I.

COMPANY PROFILE

The ​Rizal Commercial Banking Corporation (RCBC) ​was established in 1960 as a

development bank and is licensed by the Bangko Sentral ng Pilipinas (BSP) for both commercial
and investment banking. It is one of the largest universal banks in the Philippines with total
consolidated resources of Php554 billion for full-year 2017. As a diversified financial services
institution, RCBC serves corporate and individual banking needs through the most appropriate
vehicles to serve its chosen markets with innovative products and services. With an inclusive
financial business model in mind, in 2009 it ventured into the microfinance business to service
the smallest entrepreneurs via the Rizal Microbank.

RCBC is majority-owned by the Yuchengco Group of Companies (YGC), one of the

oldest and largest conglomerates in Southeast Asia covering over 60 businesses which include the
leading non-life insurance company, Malayan Insurance, a life insurance company joint venture
with Sun Life Financials, Philippines, Sunlife/GREPA Financials; the leading globally-oriented
construction company EEI Corp.; top educational institutions; and vehicle dealerships. Other
significant investors of the bank include the World Bank's International Finance Corporation and
Cathay Life Insurance Co., Ltd., a wholly-owned subsidiary of Cathay Financial Holding., Ltd.,
the largest publicly-listed holding company in Taiwan.

● Nature of Business:​ Banking/ Financial Services

● Form of Business:​ Corporation
● Mission:

○ We are a leading universal bank providing quality Integrated Financial Services that best
meet our clients’ needs.
○ We are committed to: Conducting our business with utmost integrity, excellence, and
commitment as responsible corporate citizens; and,
○ Providing professional growth opportunities to develop a talented base of officers and
employees, and achieving the best returns for our stockholders.

● Vision: To be the most admired and trusted profitable financial services group providing and
adapting to customers’ changing needs - for every Filipino worldwide - through innovative
products, excellent service, and a highly motivated, committed and impassioned team.
● Values:

○ Passion for Excellence​, striving to be great and not just good; improving our results
continuously.
○ Sense of Urgency​, doing things fast; taking the initiative to respond to the needs of
various stakeholders, internal and external clients.
○ Professional Discipline​, possessing strong work ethic; deserving trust and respect; using
bank funds and property (including time) prudently; acting with fairness and objectivity;
being accountable for actions.
 ○ Loyalty​, being good corporate citizens; pursuing corporate interests as one's own;
speaking well of the company & taking pride in its achievements.
○ Teamwork​, tapping areas of synergy actively; collaborating toward shared goals.

I. STATEMENT OF THE PROBLEM

Five officials of the Yuchengco-owned Rizal Commercial Banking Corporation (RCBC)
were slapped with money laundering charges by the Department of Justice (DOJ) over their
alleged involvement in the $81-million Bangladesh Bank heist in 2016. The Bangladesh Bank
filed a separate criminal case against RCBC before a court in New York over the heist. RCBC
also went on the offensive and filed a defamation case against the Bangladesh Bank. ​Other than
the money laundering controversy, RCBC is also facing a ​$140-million loan exposure with
embattled shipbuilder Hanjin. The bank has since downplayed the impact of the default.

II. CASE ANALYSIS

● Facts
○ Maia Deguito was a branch manager at RCBC Jupiter, Makati.
○ The conviction of Deguito is unrelated and does not assure the recovery of the laundered
money according to the Anti-Money Laundering Council.
○ The US dollar accounts that were opened at the RCBC Jupiter branch in May 2015 were
under the names of Michael F. Cruz, Jessie Christopher M. Lagrosas, Alfred S. Vergara
and Enrico T. Vasquez.
○ The discovery of this money laundering heist resulted in the failure of operation in many
casinos.
○ Maia Deguito was convicted and sentenced by the Makati Regional Trial Court for 4-7
years in prison for every 8 counts of money laundering on January 10, 2019.

● Time Context
○ The bank heist started during the year 2016 and was resolved last January 2019
● Core Corporate of Good Governance Violated
○ The money laundering case of RCBC violated two of the core corporate of good
governance, which is Accountability and ​Transparency​. The company violated the code
of ethics of taking responsibility and being truthful. RCBC handled the issue by saying
that they are working with a third-party investigator, and the said executive officials are
not involved with the issue. They failed to acknowledge the fact the said accusations
might be right and denied it unhesitantly. They also failed to have transparency with their
business and financial activities when the case of money laundering had surfaced. The
executives had hidden agendas that implied dishonesty, miscommunication, and
cooperation within the company.
● SWOT Analysis
○ Strengths:
■ The company has a good reputation and stature thus provides a positive image to
potential customers and investors.
■ The company maintains a positive relationship with their investors.
■ The company was able to cope up with the innovation of technology thus
meeting customers demand.
■ The company’s operation for the past few months is considered profitable.
■ The company consists of a skilled workforce thus making the operation of the
company.

○ Weaknesses:
■ One of the main factors that became the company’s weakness is that their
technology is outdated. Lack of proprietary technology and patents can harm the
company’s ability to compete against rivals. This will have a long term negative
impact thus will decrease the company’s value.

○ Opportunities:
■ Opportunities to expand their business are being offered by international markets
and collaboration with other countries.
■ Greater innovation can help the company to produce unique products and
services that meet customer needs.

○ Threats:
■ Stability of the system: Failure of some weak banks has often threatened the
stability of the system.
■ Cyber threats: There has been a lot of issues lately on information theft and
security. These cyber threats from a headache for the banks which can affect the
image of the bank if not managed well.

● Objective of the Issue

○ To generate a profit for the individual or group that carries out the act without
jeopardising their source.
○ To control the funds without attracting attention to the underlying activity or the persons
involved. Criminals do this by disguising the sources, changing the form, or moving the
funds to a place where they are less likely to attract attention.
○ To gain profit illegally without having an estimate to the exact amount laundered. Due to
the illegal nature of the transactions, precise statistics are not available and it is therefore
impossible to produce a definitive estimate of the amount of money that is globally
laundered every year.
○ To break up large amounts of cash into less conspicuous smaller sums that are then
deposited directly into a bank account, or by purchasing a series of monetary instruments
 (cheques, money orders, etc.) that are then collected and deposited into accounts at
another location.
○ To seek out countries or sectors in which there is a low risk of detection due to weak or
ineffective anti-money laundering programmes. Because the objective of money
laundering is to get the illegal funds back to the individual who generated them,
launderers usually prefer to move funds through stable financial systems.

III. RESOLUTION
● 5 Relevant Information on Company or Court Decision on the problem stated
1. The Makati Regional Trial Court Branch 149 sentenced Maia Deguito, a former branch manager
of Rizal Commercial Banking Corp (RCBC), to 4 to 7 years in prison for each of the 8 counts of
money laundering.
● The accused former branch manager of RCBC corp, Maia Santos-Deguito, declared to the
open court that she has nothing to do with the transaction which was a complete and
comprehensive lie. She was found guilty and penalized for 4 to 7 years of prison and fined for
109 million. Her lawyer said that the option for filing a motion for consideration is still
available and that no incarceration will be done until the finality of the case. At the same
time, the Bangladesh bank, finance, and law ministry officials were on the move to deciding
to sue the parties involved.

2. Aside from the prison term, Deguito was ordered to pay a fine corresponding to not more than
200 percent of the value of the laundered money, which would amount to almost $110 million.

● The presiding judge Cesar Untalan sentenced her to a maximum of 7 years in prison for
each count of money laundering in the motion for reconsideration filed by Deguito. She
insisted that the judge misunderstood the meaning of money laundering, misappreciated
the facts, and evidence, and imposed the wrong penalty on her. An AMLC secretariat
officer who invested the case, Raphael Echaluse, said that Deguito facilitated opening
several fictitious accounts where the stolen money from the bank of Bangladesh was
deposited.

3. RCBC was fined a record P1 billion by the Bangko Sentral ng Pilipinas in August 2016 for its
failure to prevent movement of the stolen money through its system.
● RCBC has been fined 1 billion pesos for their lack of Accountability and Transparency
through the said cases. They have let this issue prevail; therefore, they should also bear its
consequences as the people under their company do the crimes. They failed to report it
sooner to the authorities, thus proves there is a problem with transparency as these types
of issues prevail.

4. In a resolution made public Wednesday, the DOJ denied the bank officials’ motion for
reconsideration due to lack of merit. Assistant State Prosecutor Mary Jane Sytat recommended
the filing of an anti-money laundering charge against the following:
❖ Former RCBC Treasurer Raul Victor Tan
 ❖ National sales director for retail banking Ismael Reyes
❖ Regional sales director for retail banking Brigitte Capiña
❖ Customer service head for Jupiter business center Romualdo Agarrado
❖ Senior customer relations officer for Jupiter business center Angela Ruth Torres

● The DOJ filed cases against these people as they were instruments for the crime. They
chose to avoid their knowledge of the crime by failing to ask about the apparent
wrongdoing despite being completely aware of it. However, the legal counsel of RCBC,
Thea Daep were confident that the case of the five bank officials would be dismissed
according to the investigations conducted by third parties.

5. RCBC downplayed the case filed by Bangladesh Bank as a “political stunt.”

● RCBC said that the was filed as a political stunt as the Bangladesh Bank's suit came in 3
years late, which is an indication that they were not serious about recovering the money.
The issue was said to be rooted in Bangladesh's lapses in security protocols and errors,
thus them concealing information to admit their guilt and blame others.

● 5 Effects of the Case to the Stakeholders

1. The executives of the bank received a lot of cases against them.
The DOJ filed a money laundering case last May against former RCBC Treasurer
and Executive Vice President ​Raul Victor Tan​, National Sales Director for Retail
Banking ​Ismael Reyes​, Regional Sales Director for Retail Banking ​Brigitte Capiña​,
Customer Service Head for Jupiter Business Center ​Romualdo Agarrado​, and Senior
Customer Relations Officer for Jupiter Business Center ​Angela Ruth Torres​.

2. The value of their stocks fell

The price of RCBC shares fell to as low as 28.75 pesos after the bank was placed
under investigation. The stock fell as much as 3.8 percent to 30.70 versus a 0.6 percent
decline in the broader market. RCBC shares closed at P26.50 apiece, down by five
centavos or 0.19% in connection to the issues and lawsuits filed to the company.

3. RCBC’s good name, reputation, and the image is threatened

Money laundering offenses are huge, headlining the news in big companies.
Being in the headlines for all the wrong reasons spells reputational damage. As a result,
customers lose trust in the company. This impacts a revenue stream in a huge way and
can affect daily business activities.

4. Rivalry towards executives

Tan maintained his innocence in the $81-million money laundering heist and
accused Deguito of blaming higher officials of RCBC to protect herself. Tan said that
 Deguito is only out to malign his reputation and take the blame off her, to cover up her
fraudulent actions or gross negligence.

5. Received a huge penalty in connection to the money laundering heist

Yuchengco family-controlled Rizal Commercial Banking Corp. (RCBC) received
a P1-billion fine in the wake of the Bangladesh Bank cyber heist.

IV. CONCLUSION
Corrective
-​ ​Lawsuits for convicted money launderers will be filed immediately

Advantages
-​ ​Workplace honesty.

-​ ​The convicted has the right to defend himself.

-​ ​Fast implementation of the law

Disadvantages
-​ ​Wrong conviction may lead to defamation.

-​ ​May result in a waste of money.

-​ ​May cause emotional effects to the convicted.

-​ ​May increase collusion.

Corrective
- ​Immediate termination and increase penalty of the money launderer to the company and

to the launderer.
Advantages
-​ ​Lessen incompetent and dishonest workers

-​ ​Lessen threats and increase trust to the company

-​ ​Better reputation of the company

Disadvantages
-​ ​Termination of the competent workers

-​ ​Decrease manpower in the company

-​ ​Expense in hiring replacement

Corrective
-​ ​Conducting of seminars about Business Ethics and Corporate Laws

Advantages
-​ ​Increase awareness of employees

-​ ​Lessing of intent in money laundering

-​ ​Constant reminder to avoid unlawful acts

Disadvantages
-​ ​Waste of productive time

-​ ​Expense in conducting seminars

-​ ​Unwilling participation of employees

 Preventive
-​ ​Strengthen the punishment for Anti-Money Laundering Act.

Advantages
-​ ​Reduce the attempts of people to do the money laundering act.

-​ ​Better implementation and integrity of the law.

-​ ​Improved business ethics in businesses.

Disadvantages
-​ ​May result in inhumane punishment.

-​ ​Expensive probing procedures.

-​ ​Less freedom for the business.

Preventive
-​ ​ ​Develop devices that can track the money from accounts.
Advantages
-​ ​Increased trust of investors.

-​ ​Lessen the probability of money laundering.

-​ ​Better monitoring in the flow of money.

Disadvantages
-​ ​High cost for security expenses.

-​ ​Need for hiring people with specialties in programming and the like.

-​ ​Violation of accounts confidentiality.

Preventive
-​ ​ ​Increased consequences for employees who do not abide with corporate governance law.

Advantages
-​ ​Employees will carry the values of business ethics inside and outside of the workplace.
-​ ​Increased professionalism.

-​ ​Disciplined in the workplace.

Disadvantages
-​ ​Narrow mistakes will be a candidate for dishonest behavior.
-​ ​Increased fear in the workplace.

-​ ​The Probability of employee resignation or termination will increase.

V. REFLECTION PAPER​.
○ To lose or to win the situation required personal decision because consequences
of the effects lie to you, not the higher person who made the order if it is illegal
and beyond common sense. Perse. Money cannot buy anything, and integrity is
doing the right thing, knowing that nobody is going to know whether you did it or
not. Owners of erring banks, and not just their top executives, should be held
 liable for large-scale money laundering done with their actual or constructive
knowledge. It is time the owners are made to account for how their hirelings
operate their businesses.
○ Before resorting to any amendment of either the Bank Secrecy Law, the
government should focus its attention on this latest large-scale money laundering
controversy. Besides, amending the laws at this stage will serve no useful
purpose to the ongoing investigation because laws cannot be given any retroactive
effect, especially if they are penal in character.
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