It’s been a bumpy few weeks for Rafael Buenaventura, governor of Bangko Sentral ng Pilipinas, the central bank of the Philippines.
By Kevin Hamlin
March 2001
Institutional Investor Magazine
Opponents are clamoring for his resignation, accusing him of aiding disgraced ex-president Joseph Estrada, who in January was forced from office in a popular, military-backed uprising. Buenaventura, critics say, did nothing to prevent Estrada from allegedly stashing millions of dollars in numbered or alias bank accounts. They also charge that Buenaventura tipped off both the former president and the BSP Provident Fund, the central bank’s employee pension plan, about the closure of Urban Bank in April of last year. Estrada allegedly withdrew 143 million pesos ($2.97 million) from a numbered account at the bank shortly before it shut down, and the BSP Provident Fund withdrew a P15 million deposit one day before Urban closed.
A longtime Citibank executive who was appointed by Estrada in mid-1999, Buenaventura refuses to resign or admit wrongdoing. “My actions in the last few months, when he [Estrada] was very much clinging to power, speak for themselves,” says the governor, who served as Citi’s CEO in the Philippines from 1982 to 1985. “I did not do anything to jeopardize the economic fundamentals to prop him up. The peso gyrated from 44 to 55, but I did not raise interest rates, and I did not go after banks that were anti-Erap [Estrada’s popular nickname]. The International Monetary Fund has praised our actions on monetary policy.”
The Bankers Association of the Philippines and the influential Makati Business Club have rallied behind the 62-year-old Buenaventura, warning that the central bank would be undermined if the governor was hounded from office. “The independence of central banks is what is being questioned all over the region,” says Buenaventura. “Are they independent, or are they subject to harassment when governments change?”
New president Gloria Macapagal-Arroyo,s administration has given the central bank governor, a high school classmate of Estrada,s, a less than ringing endorsement. It will respect his six-year term of office, which expires in 2005. But earlier a presidential spokesman questioned the legality of Buenaventura’s appointment , erroneously , and then suggested that those who had a complaint against the governor should sue. Macapagal-Arroyo recently told local newspapers, “The law makes the Bangko Sentral ng Pilipinas independent, so the central bank governor will have to answer the issue of integrity himself.”
Buenaventura responds that the country,s now-reformed banking laws once provided “absolute secrecy” to depositors in the Philippines, banks, so that no one at BSP could have known about Estrada,s alleged alias accounts. Though Buenaventura says he worked to strengthen BSP’s investigative powers, he notes that a branch of the Organisation for Economic Co-Operation and Development this year named the Philippines one of 15 so-called “noncooperative jurisdictions” for preventing money laundering.
Buenaventura denies alerting Estrada or the BSP Provident Fund to the imminent closure of Urban Bank. He considers himself the victim of a smear campaign waged by Estrada foes who want to undermine his credibility. The BSP Provident Fund acknowledges that it withdrew funds before Urban Bank’s closure but says it did so because of widespread rumors that the bank was in trouble. Buenaventura has no control over the fund.
Still, critics continue to question the BSP governor. Congressman Joker Arroyo says it,s unacceptable for Buenaventura to “adopt an ostrichlike attitude.” For his part, the embattled central banker is not taking anything for granted. Does he think the bank’s independence can be maintained? “That remains to be seen.”
