PAARL Fact-finding Board Report

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A Fact-Finding Board was created on 14 February 2013 by the 2013 Board of Directors of the Philippine Association of Academic and Research Librarians, barely a week after its discovery of a fake Time Deposit Certificate. Specifically the fact- finding team led by past President Fe Angela M. Verzosa was mandated to investigate into the circumstances surrounding the missing time deposits in the amount of P1.25 million, and to provide evidence-based findings in order to establish a documented basis upon which recommended actions may be done. This report was presented at the special meeting of the general membership of the Association on 17 June 2013 held at the Multi-Purpose Hall of the National Historical Commission, T.M. Kalaw St., Ermita, Manila, Philippines.

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PAARL Fact-finding Board Report

  1. 1. PAARLFact-Finding Board ReportPrepared byFE ANGELA M. VERZOSA, CHAIRPhilippine Association of Academic/Research Librarians,Inc.Rm. 301, The National Library Building,T.M. Kalaw St., Ermita 1000 Manila, Philippines
  2. 2. Created to investigate the missing TD
  3. 3. Scope and Purpose investigate into the circumstances surrounding the missingtime deposits placed originally with Banco de Oro (Taft Avenuebranch) in 2005 for a 5-year placement, and subsequentlytransferred to BPI Family Savings Bank (Pedro Gil Branch) in theamount of P1.25 million in December 2010 establish a documented basis to determine liability,culpability, and/or accountability of the parties involved in theincident identify what action/s will be needed to protectthe organization assess any potential or developing problemsthat could impact on the confidence of the memberson the governance of the Association, and on the image of theassociation resulting in damage to its reputation, by disclosing theconclusions arrived at by the Fact-Finding Board to the generalmembership in a special meeting to be called for this purpose.
  4. 4. Background
  5. 5. Photocopy of the Time Deposit Certificate for Php 1,040,000 placed in 20058 Sept 2010Interest of 10% per annumOr 50% after 5 years
  6. 6. Note: By Dec 2010 the total interest income wasPhp 449,355.74 net of taxes, andthe total time deposit Php 1,489,355.74
  7. 7. On 8 September 2010 the interest earnings of the BDOAccount No. 45800-883-12 totaled to Php 425, 774.54, basedon an email dated 8 September 2010, sent by 2010 Vice-President Roderick B. Ramos to update the 2010 TreasurerAisa de la Torre- Morana on the outstanding balance on thepassbook.
  8. 8. Facts and Sequence of Events 13 Sept 2010 – Pres. Paras picks up original TD certificatefrom Treasurer Morana, and a blank withdrawal slip signed byMs. Morana 15 Sept 2010 – Board of Directors meeting minutes after MIBFForum at SMX Mall of Asia did not mention any resolutionauthorizing him to withdraw 14 Oct 2010 – Board of Directors meeting (no attendancefrom Council of Elders who were invited) to discuss the transfer ofthe TD, no Board Resolution signed for the final disposition of theTime deposits 18 Oct 2010 - Mr. Paras withdraws the amount of Php250,000 in cash from the passbook account no. 45800-883-12 withBanco de Oro, which represented the interest earnings of the timedeposit, and kept passbook and cash (no mention to the Board) 21-24 Oct 2010 – Benchmarking tour of PAARL in Singapore
  9. 9. Signature of Mrs.Aisa de la Torre-Morana attestingto the turn-overSignature of Mr.Paras acknowledgingreceipt of the TDcertificateScanned copy of theoriginal TD Certificatewhich was eventuallyturned over to BDO on18 Nov 2010FACT ONE: 13 Sept 2010 – Pres. Paras picks uporiginal TD certificate from Treasurer Morana
  10. 10. FACT TWO: A blank withdrawal slip pre-signed by Ms. Morana for Php 250,000
  11. 11. Paras signs receiptof cash withdrawnCashbreakdown:1000 x 20050 x 100This cash of Php 250,000 disappears after Paras withdrawal, since it was notdeposited to any account of PAARL with BPI Family Savings Bank since Oct 18.
  12. 12. Facts and Sequence of EventsFACT THREE: 9 Nov 20102010 Secretary Sonia Gementiza signsSecretary’s certification prepared byPres. Paras authorizing him andTreasurer Morana to open aSCHOLARSHIP FUND at BPI FamilySavings Bank, without any Boardresolution signed by directors to effectANY transfer. Document was notarized11 November.
  13. 13. Secretary’s certification authorizingParas and Morana to open a PAARLScholarship Fund with BPI Fam BankNo Board resolution attachedto open a time deposit accountThis certification was used toopen only a Maxi-Saver account(savings account only) on 8 Dec
  14. 14. Facts and Sequence of EventsFACT FOUR: 18 Nov 2010 Paras withdraws the time deposit of P1,040,000from BDO, with a blank withdrawal slip and pre-signed application for manager’s check signedby Morana; without any board resolutionauthorizing him AND Morana to withdraw Paras withdraws the amount of Php 198, 711.73in cash from the passbook account no. 45800-883-12with Banco de Oro (after obtaining passbook from VPRoderick Ramos, which represented the interestearnings of the time deposit, and kept passbook andcash (no mention to the Board)
  15. 15. blank withdrawal slipPre-signed by Morana
  16. 16. blank withdrawal slipPre-signed by Morana
  17. 17. Paras and Moranasign application formanager’s checkApplication form for Manager’s CheckPre-signed by Morana and Paras
  18. 18. Paras withdraws P 198,711.73From passbook for interest incomeOf the time deposits.
  19. 19. CashbreakdownParas signs receiptof cash withdrawntotal sum now withdrawn from this accountamounted to Php 448,711.73, whichdisappears from the books of account.
  20. 20. Facts and Sequence of EventsFACT FIVE: FROM SEPT THRU NOV 2010Although the Board of Directors met three times: 15 September 2010 after the MIBF one-day seminar atSMX Convention Center 14 October 2010 at the National Library headquarters 25 November 2010 after the NBW forum at the NationalLibraryDirectors were not informed of the: Turn-over of the original TD certificate by Aisa Morana Turn-over of the passbook by VP Roderick Ramos Heavy withdrawals of the time deposit and interests Any Board Resolution authorizing withdrawals noropening of any accounts to effect the transfer of funds
  21. 21. Facts and Sequence of EventsFACT SIX: 1 Dec 2010 – Manager’s check for Php 1,040,000was deposited at BPI Family Savings Bank-CarlosPalanca Branch and credited to the Association’s Maxi-Check Account No. 5951-0782-06 at BPI Family SavingsBank-Pedro Gil Branch 8 Dec 2010 – Paras withdraws in cash P1,040,000with a blank pay-to-cash (check no. 086073) pre-signed by Morana; without any board resolutionauthorizing him to withdraw the amount
  22. 22. check of Php 1,040,000 was deposited atBPI Family Savings Bank-Carlos Palanca BranchPay-to-cash check for Php 1,040,000 was encashedThis bank statement was printed on 3 Jan 2011 at 12:46:23
  23. 23. Facts and Sequence of EventsFACT SEVEN:8 Dec 2010 – Paras OPENS a PAARL Scholarship Fund(Maxi-Saver Acct. No. 5953-3395-97) from thecash amount of Php1,040,000 with the initial deposit ofPhp 239, 355.74 after presenting the Secretary’sCertification of Board Resolution No. 6 TAKES OUT the remaining balance in cashamounting to Php 800, 644.26 as indicated withthe word “out” written by hand at the back of thecheck no. 086073, WITH CASH BREAKDOWN.
  24. 24. encashed by Mr. Paras, signed,indicating at the back of thecheck his “PRC No. 02259 andSSS ID No. 33-2717626-1”Check no. 086073 of PAARL’s Maxi-Check with BPI Family Savings Bankthe amount of Php 239,355.74deposited to Maxi-Saver Acct.5953-3395-97CASH BREAKDOWN:The remaining balance in cashamounting to Php 800, 644.26was indicated with the word“out” , to mean withdrawn.
  25. 25. Secretary’s certification authorizingParas and Morana to open a PAARLScholarship Fund with BPI Fam BankNo Board resolution attachedto open a time deposit accountThis certification was used toopen only a Maxi-Saver account(savings account only) on 8 Dec
  26. 26. Facts and Sequence of EventsFACT EIGHT: 3 Jan 2011–Paras emails Morana to inform that he has transferred the BDO fundsto BPI Family and opened the Scholarship Fund (On the same datewhen bank statement WAS PRINTED) 13 Jan 2011 –Mr. Paras emails Mrs. Morana indicating that the total sum of Php 449,355.74was withdrawn from the interest earnings of the time deposit with BDO on 8December 2010, thereby closing the account. (This amount, when added tothe balance of the time deposit encashed by Mr. Paras of Php 800,644.26would indicate the sum of Php 1,250,000) In truth and in fact, Paras hadalready withdrawn the bulk of the interest earnings on 18 October and 18November 2010, AND THE PASSBOOK REMAINED WITH HIM. 25 Jan 2011 – Paras emails Morana attaching 2 scanned images:*Certificate of Time Deposit for Php 1.25 million* Maxi-Saver Acct. No. 5953-3395-97 for Php 239, 355.74
  27. 27. amount of Php 239,355.74indicated as NCS (Non-Book CashTransaction) deposited to Maxi-Saver Acct. 5953-3395-97amount of Php 77,750.91withdrawn from PNB savingsaccount, indicated as NCS (Non-Book Cash Transaction) on 31Jan 2011, thus closing PNB acct.
  28. 28. Facts and Sequence of Events 28 Jan 2011 – Mr. Paras presented the Treasurer’s Report before theAnnual General Assembly held at the National Library’s Epifanio de los SantosAuditorium in lieu of Mrs. Teresita Moran, who was tasked to prepare thereport on behalf of Mrs. Morana who was on maternity leave. 31 Jan 2011 – PNB savings deposit amounting to Php 77,550.91 waswithdrawn and transferred to the Scholarship Fund with BPI, without anyBoard Resolution or Secretary’s Certification authorizing him to close theaccount. May or Jun 2011 – Mr. Paras came over to Ateneo ProfessionalSchools Library to deliver an envelope containing the TD Certificate of 1.25million and the Maxi-Saver passbook for PAARL Scholarship Fund. 8 Dec 2011 – a non-book cash transaction was posted on the passbookof PAARL Scholarship Fund, Maxi-Saver passbook No. 5953-3395-97 with theamount of Php 50,000, which was mistaken as interest earnings by TreasurerSonia David, and reported as such in the 2011 Annual Treasurer’s Report. Noeffort was made by the External Auditors to verify/confirm this amount, orto examine the TD certificate.
  29. 29. amount of Php 239,355.74indicated as NCS (Non-Book CashTransaction) deposited to Maxi-Saver Acct. 5953-3395-97amount of Php 77,750.91withdrawn from PNB savingsaccount, indicated as NCS (Non-Book Cash Transaction) on 31Jan 2011, thus closing PNB acct.
  30. 30. Cash deposit of Php 50,000 reported as interest when it wasindicated here as “NCS” – non-book cash transaction
  31. 31. reported as interest earned from the timedeposit in the Treasurer’s report presented bySonia David at the 2012 General Assembly heldat De La Salle University-Dasmarinas on 27January 2012interest
  32. 32. Facts and Sequence of EventsFACT NINE: The Reports of the Independent Auditors for 2010 (submitted on17 December 2011) and for 2011 (submitted on 11 July 2012)were done by the same auditor, Mario Enrique A. de los Reyes,CPA Reg. No. 63651. In his report for both audits, he simply mentioned the timedeposit with the same statement (on page 15 and 16respectively) as “The Association has a time deposit ofP1,250,000 at the Bank of the Philippine Islands (BPI)”. Noverification or confirmation was made. According to 2012 President Gementiza, the Independent Auditorwas recommended by Mr. Paras himself. The Time Deposit certificate was kept in the vault of AteneoProfessional Schools Library under the custody of Ms. David untilan inquiry on the time deposit interest earning for 8 December2012 was raised during the General Assembly in January 2013 atTUCP-Cubao.
  33. 33. Facts and Sequence of EventsFACT TEN: On 7 February 2013 Ms. Cecillia Lobo went to BFB-Pedro Gil Branch toinquire about the interest earning of the time deposit, and presented the TimeDeposit Certificate. The bank manager then told her that the certificatebearing Account No. 5952-2816-76 was fake for the following reasons:-The texture of the paper is different from the original, being only a scanned copy-The certificate should bear two signatures of bank officers-There is no annual interest payment schedule; it is either monthly or upon maturity In a formal reply dated 27 February 2013, BPI-Family Savings Bank declaredthat the Time Deposit Certificate presented to the bank was not authentic.-The document was not issued by the branch.-There is no TD placement with this particular number.-The other details on the face of the document were also manufactured orfaked.-The signatures appearing on the authorized signature portion are not thesignatures of branch officers of the bank-The paper used was ordinary paper, a scanned copy to make it lookoriginal.-The checkwrite portion is just a copy and not from the official checkwriterof the bank.
  34. 34. Evaluation of findings 2010 President “misappropriated the amount ofPhp 1.25 million”, and “worse, hemisrepresented and pretended to have dulyinvested the money by presenting to thePAARL a copy of a falsified and spurious PesoTime Deposit Certificate containing the saidamount. 2010 Treasurer, for her gross incompetence,neglect of duty, and reckless mishandling ofthe Association’s funds at its most crucialmoments, “aided/abetted” wittingly orunwittingly the misappropriation committed bythe President
  35. 35.  Strategic Lapses-A Conspiracy of Silence-Failure to secure bank reconciliations/certifications-Absence of Board resolutions to record major decisions-Rampant issuance of pay-to-cash checks/blank withdrawal slips-Failure in proper turn-over and inventory of records Breach of Fiduciary Duties(1) duty of care – to act with diligence and with the care an ordinarilyprudent person in a like position would exercise;(2) duty of informed judgment – the process of gaining sufficientfamiliarity with the background facts and circumstances to make aninformed judgment before acting;(3) duty of disclosure – to disclose material / important information toshareholders / members, including conflicts of interest;(4) duty of loyalty – to act in the best interests of the corporation.Evaluation of findings
  36. 36.  Imposition of sanctions/disciplinary action on:President – expulsion, criminal action, administrative complaintTreasurer – expulsion, criminal action, administrative complaintVice-President – disqualification from appointive/elective positionSecretary – disqualification from elective positionAuditor – disqualification from appointive/elective position Strict implementation of By-Laws, Manual, guidelines,other rules, and Best practices Review of the Manual-to include provisions to tighten internal controls over the management ofthe association’s funds and assets; strict observance of proper turn-overs-to formulate standard accounting/auditing guidelines-to formulate election rules to guide all future elections Rectification of mistakes madeRecommendations

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