procedures, and other documentary requirements in relation to Landbank accounts.
For context on government mechanisms and laws on suspicious, and consequently massive transactions, the Anti-Money Laundering Act (AMLA) requires all cash withdrawals over P500,000 to be automatically reported to the Anti-Money Laundering Council (AMLC).
So if a transaction is considered “suspicious,” the AMLC gets a suspicious transaction report.
“The people are demanding answers and want to know the truth in this flood control scam,” the Senator expounded in a Facebook post, clarifying his insistence on probing the lender on the issue. “They want to know if LandBank branches throughout the country wherein questionable flood control projects are located likewise release piles of cash in the hundreds of millions in such a manner.
But the state lender says that the funds deposited by contractors form the Department of Public Works and highways were in line with those found in the General Appropriations Act.
"The huge cash withdrawals didn't raise a red flag because the contractors were official contractors of DPWH and listed winners of the bids," said Calixto Chikiamco, president of the Foundation for Economic Freedom, via Viber. "The projects were also official government projects and the withdrawals were endorsed by government officials."
He added that Pangilinan was right to question these anomalous withdrawals, but failed to establish which law had been violated and that the senator only said the law has gaps in identifying suspicious transactions.
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President Ferdinand “Bongbong” Marocs, Jr. has formed an independent commission to look into irregularities found in flood-control contracts and has been cracking down on the revelations on the alleged involvement of legislators fattening their pockets via kickbacks from ghost projects.
Several lawmakers have been tagged and even face charges over allegedly benefitting from these anomalous contracts via cash kickbacks.
On September 30, the Court of Appeals issued a third freeze order covering the assets of personalities and entities linked to anomalous government flood control projects.
The order covers 836 bank accounts, 12 e-wallets, 24 insurance policies, 81 motor vehicles, and 12 real estate properties. Two earlier orders sought to freeze 1,563 bank accounts, 54 insurance policies, 154 vehicles, 30 properties, and 12 e wallets.
The AMLC has said the total number of frozen assets has reached P2.9 billion covering 2,778 assets.
Landbank maintains that there was no legal basis to withhold the funds, even if it was in the hundreds of millions.
“Is it wrong for me to inquire if this is standard banking practice considering ‘strict banking rules and regulations’ were followed in the case of the Landbank Malolos branch?” Pangilinan posed the rhetorical question in his Facebook post, referring to the branch linked to suspicious cash withdrawals of DPWH contractors.
His post was prompted by an earlier open letter / social media post by Bernadette Zamora, who introduced herself as "a simple banker" and employee of Landbank, who suggested that Filipinos focus more on the “real problem” of leading efforts to fix broken systems that allow systemic corruption.
“This is where your role as Senator becomes crucial, because you have the power to initiate reforms that can prevent ordinary citizens from ever suffering this kind of betrayal again,” Zamora said in her post. She said the state-lender itself has no authority to question “duly-allocated government funds” and that it isn’t within its mandate to “second guess projects meant to benefit the Filipino people on paper."
“Focusing on the big fish alone will not end massive corruption because it is systemic in nature and as such it must be addressed as a system,” Pangilian said in reply to Zamora's post, which has amassed nearly 40,000 reactions as of the late afternoon of October 1, “And I know you will agree with me that the banking system, particularly government financial institutions such as the Landbank, is part of the system that needs fixing.”
Landbank has said that it would cooperate with the proper authorities and investigating bodies, but added that it did not have the authority to probe these funds outside of its legal mandate.
"I guess the AMLA should mandate a rule that large cash withdrawals must be accompanied by an official explanation from the bank client and banks must remit the report to AMLA," Chikiamco said. "Perhaps, AMLA can use Artificial Intelligence to do a screening of all the reports and identify possible criminal activities."
The clamor for public pressure and institutional reform
“In this case, legislative reforms will be inadequate. What is needed is an overhaul of the institution that will reward the right conduct over corruption,” Leonardo Lanzona, who teaches economics at the Ateneo de Manila University, told Esquire Philippines in a Facebook Messenger chat. “Going after these high officials, however, will not be enough since the institution itself has been designed to allow theft.”
He added that institutions such as LANDANK are "captured by corrupt high officials" and that government needs to revisit the bank's system and to reward the right conduct over corrupt practices.
The Marcos administration waged its war against graft and corruption after a state probe on suspicious government flood-control projects revealed that only 15 contractors bagged P100 billion of these projects since 2022. The state has spent about P545 billion in taxpayer money on flood mitigation.
Mass protests in Metro Manila broke out as several groups and personalities took to the streets to show their outrage over lawmakers and public institutions being used for corruption.
Sonny Africa, the executive director of the think tank IBON Foundation, says deterring dubious transactions should be a straightforward fix: mandatory disbursement for government contracts, banning cash withdrawals from government accounts above a modest ceiling, among other pre-disbursement documentary verification steps.
“But this isn't really where the problem is,” he said in a Viber message. “Public pressure and civil society are critical though because corrupt lawmakers will resist any needed legislation, and politicized regulators may also not take steps that they can already take.”
The piping-hot issue of the flood-control corruption fiasco is seen to be one of the biggest scandals scale-wise since the pork barrel scam from a decade ago, which allowed lawmakers to fund fictitious projects in their own jurisdictions.
“There has to be sustained public clamor even after a few sacrificial lambs are given up because so many more corrupt officials have to be made accountable and so many larger institutional reforms are needed,” Arica said.
