By Fel V. Maragay

THE head of the Legacy Group accused of swindling investors out of billions of pesos yesterday defended his ?double-your-money? schemes and blamed the central bank, the media and the financial crisis for the collapse of his business empire.

Celso de los Angeles surfaced yesterday at a Senate hearing on the troubled pre-need industry after snubbing a similar inquiry at the House of Representatives.

?We have been subjected to harassment and prosecution and adverse and irresponsible media reporting,? De los Angeles said.

?There were extortion groups that tried to get money from us. We were also caught by the economic situation.?

De los Angeles said that investment plans promising to double or triple an investor?s money over a short period were a good way of raising capital.

He said his group, established in 1998, was able to lure about 50,000 plan holders and to collect more than P1 billion in premium contributions.

But things went sour for the Legacy Group after it went to the Securities and Exchange Commission in December to ask for the dissolution of its pre-need business due to insolvency, he said.

Then a few weeks ago the Bangko Sentral ordered nine of the group?s rural banks closed for alleged malpractices, including the illegal investment of bank deposits.

De Los Angeles said his group?s pre-need business, which offered pension, educational and health plans, was forced to close because it was hurt by the unfavorable reports on the Legacy network of banks.

Also at yesterday?s hearing, Philip Piccio, president of the Parents Enabling Parents Coalition, testified that as early as 2006, plan holders had started complaining about problems with their Legacy pre-need plans. He said they promptly brought these complaints to the Securities and Exchange Commission but its officials did nothing.

?I suspect they [SEC officials] are in cahoots with the Legacy Group,? Piccio said.

Senate President Juan Ponce Enrile and Senators Mar Roxas (chairman of the trade and commerce committee) and Francis Escudero (chairman of the banks committee) took turns castigating SEC officials?especially Director Jose Aquino of the non-traditional securities and instruments department?for sleeping on the job.

They also questioned Aquino?s fitness for the job after he admitted that he was a literature instructor in college who later took up business courses.

De los Angeles said that his group had P1.1 billion in total obligations to its plan holders with maturities up to 2020. He said these plans were supported by P330 million in a trust fund deposited in banks and assets worth P770 million.

He also said that out its P2.5-billion obligation to investors under the group?s high-interest yielding scheme, Legacy still owed P1 billion.

De los Angeles slammed the Bangko Sentral for rejecting the Legacy Group?s application for the merger of the rural banks under its wing, which was intended to comply with the central bank guidelines to strengthen the banking system.

He also accused Efren Reyes, the brother of a former Bangko Sentral deputy governor, of extorting money from him in exchange for facilitating the approval of the merger, which never materialized.

De Los Angeles said Reyes volunteered to be his consultant but took advantage of this by securing bank loans from the Legacy Group amounting to P3.3 million. The loans aside, he said, he also paid an acceptance fee of P500,000 and a separate fee of P750,000 to Reyes.

But he said every time he asked Reyes to settle his loans, the Bangko Sentral would subject the Legacy Group?s banks to a special audit.

Asked why he allowed his banks to provide new loans to Reyes despite his inability to pay for his previous loans, De los Angeles said he had assumed that it would take time for the merger application to be approved.

Enrile expressed shock over De Los Angeles? allegations of corruption in the central bank.

De los Angeles said Reyes? successor as central bank deputy governor, Nestor Espenilla, also turned down his group?s application for the merger of the banks under his group and became instrumental in ordering their closure.

?Even our request for a change of the name of our banks and increase in capitalization was not approved by the Bangko Sentral,? he said.

De los Angeles also pointed to the impropriety of Espenilla owning a rural bank in San Jacinto, Mabate, with his sister as bank president.

De los Angeles, now mayor of Sto. Domingo, Albay, is the president of the municipal mayors? league in the province. He was a former president of the National Home Mortgage Finance Corp. and was responsible for disposing of the agency?s non-performing portfolio, including foreclosed housing units with delinquent loans.

In reply to questions by Escudero, De los Angeles said it was Vice President Noli de Castro who endorsed his appointment as president of the home mortgage agency.

He also said he belonged to the Liberal Party, an admission that apparently embarrassed Roxas, its national president.

De los Angeles confirmed that Speaker Prospero Nograles was an investor in the Legacy Group. He said Nograles invested up to P20 million in family funds in the group, but was not a business partner.

De Los Angeles said his group had already returned half of the amount it owed to the House speaker.

Roxas chastised SEC officials for their ?willful negligence? and incompetence in protecting pre-need plan holders and investors.

?The weakest charge against the SEC is that it has been negligent. That?s the kindest assessment. They have been negligent, lazy and passive,? he said.

Enrile, Roxas and Escudero rebuked SEC chairman Fe Barin and other officials for allowing Legacy to resume operations even afrer it reported its financial woes as early as three years ago.

The senators dismissed Aquino?s explanation that Legacy?s trust fund was enough to cover its obligations.

Barin said that while they made sure the interests of plan holders were protected, they also tried to balance the concerns of pre-need companies.

Responding to a motion by Escudero, the two probe panels decided to invite Deputy Governor Espenilla and former Deputy Governor Reyes to the next hearing.

Amid mounting criticism of the SEC, Socio-Economic Planning Secretary Ralph Recto yesterday said its regulatory functions over the pre-need industry should be transferred to the Insurance Commission, which he said was better equipped to oversee the business.

?The SEC does not even have an actuarial person while the Insurance Commission does,? Recto said in an interview at the Palace. With Joyce Pangco Pa?ares