MANILA, Philippines – Does the Ombudsman’s power to investigate public officials override the procedures stated in the Anti-Money Laundering Act (AMLA)?
Sen Miriam Defensor Santiago raised this question to Ombudsman Conchita Carpio-Morales as concerns on the scope of her power – and its possible abuse – were raised at the impeachment trial against Chief Justice Renato Corona on Tuesday, May 15.
Morales testified on Monday, May 14 that based on a report from the Anti-Money Laundering Council (AMLC), Corona has at least $10 million in “transactional balances” and $12 million in fresh deposits.
But Santiago said that under AMLA, a bank inquiry can only be conducted after the following process: the AMLC first finds probable cause against a public official afterwhich it would file a complaint with the Department of Justice or the Office of the Ombudsman. The government agency concerned will then conduct a preliminary investigation on the official and have his or her bank accounts examined.
In Corona’s case, however, the Ombudsman went to the AMLC first.
Santiago asked Morales if this meant that the powers of her office supercede the process stipulated in the AMLA.
Morales explained that she went to AMLC because it is part of her mandate and that she was abiding by the Ombudsman law, or Republic Act 6770. The law authorizes the Ombudsman to “request any government agency for assistance and information necessary in the discharge of its responsibilities, and to examine, if necessary, pertinent records and document.”
The power of the Ombudsman and the AMLA are based on two different laws that are equal in status, according to Dean Antonio La Viña of the Ateneo School of Government.
“Unless the AMLA says the Ombudsman cannot do it, then she can exercise all powers under the Ombudsman law. Plus there’s the SALN (Statement of Assets, Liabilities, and Net Worth) waiver,” he explained. La Viña expounds on this in his Thought Leaders piece.
Roberto Cadiz, executive director of the lawyer’s group Libertas, holds the same view. “They [Ombudsman Act and AMLA] can precede each other. In the Corona impeachment case, however, what happened was that it was the Ombudsman who initiated the fact-finding investigation thus preceding the AMLC,” he said.
Lawyer Pablito Sanidad – one of the private prosecutors in the impeachment trial of ousted President Joseph Estrada – said that the authority given to the Ombudsman precedes AMLA because it’s stipulated in the 1987 Constitution. “Constitutional provisions always prevail over any other law,” he said.
Morales herself gave assurances that she won’t use her office to be a political tool of the present administration.
What’s the protocol?
There’s no question that the Ombudsman has the authority to seek the assistance of AMLC in probing bank transactions and bank accounts of people alleged to have engaged in unlawful activities.
But Sen Alan Peter Cayetano asked Morales to clarify the protocol in getting information from the AMLC.
Cayetano said that during his term as Senate Blue Ribbon committee chair, he tried to get financial information from the AMLC on officials involved in corruption cases such as the botched $329-million NBN-ZTE deal and the cash gift-giving in Malacañang under the time of President Gloria Macapagal Arroyo. But the council had told him it could not do so without a court order, he said.
Lead defense counsel Serafin Cuevas also harped on this point on May 14. He raised doubts if the process in AMLC’s inquiry on Corona’s dollar accounts was observed properly.
The defense also asked if the Ombudsman secured a court order first before it tasked the AMLC to look into Corona’s accounts.
Sec 11 of Republic Act 9160 or the Anti-Money Laundering Act (AMLA) specifies that the AMLC may inquire into deposits or investments with banks “upon order of any competent court.”
The only exception to this is when there is probable cause that the deposits or investments are related to kidnapping for ransom,hijacking, arson, murder and drug trafficking.
The AMLC can examine bank deposits though even if no criminal case arising from the violation of the AMLA has been filed against the depositor.
However, the AMLA said the council still needs to get a court order, and it cannot get one based only on the allegation that the depositor has ill-gotten wealth. The violation committed should be related to corruption, such as plunder and bribery, according to the law.
But, crucial to any investigation, the AMLC has access to financial transactions even in the absence of a court order, since the law requires banks to report suspicious and “covered transactions.”
Covered transactions refer to cash transactions beyond P500,000 made in one day. Suspicious transactions, on the other hand, are bank or financial transactions regardless of amount where:
- there is no underlying legal or trade obligation, purpose or economic justification
- the client is not properly identified
- the amount involved is not commensurate with the business or financial capacity of the client
- taking into account all known circumstances, it may be perceived that the client’s transaction is structured in order to avoid being the subject of reporting requirements under the AMLA;
- any circumstances relating to the transaction which is observed to deviate from the profile of the client and/or the client’s past transactions with the covered institution;
- the transactions is in a way related to an unlawful activity or offense under the AMLA that is about to be, is being or has been committed and similar transactions.
Cayetano noted though that the AMLC is careful in taking advantage of this power and does not easily release data concerning officials. “When it’s a covered transaction, they cannot look into it yet unless there is a predicate kind, until there is probable cause, until the AMLC is unanimous in investigating,” he said.
Cayetano added that in Corona’s case, the Ombudsman said the waiver in the statement of assets, liabilities and networth already gave her the go-signal to ask AMLC for Corona’s financial transactions.
Once the public official signed the SALN, he gives the Ombudsman the authority to “obtain and secure from all appropriate government agencies documents that may show his assets, liabilities, net worth, business interests and financial connections.”
While Cayetano supported Morales’s move, he said there should be safeguards.
“I signed a waiver in my SALN, but of course I still have my constitutional rights,” he said. He likened it to a warrantless search. Can the police search his house just because he signed a waiver, even if there was no probable cause against him?
Senate President Juan Ponce Enrile cut him short, however, saying his concerns should be threshed out in an inquiry in aid of legislation, not in an impeachment trial. Cayetano insisted his point is valid though because if the information on the dollar accounts was illegally sourced, then it is inadmissible in court.
Enrile explained that under the rules of evidence, evidence already presented in court, even if illegally acquired, may be accepted.
Morales knows that getting information from the AMLC requires not only a court order. The owner of the bank accounts should also be informed of the said examination of accounts.
As a Supreme Court justice then in 2008, Morales concurred in a High Court ruling barring the AMLC from conducting an ex-parte bank inquiry.
Morales voted along with the 4 other members of the Supreme Court’s second division in February 2008 which ruled that Republic Act 9160, or the Anti-Money Laundering Act, does not authorize the AMLC “ex parte (one-party) proceedings.”
In the said case, the SC second division granted the motion of Pantaleon Alvarez – who was then being investigated by the Ombudsman for his role in the reportedly anomalous Ninoy Aquino International Airport terminal 3 project – to stop the AMLC from looking into his bank accounts.
The Ombudsman and the solicitor general asked the AMLC to conduct a bank inquiry into the accounts of Alvarez, who was the Transportation and Communication Secretary when the NAIA 3 project was awarded to the Philippine International Air Terminals Company, Inc (Piatco) consortium under questionable circumstances. (The consortium – which was made up of People’s Air Cargo & Warehousing Co., Inc. (Paircargo), the Philippine Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. – reportedly had no financial capacity to operate the project).
AMLC then secured a court order from the Manila and Makati regional trial courts to proceed with the bank inquiry into the accounts owned by Alvarez, Piatco president Wilfredo Trinidad, Piatco consultant Alfredo Liongson, and Piatco investor Cheng Yong.
Alvarez then tried to stop AMLC by challenging the court order before a Manila regional trial court. He said the issuance of the ex-parte order was a violation of his right to “financial privacy.” The Manila RTC granted Alvarez’s motion. Cheng Yong’s wife, Lillia Cheng, also got a temporary restraining order from the Court of Appeals.
AMLC elevated the case to the SC. The High Court ruled in favor of Alvarez.
“There would be significant implications on the right to privacy should a bank account be allowed to be inspected by the government following an ex parte proceeding which the depositor would know nothing about. The notion that the government could be so empowered is cause for concern of any individual who values the right to privacy, which, after all, embodies even the right to be ‘let alone,’ the most comprehensive of rights and the right most valued by civilized people,” according to the verdict penned by then Associate Justice Dante Tinga.
The SC second division added that the Anti-Money Laundering Act specified in Sec 10 that ex-parte applications could only be granted when the order involved the freezing of bank accounts.- Rappler.com