PSE Circular for Brokers No. 1430-98

June 24, 1998 PSE CIRCULAR FOR BROKERS NO. 1430-98 Philippine Stock Exchange, Inc. PSE Center, Exchange Road Ortigas Center, Pasig City This is in compliance with your urgent fax message dated June 23, 1998 requesting for a written explanation as to the article which appeared in the June 20, 1998 issue of the Philippine Journal wherein our bank was issued ultimatum by the Ombudsman relating to the Amari transaction. Please be advised that Union Bank of the Philippines is not involved whatsoever in the Amari scandal in light of the implications in said article Our bank thru our Julia Vargas Branch has received on April 19, 1998 an Order from the Office of Ombudsman Aniano Desierto to allow "in camera" inspection of certain accounts allegedly maintained in said branch upon whom certain checks issued by Traders Royal Bank sometime in May 1995 were deposited. These checks were among the various checks involved in the Amari deal. As the order of the Ombudsman had no attachment of the particular checks allegedly deposited with our bank, we had to request for their production considering the strict requirements of the Bank Secrecy Law, RA 1405 in that the accounts of bank depositors cannot be arbitrarily inquired upon or disclosed to unauthorized persons without the consent of the depositors or approval of the court and other authorized agencies of the government. But in the latter cases, there must be compliance with certain procedural requirements before the depositary banks can allow the disclosure of such information. It was only during the first week of June 1998 that certified photo-copies of the subject Traders Royal Bank (TRB) checks were presented to us bearing the Union Bank Julia Vargas stamp of deposit on May 3, 1995. But because these TRB checks were issued in the name of Cash or Bearer without any designation of a particular payee thereon, our branch could not readily identify the particular account names. The only available means was to locate the account numbers stated at the back of the checks which unfortunately could not be immediately located as these account numbers pertain to International Corporate Bank (Interbank) assigned account numbers. We explained that Union Bank and Interbank had just merged and the interbank computer system was collapsed in 1996. In other words, we have to exert efforts to locate subject accounts among the thousands of accounts we have under the present Union Bank computer system. Furthermore if these accounts were closed or dormant prior to 1996 conversion of the branch to the new computer system, it would be difficult to readily identify same in a short period of time given as these accounts may have not been migrated to the new system. cdpr We have written the Ombudsman on June 4, 1998 about the above circumstances and despite said explanation, the Ombudsman as of June 19, 1998 still insists in further compelling our branch to produce said records. To date, we are still locating from the archived files of Interbank and from all the bodegas to comply with the order of the Ombudsman which has imposed sanctions of contempt or obstruction if we will not provide the required information. Considering however the deadline given us of only two (2) working days to locate said files, we have requested for an additional period of three (3) working days to comply Please refer to our correspondence to the Ombudsman on the matter in support of the foregoing clarification. We hope we have sufficiently complied with your 24-hour deadline. Very truly yours, (SGD.) FE B. MACALINO Corporate Secretary OMB-0-97-0411 Violation of RA 3019 FACT FINDING AND INTELLIGENCE BUREAU as represented by DIRECTOR AGAPITO B. ROSALES, complainant vs. AMADO LAGDAMEO, JR. ET AL. URGENT FIRST MOTION TO EXTEND PERIOD TO COMPLY The Branch Manager, Lourdes T. Marquez of Union Bank of the Philippines Julia Vargas Branch, Pasig City, thru the undersigned counsels and before this Honorable Office, most respectfully moves: 1. That in the afternoon of June 19, 1998, she was served with the Order of this Honorable Office directing her to produce the requested bank records and documents for "in camera" inspection by the duly authorized representatives of the Office to occur within period of 5 days or on June 24, 1998; 2. That said Order likewise states that for her failure to comply within the aforesaid order, she should show cause to the Honorable Office for a period of 5 days why she should not be subject of contempt and why she should not be charged for obstruction; 3. That said Order for her to comply within the 5-day period is short because the 5-day period included Saturday and Sunday, hence, she had only two (2) working days within which to comply; 4. That the 2-day working period of time allocated for her to comply renders it physically impossible for her to comply with accuracy and dispatch considering the circumstance that the account is an Interbank account and not originally a Union Bank account for which bank records have to be located and which Your Honorable Office has been previously been aware of, 5. That one of the accounts mentioned in your Order, Account No. 011-37270-5 upon which TRB MC No. 34001 was not an account of the branch and hence has to be located if indeed said check was deposited in any particular Union Bank account. 6. That in view of the severe sanction imposable upon her by your office for her failure to comply as directed, it is respectfully requested that she be granted up to July 01, 1998 within which to comply with the said Order. 7. That this Motion being her first Motion to Extend period to comply, is not intended to delay the disposition of the above entitled case and solely made for the purposes above mentioned. PRAYER WHEREFORE, considering the foregoing and for reason of justice, equity and fairness, movant Branch Manager respectfully prays for the approval of said Compliance Period be extended from June 24, 1998 to July 01, 1998 , since June 27, 28 and 30 are non-working days. FURTHER, other reliefs deemed just and equitable under the premises are prayed for. Makati for the City of Manila, June 23, 1998. MACALINO AND ASSOCIATES Counsel SSS (Makati) Building, Ayala Ave. Makati City By: ATTY. FE B. MACALINO PTR No. 1274804/1-27-98/Makati IBP No. 455043/2-10-98/Laguna NOTIFICATION THE RECORDING CLERK OFFICE OF THE OMBUDSMAN Manila GREETINGS: Immediately upon receipt hereof, kindly submit the foregoing request to the Honorable Office for its resolution and approval. Makati for the City of Manila, June 23, 1998. FE B. MACALINO