More Flaws in P5-Billion Loan to Quedancor Bared
By YVONNE T. CHUA and LUZ RIMBAN | VERA FILES
(Conclusion)
TWO months before the May 2004 elections, the Quedan and Rural Credit Guarantee Corp. (Quedancor) obtained a P5-billion syndicated loan from Equitable PCIBank and Land Bank of the Philippines but only needed at most a fifth of the money it borrowed.
It also presented “bloated figures” of its operations, including an “unachievable” repayment fee, in order to get the loan. And it had been offered better terms by the two banks but ignored or changed these. The terms were so disadvantageous that Quedancor got less than half of P5 billion.
The loan is one of the main reasons Quedancor, the credit guarantee arm of the Department of Agriculture, is now in financial distress.
An internal audit on the beleaguered state firm, interviews with its officials and employees, and documents obtained by VERA Files show that when Quedancor negotiated with the banks, it was already in the red because of its various failed lending programs.
It had also suddenly expanded operations under the Arroyo administration, creating regional, district and extension offices. Mass hiring caused the Quedancor bureaucracy to balloon from 520 in 2001 to 1,721 in 2004.
The firm was scouring for money to finance pending loan applications of up to P759 million, but there was no firm assurance of fresh funds coming from the national government, its traditional source of money.
It was at this point that the 11-member Quedancor board, chaired by then Agriculture Secretary Luis Lorenzo, approved a proposal to tap the capital market, where long-term funds such as bonds and stocks are traded.
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