The fall of Orient Bank

MANILA, Philippines – It was in February 1996 when Jose Go converted his thrift bank, Bangko Silangan Development Bank, into a commercial bank. By late 1997, Orient Bank had 52 branches and total assets of P7.8 billion, according to a study by Erlinda Echanis, professor at the University of the Philippines College of Business Administration.

However, rumblings started to shake the bank during the last quarter of 1997, BSP documents show. It suffered huge losses and ran to the BSP for emergency advances that reached P3.3 billion in early January 1998.

What happened was: Jose Go treated the bank funds as if they were his own. He siphoned off billions of pesos into his personal accounts, through fictitious loans.

Echanis said the BSP discovered some P5.5 billion of the bank’s total loan portfolio of P6.1 billion in loans to the bank’s directors, shareholders and other related interests or DOSRI. These violated the rule restricting bank exposure to DOSRI.

BSP reports made available to Rappler detailed how Go did it:

“The evidence strongly indicates that Go converted Orient Bank funds to his own personal use and benefit…,” the Supreme Court said in a decision in August 2014.

“Go is presumed author of the falsification of commercial and public documents…Orient Bank funds ended up in the personal bank accounts of Go and were used to fund his personal checks.” – Marites Dañguilan Vitug/Rappler.com