Kampac Oil Middle East confirms MOA with Amanah Islamic Bank

Kampac Oil Middle East confirms 

MOA with Amanah Islamic Bank

By Abdel Azish Dimapunung

(Abdel Aziz Dimapunong)

Chairman and founder, Amanah Islamic Bank

The Amanah Islamic Investment Bank of the Philippines concluded its 16^th General Stockholders Meeting last Sunday, June 3, 2007 at the Islamic Bank Alkhairi Mosque in Manila. Among other things, the meeting confirmed, approved and ratified the Memorandum of Agreement between Kampac Oil Middle East and the Amanah Islamic Bank.

Kampac Oil signed the Agreement last May 15, 2007 after some due diligence work. The due diligence covers legal and political background check on the Amanah Islamic Bank. I have discussed part of this in my previous blog in this website entitled “Learning from Halliburton”

http://dimapunong.sulekha.com/blog/post/2007/05/learning-from-halliburton.htm

The Board of Directors of the Bank immediately approved the Kampac Oil – Islamic Bank Agreement on the day it was signed. Thereafter, it was submitted for confirmation and ratification by more than two thirds of all common voting stocks of the Islamic Bank. In accordance with the special charter of the Islamic Bank and its By Laws, this requirement has been accomplished during the bank’s 16th general shareholders meeting last June 3, 2007. The Kampac Oil-Islamic Bank agreement calls for a majority ownership of the bank by Kampac Oil M.E.

The Amanah Islamic Bank was founded by yours truly in 1992. Over the years it has grown into more than a billion dollar bank. The Islamic Bank is a proponent of renewable energy, principally biodiesel and bio-ethanol. http://dimapunong.sulekha.com/blog/post/2007/02/amanah-islamic-bank-pushes-for-renewable-energy.htm Both of these products require the basic fossil fuel.

The Kampac Group

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Kampac Oil (KOIL) http://www.kampacgroup.com is an oil company based in the city of Dubai in the United Arab Emirates. Its founder, Mr. Charles Ampofo, now the chairman of the Kampac Group, established the Kampac Group in 1988. According to him, from its modest beginning, the group has seen a steady growth over the last decade. Kampac now has 15 offices in 13 countries around the globe. These offices are located in the Ivory Coast, Nigeria, Jordan, Greece, the United Kingdom, Las Palmas, New York, New Orleans, Syria, and Canada. Kampac has now an office in the Philippines. Over the years Kampac has diversified into different categories of its business activities.

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Charles Ampofo

Chairman, Kampac Group

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Charles was here in the Philippines in the middle of May to see Her Excellency President Gloria Macapagal Arroyo. A top-level cabinet member in the Arroyo Administration arranged the meeting. Charles is particularly proud of having a strong government and business relationships worldwide. “It is our strength”, he said. “Strong government relationships gives us the edge over our peers in the industry”, he added.

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Her Excellency, President Gloria Macapagal Arroyo

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Ampofo’s delegation to the Philippines includes Syed Hafizullah, the young and energetic Managing Director of Simex International FZ LLC, and a member of the Kampac group. It is engaged in metal, minerals and Trans Industrials.

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Charles is coming back to the Philippines soon. According to him, he would probably be in the company of the minister of finance of Dubai and the chairman of the Islamic Bank of Dubai, the pioneering Islamic bank of the world. They would be coming not merely as tourists but as investors. That would be another boost to our currently booming stock market and the flourishing economy of the Philippines under the able leadership of President Gloria Macapagal Arroyo. The confidence of international business for President Arroyo is the topic of my previous blog http://dimapunong.sulekha.com/blog/post/2007/05/votes-of-confidence-for-president-arroyo-and-the-philippines.htm

 

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The international presence of the Kampac group is shown by the fact that it employs over 800 personnel from 25 different countries with various ethnic backgrounds. It has also a team of 50 professionals consisting of high level administrators, bankers, geologists, geo-physicists, petroleum engineers and chemical engineers.

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Investing in the oil industry
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Kampac has recently acquired oil blocks in West and Central Africa. It has also Logistics in South America and Africa. It has committed to invest $115 million to exploration on the Louga and St. Louis blocks for the next 7 years. Kampac has also allocated $120 million for its downstream activities. Downstream operations consist of primarily trading, oil services and retailing. Currently Kampac has interest in more than six oil blocks in Africa. Although Africa is regarded as less endowed with resources, Charles says “we judge right and get it right”. This is what Kampac branded as ‘new frontier investment approach’, the lure of new frontier in oil exploration.

Kampac’s investments in storage facilities in South America and Africa peaked at $129 million. The investments consist of 600,000 metric cube lands and 300,000 metric cube of Floating Storage Units (FSU). Kampac is now investing in the Philippine oil industry as well as in the Amanah Islamic Bank.

The Philippines needs a company like Kampac for its oil requirements. Recently, the country eyes Venezuela and Kuwait for oil imports. According to Energy Secretary Raphael Lotilla, the government is eyeing to get part of its oil requirements from other sources to help ensure a stable supply. The country wants to diversify sources of crude supply but it has to do this in cooperation with the refiners in the country. Government is not into refining so that imports of crude oil have to be in tandem with the schedule of refiners. The country has two refineries: one is being run by Petron Corp. in Bataan with a capacity of 180,000 barrels per day and the other one is in Batangas which is run by Pilipinas Shell Petroleum Corp. with a capacity of 110,000 bpd. This is an area where the assistance of Kampac may serve. Kampac’s investments in storage facilities in South America and Africa peaked at $129 million. The investments consist of 600,000 metric cube lands and 300,000 metric cube of Floating Storage Units (FSU). Kampac is now investing in the Philippine oil industry as well as in the Amanah Islamic Bank.

Lotilla also said that the government would continue to pursue the idea of stockpiling oil, an issue that was taken up in the East Asia Summit. There is a plan to pursue the development of a 30 million barrel strategic stockpile program. Possible stockpiling sites include the Coastal Subic Bay Oil Terminal with about 500,000 to 600,000 barrels of idle storage capacity, which can be converted as oil stockpile. The other site is the Nonoc Terminal in Surigao. Undoubtedly the Philippines needs storage facilities for its oil and Kampac Oil is the right company for the job. As most of the investments required through Kampac would be coming from Islamic funds in the Middle East, the Amanah Islamic Bank becomes a vital link.

Kampac’s corporate mission is stated simply but in global terms. Thus, Kampac aims to build a global company that cuts across all boundaries. Kampac’ vision is likewise simple: To discover, manage and sustain profitability through exceptional customer satisfaction and progress to the very best in the industries the group represents.

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The shadow of the Philippine Amanah Bank

The shadow of

Philippine Amanah Bank

By Abdel Aziz Dimapunong (Abdel Azish Dimapunung)

Founding Chairman, Amanah Islamic Bank

This article and its sequel are written in response to comments on my previous articles and new inquiries about the relationship of the Philippine Amanah Bank and the Amanah Islamic Bank, more particularly on their respective shares of stocks.

It is totally wrong to say that the Amanah Islamic Bank is the former Philippine Amanah Bank. It is wrong to write Amanah Islamic Bank (formerly Philippine Amanah Bank)

This article in two series will attempt to explain that the Amanah Islamic Bank is not the former Philippine Amanah Bank. I will support the explanation with legal provisions of law, legal jurisprudence, accounting and auditing data.

The shadow of the abolished Philippine Amanah Bank still lingers because there is still the confusion and wrong presumption that the Amanah Islamic Bank is the former Philippine Amanah Bank. This error is perpetuated by new government officers of the so-called Privatization and Management Office, successor of the Asset Privatization Trust, who are still trying to sell the dead shares of the Philippine Amanah Bank in the name of the new Amanah Islamic Bank. For this reason, there is a need to get back to the charter of the old Philippine Amanah Bank.

It was during the oil phenomenon in 1973 that the Martial Law government of Ferdinand Marcos established by decree the Philippine Amanah Bank with all its pretension as a Muslim bank if not strictly an Islamic bank. However, this was only for a show to the Muslim world. The truth was this bank was never a truly Islamic bank.

On the background of the establishment of the Philippine Amanah Bank, I have previously written and posted on this site: Tamano and Islamic Banking. Please visit my blog on this title.

http://dimapunong.sulekha.com/blog/post/2007/03/senator-tamano-and-islamic-banking.htm

In August of 1974, Marcos amended PD 264 by issuing PD 542.

To the Muslims in the Philippines, it was very pleasing to read the following preamble to the amendment, thus

“WHEREAS, in order to render more effective the foregoing intentions and objectives of this Decree, it is necessary that the religious beliefs and practices of the Muslim citizens of the Philippines, be followed and respected, unless otherwise it is contrary to law, good morals and public policy.

Section 1 of the amendment was also very pleasing to read, thus:

The Philippine Amanah Bank shall be based on the Islamic Concept of Banking, following the no-interest and partnership principles.”

Despite of the amendment, however, from day one of its operation in 1973 until it was abolished in February 1990; it was paying and charging interest in violation of Islamic banking principle. It was also never owned by Muslims except for nominal few private stockholders.

Capitalized at a meager amount of only P50 million (about USD 1.3 million) in 1973, the PAB was finally insolvent at end of year 1993.

There is not a sensible and meaningful financial analysis about the performance of the abolished Philippine Amanah Bank. There was also nothing in it that the Muslims of the Philippines can be proud of. It was a total failure. It was a total disappointment.

To some Muslim scholars in the Philippines, the operation of the defunct PAB from 1974 up to 1992 under the supervision of the government financial institutions (the Philippine National Bank and later the Development Bank of the Philippines) was meant to degrade and embarrass the Muslim professionals.

Below are a copy of PD 264 that created the Philippine Amanah Bank and a copy of its amendment, PD 542. Presidential Decree 264 as amended is already non-existing as it was repealed entirely by Republic Act No. 6848. I have made some important notations in relations to the Al Amanah Islamic Investment Bank of the Philippines (Islamic Bank)

PRESIDENTIAL DECREE NO 264

(Repealed entirely by R.A. 6848)

AN ACT CREATING A PHILIPPINE AMANAH BANK

WHEREAS, it is a declared policy of the Government to promote and accelerate the socio-economic growth and development of Mindanao, particularly, the economically depressed provinces of Cotabato, Lanao del Sur, Lanao del Norte, Zamboanga del Sur, Zamboanga del Norte, and Sulu;

WHEREAS, surveys and studies indicate a pressing need to expand the banking and credit system in the region to make it more responsive to the investment and credit requirements of this development program;

WHEREAS, it is further recognize that, ultimately, sustained economic development will rely heavily on the capabilities of the people in the region to generate investments through institutional savings;

NOW, THEREFORE, I , FERDINAND MARCOS, President of the Philippines, by virtue of the powers in me vested by the Constitution as Commander-in-Chief of all the Armed Forces of the Philippines, pursuant to Proclamation No. 1081, dated 21 September 1972, as amended, by Proclamation No. 1104, dated 17 January 1973 and General Order No. 1, dated 22 September 1972, as amended, and in order to effect the desired changes and reforms in the social, economic and political structure of the society, do hereby and decree the creation of a Philippine Amanah Bank;

ESTABLISHMENT AND FUNCTIONS

SECTION 1. Purposes, Name and Domicile. – To provide credit, commercial, development and savings banking facilities at reasonable terms to the people of the preliminary Muslim provinces of Mindanao, principally, the provinces of Cotabato, South Cotabato, Lanao del Sur, Lanao del Norte, Sulu, Basilan, Zamboanga del Sur, Zamboanga del Norte and Palawan for the establishment, acquisition, development and expansion of agricultural, commercial and industrial enterprises, there is hereby created a body corporate to be known as the Philippine Amanah Bank, which shall have its principal place of business at Marawi City and shall exist for fifty years.

SEC. 2. Corporate Power.- The Philippine Amanah Bank shall have the power:

(a) to prescribe its by-laws;

(b) to adopt, alter, and use a corporate seal;

(c) to make contracts, to sue and be sued;

(d) to accept savings and time deposits, and open current or checking accounts;

(e) to borrow money; to own real or personal property and to sell, mortgage or otherwise dispose of the same;

(f) to employ such officers and personnel, preferably from the Muslim population in Mindanao and Palawan as may be necessary to carry on its business;

(g) to establish such branches and agencies in the dominantly Muslim provinces in Mindanao and Palawan and such correspondent Offices in other areas as may be necessary for the proper conduct of its business;

(h) to grant loans for the establishment, acquisition, development and expansion of any agricultural, commercial and/or industrial enterprise, including public utilities, mining, livestock and poultry and fishing, whether offshore or inland;

(I) to invest in equities of allied undertakings as pertinent laws and the Central Bank shall authorize;

(j) to carry on trust business in accordance with the provisions of law governing trust corporations;

(k) to issue bonds, debentures, securities, collaterals and/or refinancing of the same, with the approval of the Central Bank, to be used by the Bank in its lending operations for industrial and agricultural projects that will promote the economic development of the region;

(l) to exercise powers granted under this charter and such incidental powers as may be necessary to carry on its business, and to exercise further the general powers mentioned in the Corporation Law and the General Banking Act, as amended in so far as they are not inconsistent or incompatible with the provisions of this charter.

SEC. 3 Authorized Capital Stock-Par Value. – The authorized capital stock of the Amanah Bank shall be one hundred million pesos divided into one million par value shares of one hundred pesos each. The shares shall be divided into four classes, denominated as Series “A”, Series “B”, Series “C”, and Series “D”.

(a) series “A” shall comprise thirty million pesos equivalent to three hundred thousand common shares [emphasis supplied] to be subscribed by the Government of the Republic of the Philippines;

(b) series “B” shall comprise twenty million pesos equivalent to two hundred thousand preferred shares [emphasis supplied] which shall be subscribed by the Government of the Republic of the Philippines, its agencies or instrumentalities, such shares to be entitled to cumulative dividends of three percent per annum and with preference as against common stockholders in The distribution of assets in the event of liquidation;

(c) series “C” shall comprise thirty million pesos equivalent to three hundred thousand common shares [emphasis supplied] to be subscribed solely by the citizens of the Philippines and domestic corporations and entities, seventy per centum of the equity of which is owned by citizens of the Philippines. Preference in the subscription of this class of shares shall be given to residents of the provinces and cities served or to be served by the Bank;

(d) series “D” shall comprise twenty million pesos equivalent to two hundred thousand common shares which shall be available for subscription of foreign nationals, their corporations and/or associations.

………………….

Comments.

Note 1. The government shares were as follows:

Common Shares

National Government Series A P30,000,000

Preferred Shares

Financial Institutions Series B`

Dev. Bank of Philippines P5,000,000

Social Security System P5,000,000

Gov’t. Service Insurance System P5,000,000

Philippine National Bank P5, 000,000

Total Preferred Shares P20, 000,000

Note 2. Only common shares were carried in 1990 by Republic Act 6848 (1990) to the new Islamic Bank. Preferred shares were transferred in 1986 to Asset Privatization Trust (APT), now the Privatization Management Office (PMO)

———

SEC. 4 Loans and investments authorized. – Said Amanah Bank is hereby authorized:

(a) to purchase or discount promissory notes, drafts and bills of exchange issued or drawn for agricultural, commercial or industrial purposes, with securities required by the Bank, or the proceeds of which have been used or are to be used for such purpose;

(b) to grant loans on or to discount notes secured buy harvested and stored crops: That no loans on the security of such harvest and stored crops shall exceed eighty percent (80%) of the market value thereof on the date of the loan; Provided, further; that the crops so mortgaged shall be insured by the mortgagor for the benefit of the Amanah Bank for their entire market value: and Provided, finally, That if, owing to circumstance whatever, the value of the crops given as security shall diminish, the mortgagor shall obligate himself to furnish further security or refund such part of the loan as the Bank may deem necessary. Such loans shall be granted for a period of not to exceed one year, subject to extension in discretion of the Bank;

(c) to grant loans to agriculturists, on installments, for standing crops considered natural products of the Philippines such as rise, copra, sugar, tobacco, corn, etc. not exceeding seventy percent (70%) of the estimated value of such crops; Provided, however, That before granting such loans, the Amanah Bank may impose as a condition that cultivation be under supervision and/or require additional security in the nature of mortgages on real estate duly registered in the name of the debtor, or chattel mortgage, including those upon livestock, machinery and agricultural implements, or personal bonds with sufficient surety or sureties, satisfactory to the Bank;

(d) to grant loans to the several provincial, city and municipality governments and to any other branch or subdivision of the Republic of the Philippines on promissory notes guaranteed by the National Governments, as shown by the endorsement thereon of the Secretary of Finance, approved by the President of the Philippines or to purchase bonds lawfully issued by such provincial, city and municipality governments and any other branches or subdivision of the Government of the Philippines;

(e) to grant loans to cooperative associations against the security of acceptable assets of the cooperative association and /or the individual members thereof;

(f) to grant loans to small farmers, merchants and traders against the security of lands without Torrents title, where the owner of private property can show five years or more of peaceful, continuous and uninterrupted possession in the concept of the owner; or of portions of friar land estates or other lands administered by the Bureau of Lands that are covered by sales contracts and the purchasers have paid at least five years installment thereon, without the necessity of prior approval and consent of Land Authority or corresponding governmental agency; or of homesteads or free patent lands pending the issuance of titles but already approved, the provisions of any law or regulations to the contrary notwithstanding; Provided, That when the corresponding titles are issued the same shall be delivered to the register of deeds of the province where such lands are situated for the annotation of the encumbrance; Provided, further, That in the case of lands pending homestead or free patent titles, copies of notices for the presentation of the final proof shall also be furnished the Bank and, if the borrowers applicants fail to present the final proof within thirty days from date of notice, the Bank may do so for, them at their expense; Provided, finally, That the applicant for homestead or free patent has already made improvements on the land and the loan applied for is to be used for further development of the same or for other productive economic activities;

(g) to grant loans to the employees of the government service or in private industry to acquire stocks in corporations or industries in an amount not exceeding one month’s salary for every year of service against the security of the undertaking of the employee with notice upon the employer for the repayment thereof by monthly payroll deductions within a period of five years;

(1) the said government financial institutions are convinced that the resources of the Amanah Bank are inadequate to meet the legitimate credit requirements of the locality wherein the Bank is established;

(2) there is dearth of private capital in the said locality;

(3) it is not possible for the private stockholders to increase the paid-up capital thereof.

(I) the Bank with the approval of the Monetary Board may rediscount paper with the Central Bank, the Philippine National Bank or other Banks and their branches or agencies and their nature of papers deemed acceptable for rediscounting the rate to be charged by any such institutions.

(j) generally, to make advances or discount paper for agricultural, manufacturing, industrial, or commercial purposes: Provided, That seventy-five percent of the loanable funds of the Bank shall be invested in medium and long-term loans for economic development purposes and in no case shall the Bank invest more than twenty five percent of its loanable funds in short term loans for miscellaneous purposes provided however, that twenty five percent (25%) of the loanable funds for short term loans for miscellaneous purposes provided however, that twenty five percent (25%) of the loanable funds for short term loans maybe loaned on securities other than real estate mortgage.

SEC. 5 Lending Limits. – Said Amanah Bank shall observe the following limits in its lending operations:

(a) the total liabilities of any person, company, corporation or firm, excluding loans or credits prescribed by law or by the Monetary Board as non-risk assets, shall at no time exceed fifteen per cent (15%) of the unimpaired capital and surplus of the Bank.

The total liabilities of any borrower may amount to a further fifteen percent (15%) of the unimpaired capital and surplus of the Bank provided that the additional liabilities are adequately secured by shipping documents, warehouse receipts or other similar documents transferring or securing title covering readily marketable, non-perishable staples must be fully covered by insurance, and must have a market value equal to at least one hundred and twenty five percent
(125%) of such additional liabilities.

The term liabilities as used herein shall mean the direct liability of the maker or the acceptor of paper discounted with or sold to the Bank and liability of the endorser, drawer or guarantor who obtains a loan from or discounts paper with or sells paper under the guaranty to the Bank and shall include in the case of the liabilities of a co-partnership or association the liabilities of several members thereof and shall include in the case of the liabilities of a corporation all liabilities of all subsidiaries thereof in which such corporation owns or controls a majority interest. But the discount of bills of exchange drawn in good faith against actually existing values, and the discount of commercial or business paper actually owned by the person negotiating the same, shall not be considered as money borrowed, for the purpose of this section.

Loan accommodations granted by Amanah Bank to any other bank licensed to do business in the Philippines shall be subject to the loan limit to any other borrower as herein prescribed.

(b) no director or officer of the bank shall, either directly or indirectly, for himself or as the representative or agent of others, borrow any deposits or funds of the Bank, nor shall he be a guarantor, endorser, or surety for loans from the bank to others, or in any manner to be an obligor for money borrowed from the Bank or loaned by it, except with a written approval of the majority of the directors of the Bank, excluding the director concerned. The credit accommodation to such director or officer of this Bank which the Board of Directors may authorize shall in no case exceed his outstanding deposits or the book value of his paid-in capital in the Bank. Any such approval entered upon the records of the Bank and a copy of such entry shall transmitted forthwith to the appropriate supervising department of the Central Bank of the Philippines. The office of any of the director or officer of the Bank who violates the provisions of this section shall immediately become vacant and the director or officer shall be subject to criminal prosecution and suffer the penalties provided by law.

(c) the outstanding credit accommodation which the Bank may extend to stockholders, other than the government of the Republic of the Philippines, its agencies and instrumentalities, owing more than two per cent (2%) or more of the subscribed capital stock of the Bank, shall be limited to an amount equivalent to their outstanding deposits and book value of their paid-in capital contribution in the Bank.

SEC. 6 Board of Directors. – The affairs and business of the Amanah Bank shall be directed and its property managed and preserved unless otherwise provided in this act, by a Board of Directors consisting of nine (9) members duly elected as herein provided, who shall in each session of the Board attended by them, be paid a per diem in such amount as the Board of Directors may fix.

SEC. 7 Elections of Board of Directors.- Annually on the first Monday of March, the stockholders shall meet to elect the members of the Board of Directors for the current year, each stockholder or proxy to be entitled to as many votes as he may have shares of stock, registered in his name on the fifteenth of February last preceding and held by him at the time of the election. Immediately after the election, the directorate shall organize as such and elect from amongst themselves a chairman, a vice-chairman who shall assist the chairman and act in his stead in case of absence or incapacity of the chairman. In case of incapacity of both, the chairman and/or vice-chairman of the Board of Directors shall designate a temporary chairman from among its members: Provided, That no director, shareholder or employee of any other bank shall eligible as member of the Board of Director: Provided, further, That no full-time appointive or elective public official shall at the same time serve as officer, director, legal counsel or consultant of the Bank except in cases where such service is in the exercise of the stockholders rights of the government or is incident to financial assistance provided by the government, its agencies or instrumentalities to the Bank.

SEC. 8. The Board of Directors shall, among other duties, powers, and authority:

(a) formulate policies necessary to carry out effectively the provisions of this Charter and adopt such by-laws, rules and regulations for the effective operation of the Bank, in conformity with this Act and existing laws; and

(b) establish, upon previous authority of the Central Bank, branches, agencies or offices in other countries and at such points within the Philippines, as it may deem advisable, which shall perform functions as may be delegated to them by the Board of Directors.

The Amanah Bank shall have the following officers: a president, or one or more vice-presidents, a secretary, a treasurer, an auditor and a legal counsel who shall be chosen by the Board of Directors, their tenure of office and compensation shall be determined by the Board of Directors. In making these appointments, preference shall be given to members of the cultural minorities.

SEC. 10. Duties and powers of the President. – The President of the Bank shall, among others, execute and administer the policies, measures, orders and resolutions approved by the Board of Directors and direct and supervise the operation and administration of the Bank.

(a) to male loans on commercial paper for periods of time not to exceed four months in sums not exceeding fifty thousand pesos to any one person, company, corporation or firm, but he is required to submit a report on each such loan to the Board of Directors at its next succeeding session.

(b) to make, with the advise and consent of the Board of Directors, all contracts on behalf of the Bank and to enter into all necessary obligations by this charter required or permitted.

(c) to report weekly to the Board of Directors and main facts concerning the operations of the bank during the preceding week and to suggest changes in the rates of discount, exchange, or of policy which may to him seem best.

SEC. 11. Other Officers and Employees. – All other officers and employees of the Bank shall be appointed and removed by the Board of Directors, on recommendation of the President. In making appointments, members of the cultural minorities shall be given preference. Said officers and employees shall not subject to the Civil Service Law, and their duties and compensation shall be fixed by the President with the Approval of the Board of Directors.

SEC. 12. Fidelity Bond for Officers and Employees.- The Board of Directors may require the officers and employees of the Bank and its branches, before entering upon the performance of their duties, to furnish a fidelity bond for the benefit of the Bank, in the form and amount prescribed by the said Board of Directors.

SEC. 13. Project Development Office. – The Amanah Bank shall have a Project Development Office which shall be responsible for the following:

(a) conduct periodic economic surveys and studies of the investment climate and opportunities in the Bank’s sphere of operations and identify the viable projects which may be sponsored by the people in the region;

(b) offer technical consultancy services and studies in the preparation of project studies and in meeting other technical credit requirements of the Bank, including the provision of management consultants rates to be determined by the Board of Directors to projects financially assisted by the Bank.

c) evaluate each project proposal for possible financing by the Bank.

SEC. 14 Auditing Office. – The Auditing Office of the Bank shall be headed by a representative of the Auditor General. All the other employees of the Office shall be appointed by the Directors of the Bank. The operating expenses, salaries and travel expenses of the employees of the Office shall be Payable by the Bank, and the Board of Directors shall make the necessary appropriations therefor. The representative of the Auditor General shall make a quarterly report on the condition of the Bank to the President of the Philippines through the Secretary of Finance, to the Auditor General and to the Board of Directors of the Bank. The report shall contain among others a statement of the resources and liabilities, including earnings and expenses, the amount of capital stock, dividends paid, surplus reserve, and undivided profits, as well as the losses, bad debts and suspended and overdue paper carried in the Bank’s assets as of the day in which the statements are complied.

MISCELLANEOUS PROVISIONS

SEC. 15. Government Shares,- The voting power of all stock of the Amanah Bank owned and controlled by the Republic of the Philippines shall be vested in the President of the Philippines, or in such person or persons as he may from time to time duly designate.

The stockholdings of the government in common or preferred shares with the Amanah Bank, or any part thereof, may be sold at par value at any time to citizens of the Philippines who are registered stockholders of the Amanah Bank in proportion to their respective holdings. They shall have a period of one year from the date of the offer to sell by the government within which to exercise this right. In the absence of such buyers, preference shall be given to Philippine citizens who are residents of the provinces by the Bank before the shares of stock may be publicly offered by listing in the stocks at any stock exchange.

All profits assigned as dividends to the share of the Government shall first be applied in payment to the unpaid subscriptions of the Government. Upon full payment of such subscriptions, the dividends shall thereafter be paid into the Treasury of the Philippines for the general funds thereof.

SEC. 16. Government Assistance on Documentation and Registration. – Any city or municipality judge in his capacity as notary public ex-officio, shall administer oath to or act upon the instruments of the Amanah Bank, its borrowers or mortgagors free from al charges, fees. and documentary stamp tax, collectible under existing laws, relative to any loan or transaction not exceeding five thousand pesos.

Any Register of Deeds shall accept from the Amanah Bank and its borrowers or mortgagors for registration free from all charges, fees, and documentary stamp collectible under existing laws, any instrument, whether voluntary or involuntary, relating to loans or transactions extended by the Bank in an amount not exceeding five-thousand pesos: Provided, however, that charges if any, shall only be collectible on the amount in excess of five thousand pesos; and that in instruments related to assignments of several mortgages consolidated in a single deed, charges or fees, if any, shall be levied only on the amount in excess of five thousand pesos of the consideration in the assignment of each mortgage.

SEC. 17. Prohibition. – No member of the Board of Directors, officers, attorney, agent or employee of the Bank shall in any manner, directly or indirectly participate in the deliberations upon the determination of any question affecting his personal interest, or the interests of any corporation, partnership, or association in which he is directly or indirectly interested. Any persons violating the provisions of this section shall be summarily removed from office.

No fee, commission, gift or charge of any kind shall be exacted, demanded or paid to any director, employee or agent of the Bank for obtaining loans from the Bank, and any director, officer, employee or agent of the Bank exacting, demanding or receiving any fee for services in obtaining a loan shall be summarily removed from office.

SEC 18. Supervision/Inspection by the Central Bank. – The Amanah Bank shall be subject to the examination and supervision of the Central Bank pursuant to applicable laws, and shall contribute to the Central Bank an annual fee to help defray the cost of maintaining the appropriate supervising department within the Central Bank in an amount to be determined by the Monetary Board but in no case to exceed one twentieth of one per cent (1/20 of 1%) of its total assets during the preceding year, as shown on its end-of-the month balance sheets, after deducting its cash on hand and amounts due banks, including the Central Bank.

SEC. 19. Confidential Information.- The Governor, Central Bank, officers of the Central Bank and other officials as may be designated by law or regulations of the Monetary Board to examine for the books for the Amanah Bank shall not reveal the results of any examination conducted by them to any person, government official, bureau or office other than the Monetary Board and the Board of Directors of the Amanah Bank. The reports and other papers relative to such information shall not be opened to the public except only for insofar as such publicity is necessary for the business of the Amanah Bank or is incidental to proceedings upon insolvency or persistent violation of law and regulations.

SEC. 20. Secrecy of Deposits.- All deposits of whatever nature with the Amanah Bank, including investments in bonds issued by the government of the Philippines, its political subdivisions and its instrumentalities, are hereby considered as of an absolutely confidential nature and may not be examined, inquired or looked into by any person, government official, bureau or office except upon written permission the depositor, or in any cases of impeachment, or upon order of a competent court in cases where the money deposited or invested is the subject matter of the litigation.

It shall be unlawful for any official or employee of the Amanah Bank to disclose to any person other than those mentioned above any information concerning said deposits.

SEC. 21. Repealing Clause.- Any law or part of law inconsistent with the provisions of this Charter is hereby repealed.

SEC. 22. This decree shall take effect immediately.

Done in City of Manila, this 2nd day of August, in the year of our Lord, nineteen hundred and seventy-three.

(Sgd.) FERDINAND E. MARCOS

President of the Philippines

By the President:

(Sgd.) ROBERTO V. REYES

Acting Executive Secretary

PRESIDENTIAL DECREE NO. 542

(Abolished by R.A. 6848)

AMENDING PRESIDENTIAL DECREE NO. 264,

CREATING THE PHILIPPINE AMANAH BANK

WHEREAS, Presidential Decree No. 264, dated August 2, 1073 was designed and intended principally to rehabilitate, develop, expand and promote the socio-economic conditions of the economically depressed provinces of Mindanao, particularly in the Muslim Provinces of North Cotabato, Maguindanao, Sultan Kudarat, Lanao del Norte, Lanao del Sur, Sulu, Tawi-Tawi, Zamboanga del Norte, and Zamboanga del Sur, and to provide more opportunities and incentives to the Muslim citizens of the Philippines, in actively and sincerely participating and getting involved in community development and nation-building;

WHEREAS, in order to render more effective the foregoing intentions and objectives of this Decree, it is necessary that the religious beliefs and practices of the Muslim citizens of the Philippines, be followed and respected, unless otherwise it is contrary to law, good morals and public policy.

NOW, THEREFORE, I , FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the constitution, do hereby amend Presidential Decree No. 264, as follows:

SEC. 1 Section 1 of Presidential Decree No. 264, creating the Amanah Bank, is hereby amended as follows:

“SEC. 1. Purpose, Name, Domicile and Basis.- To provide

credit, commercial, development and savings banking facilities at reasonable terms to the people of the primarily Muslim provinces in Mindanao, principally, the provinces of North Cotabato, Maguindanao, Sultan Kudarat, Lanao del Sur, Lanao del Norte, Sulu, Basilan, Zamboanga del Norte, Zamboanga del Sur and Palawan for the establishment, acquisition, development and expansion of agricultural, commercial and industrial enterprises, there is hereby created a body corporate to be known as the Philippine Amanah Bank, which shall have its principal place of business at Zamboanga City and shall exist for fifty years.

The Philippine Amanah Bank shall be based on the Islamic Concept of Banking, following the no-interest and partnership principles.”

SEC. 2. The third paragraph of section 15 of the same decrees is hereby amended to read as follows:

“All profits assigned as dividends to the shares of the government, and all remaining net profits of the bank after the payment of dividends to stockholders other than the government of the Philippines, its agencies or instrumentalities, if there is any, shall be transmitted to the Muslim Development Fund of the Philippine Amanah Bank.”

SEC. 3. All laws, decrees, orders, rules regulations or thereof inconsistent with this Decree are hereby repealed or modified accordingly.

SEC. 4. This Decree shall take effect immediately.

Done in the City of Manila, this 20th day of August, in the year of our Lord, nineteen hundred and seventy four.

(Sgd.) FERDINAND E. MARCOS

President of the Philippines

By the President:

(Sgd.) ALEJANDRO MELCHOR

Executive Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There is a saying in law:

Ignorantia juris non excusat or Ignorantia legis neminem excusat. This is Latin for ignorance of the law does not excuse any person who is not aware of a law. It is a public policy holding that a person who is unaware of a law may not escape liability for violating a law. It also means that persons are presumed to have knowledge of the law.

In defense of Gaffoor And Dianaton

In defense of Gaffoor and

Dianaton of

Amanah Islamic Bank

By Abdel Aziz Dimapunong

(Abdel Azish Dimapunung)

Chancellor, Islamic Banking Research Institute

Founding Chairman

Amanah Islamic Bank (1992-1998)

 

Some stockholders of the Islamic bank sent me email messages about malicious postings in a certain website related to a perennial complaint of a certain Engr. Farouk Carpizo. The complainant already died several years ago but his postings on the Internet are still there, forcing his victims to respond – not to him who is dead but to his postings which are still live on the Internet. I received this same kind of email from Ashroff Gaffoor who requested me to present my comments on the issues. I am obliged to make a response on behalf of the respondents by the fact that I was founding chairman of the Amanah Islamic Bank.

This article is based on the results of the investigation of the Department of Justice on a complaint that it received docketed as I.S. No. 99-1806. As the I.S. number indicates, this pertains to a complaint in 1999, or seven years ago. The complaint was filed by certain former lawyers of the Bangko Sentral ng Pilipinas (BSP), Atty. Rolando A.Q Agustin and Atty. Rosalina P Ojascastro as allegedly representing the Monetary Board. The filing of the complaint was based on the original complaint by Farouk Carpizo.

The BSP lawyers just did their job upon receipt of an original complaint that was maliciously filed with the Central Bank by Carpizo. Upon my research, I found that the lawyers of the Bangko Sentral filed the case wrongfully. They filed the case in the name of the Monetary Board but without the consent of the latter. They had no authority to represent the Bangko Sentral ng Pilipinas on legal matters. Under Section 18, par (c) of the new Central Bank Act, R, A. 7653, it is the Governor of the Bangko Sentral ng Pilipinas who is authorized to represent the Bangko Sentral in any legal proceedings, action or specialized legal studies.

On their affidavits, the BSP lawyers had to confess that they were not authorized by the Monetary Board. They were only acting on their own. That was a fatal mistake because they misrepresented the Monetary Board and the Bangko Sentral. Not having been authorized, the case cannot bind the Monetary Board and the Bangko Sentral.

 

The Islamic Banking Research Institute of which I am the chairman has complete files related to the investigations of the Department of Justice on this case. The Institute is being updated by the incumbent chairman of the Amanah Islamic Bank, Mr. Grande M. Dianaton, original stockholder of the old Philippine Amanah Bank and one of the founding stockholders of the Al Amanah Islamic Investment Bank of the Philippines.

First, who was Farouk Carpizo? Who was this man who posted malicious statements on the Internet? I shall not speak about him except that he died some years ago. I knew this because he was my neighbor. The fact the he died already is a good reason not to perpetuate his complaint. But somebody is still hosting his malicious postings on the Internet.

I shall limit myself to what official records have to show about Engr. Farouk Carpizo.

The following is the legal story based on the files of the Amanah Islamic Bank and the Department of Justice of the Philippines.

Seven years after we had formally organized the Islamic Bank in accordance with its charter, R.A. 6848, the Supervision and Examination Department of the Bangko Sentral ng Pilipinas (BSP) was misinformed by one Engr. Farouk Carpizo. Sometime in 1999, he represented himself to the BSP as a government representative. In truth, as the records show he was president of the old abolished Philippine Amanah Bank (PAB) – not the new Al Amanah Islamic Investment Bank of the Philippines. He claimed that the Islamic Bank is a government bank of which he is the president, representing the government. And he further charged Grande Dianaton, Ashroff Gaffoor and some of the directors of the private Islamic Bank as bogus!

Based on hearsay, the BSP lawyers filed a formal complaint allegedly in the name of the Monetary Board against Grande Dianaton, Ashroff Gaffoor and some directors and officers of the original Islamic Bank. Bad publicity in the press and the Internet was made, and investigation was conducted by the Department of Justice. What a waste of time! All the charges were maliciously manufactured. These false charges are the ones that were posted on the Internet.

The complainant charges those innocent officers as bogus – but actually it was he and his group who were the real bogus.

At this point, it bears relevance to introduce the complainant, Engr. Farouk Carpizo based on records of no less than the Hon. Supreme Court of the Philippines.

As I have said, I shall not personally comment on the person of Farouk Carpizo who is already dead but whose postings are still live on the Internet. I will only quote the Honorable SUPREME COURT of the Philippines from a DECISION involving one Engr. Farouk Carpizo.

BEGIN QUOTE FROM SUPREME COURT

(In this case, the Supreme Court speaks through the Hon. Justice of the Supreme Court, Justice Hilarion Davide, Jr. who penned the following Supreme Court Decision about the same Engr. Farouk Carpizo as being “bogus”, who represented a “fake Board”)

“It must be pointed out that two groups had earlier vied for control of the IDP, namely, (1) the Carpizo group headed by Engr. Farouk Carpizo [Underscoring supplied]…Nevertheless, on 20 April 1989, the Carpizo group caused the signing of an alleged Board Resolution authorizing the sale of the two parcels of land mentioned above to private respondent Iglesia ni Cristo (hereafter INC).

“If the SEC can declare who is the legitimate IDP Board, then by parity of reasoning, it can also declare who is not the legitimate IDP Board. This is precisely what the SEC did in SEC Case No. 4012 when it adjudged the election of the Carpizo Group to the IDP Board of Trustees to be null and void. By this ruling, the SEC in effect made the unequivocal finding that the IDP-Carpizo Group is a bogus Board of Trustees. [Underscoring supplied] Consequently, the Carpizo Group is bereft of any authority whatsoever to bind IDP in any kind of transaction including the sale or disposition of IDP property.

xxx xxx xxx

“. . . Nothing thus becomes more settled than that the IDP-Carpizo Group with whom private respondent INC contracted is a fake Board. [Underscoring supplied]

xxx xxx xxx

“… For the sale to be valid, the majority vote of the legitimate Board of Trustees, concurred in by the vote of at least 2/3 of the bona fide members of the corporation should have been obtained. These twin requirements were not met as the Carpizo Group which voted to sell the Tandang Sora property was a fake Board of Trustees [Underscoring supplied], and those whose names and signatures were affixed by the Carpizo group together with the sham Board Resolution authorizing the negotiation for the sale were, from all indications, not bona fide members of the IDP as they were made to appear to be. . . .

All told, the disputed Deed of Absolute Sale executed by the fake Carpizo Board [Underscoring supplied] and private respondent INC was intrinsically void ab initio.

[G.R. No. 127683 August 7, 1998, LETICIA P. LIGON, petitioner, vs. COURT OF APPEALS and IGLESIA NI CRISTO, respondents.]

UNQUOTE

Going back to the case of Ashroff Gaffoor and Grande Dianaton versus Farouk Carpizo and the BSP, the following surfaced:

1. Owing to its fiscal crisis that closely approaches the Nicaraguan syndrome, the Philippine government has never subscribed to the capital stock of the new Amanah Islamic Bank.

 

2. The two BSP lawyers who filed the case had to confess upon investigation that they had no authority to file the case from the Monetary Board. That was an act of misrepresentation.

 

3. The two BSP lawyers did not know also that there was already an earlier Resolution by the Honorable Supreme Court of the Philippines on the same case complained about.

4. They charged Dianaton, Gaffoor and Mangompia for violation of Republic Act No. 337 – not knowing that this was a non-existing law at the time of the filing of the case. That was the old Central Bank Act which was enacted in 1948!

 

In summary the complaint was based on hearsay that was loaded with errors and falsity.

 

This story is not a fiction. The statements are facts of a malicious and baseless complaint (Department of Justice, I.S. No. 99-1806) filed by two misinformed BSP lawyers against innocent officers of the new Amanah Islamic Bank. They not only misrepresented the Monetary Board but they also misrepresented the Office of the President of the Philippines. And worst, they are misleading the general public.

 

The following are the facts that were considered by the Department of Justice (DOJ) in its Resolution on the complaint of the Central Bank

BEGIN QUOTING THE DOJ RESOLUTION.

The respondents, “as summarized, jointly alleges that the complaint-affidavit of the BSP against the respondents for violation of Section 6 of RA 337 in relation to Section 36 of RA 7653, has no basis in fact and in law, based on the following: a) that we are all stockholders and organic directors and officers of the Islamic Bank, a corporation created by RA 6848, and duly organized by most of us with present business development address at No. 3, Block 11, Marawi Avenue, Maharlika Village, Taguig, Metro Manila; b) that respondents Mangompia, Badio, Pangcoga, and Rasuman, were among those present as organizers in the organizational shareholders meeting of the Islamic Bank on April 28, 1992 at the Army and Navy Club, Manila, of which the original and authentic Islamic Bank was officially organized in the manner prescribed by law under R.A. 6848; c) that their decision to subscribe to Series “B” shares and Series “C” shares in the capital of the Islamic Bank was based on their knowledge of this legal processes which was sanctioned by the confirmation letter of the SEC which issued a confirmation letter, dated July 29, 1993, that the Islamic Bank is deemed registered and authorized to operate as of the date of approval of RA 6848, and this was further boosted by another confirmation letter, dated September 8, 1993, that the Islamic Bank is exempted from the Revised Securities Act; d) that the legality of their being stockholders of the Islamic Bank is even supported by the Hon. Court of Appeals in its Decision on Civil Case No. CA GR No. 28445 entitled Abdel Aziz Dimapunong v. Hon. Zosimo Z. Angeles where on page 6, par. 2 the Hon. Court states that “ there is no question that the other petitioners, Abbas, Dianaton, and Malambut, are stockholders of the bank”. Abbas and Malambut were among their predecessor directors while Dianaton is still a director; e) that the legality of their being stockholders of the Islamic Bank is also supported by the Office of the Solicitor General in its Motion and Manifestation dated September 22, 1992; f) that a careful reading of the complaint of the Monetary Board clearly shows that it is a recycled complaint, the original “Complaint For Injunction with Damages” having been filed by then Finance Secretary Roberto De Ocampo and Farouk Carpizo. This is the same complaint by the BSP officials in the instant case; g) that the complaint alleges without basis that “the legitimate government owned Islamic Bank, which is duly recognized by the Bangko Sentral, is the Al Amanah Islamic Investment Bank of the Philippines (AIIBP) which was created and existing pursuant to the provisions of R.A. 6848, and the majority shares of which are held by the National Government, Social Security System (SSS), Government Service Insurance System (GSIS), Development Bank of the Philippines (DBP), and the Asset Privatization Trust (APT)” In response, we state that this is totally wrong because the shareholdings of the National Government, SSS, GSIS, DBP, and APT refers to their shareholdings in the abolished Philippine Amanah Bank (PAB). These government shareholdings have long been totally worthless because of the total bankruptcy and insolvency of the Philippine Amanah Bank which is now being resurrected by the BSP by usurping the name of our Islamic Bank; h) that the complaint states that certain persons were “nominated by the president of the Philippines and elected in the alleged general shareholders meeting held on June 30, 1999. This is not true, the President of the Philippines did not nominate anyone but in his letter of June 22, 1999, he wrote to DBP Chairman Ramoncito Z. Abad (not to the chairman of the Islamic Bank) expressing ONLY A DESIRE – not a nomination; i) that the complainant should be educated about the charter of the Islamic Bank to discover that we do not have to be under the supervision of the BSP because the Islamic Bank is not just a bank as defined under the General Banking Act but also an INVESTMENT HOUSE”. Should it operate as an investment house, the Islamic Bank is under the supervision of the SEC; j) it must also be noted that the charter provides them exemption from the provisions of the General Banking Act and Central Bank Act. The charter provides the following exemption: “SEC. 39. Non-Applicability of Selected Acts. – In order to achieve the international and domestic objectives of Islamic banking business, the provisions of the following acts and laws shall not apply to the Islamic Bank to the extent as herein rendered inoperative: “(1) The provisions of the Central Bank Act and the General Banking Act with particular reference to the determination of bank interest rates, loans and discounts, and any interest-bearing instruments or charge: provided that nothing contained herein shall be construed to impair the powers of the Central Bank to supervise and regulate the activities of the Islamic Bank.”; k) that the undersigned respondents also question the capacities of Rolando A.Q Agustin and Rosalina P Ojascastro as representing the Monetary Board in the instant legal action. Under Section 18, par (c) of the new Central Bank Act, R, A. 7653, it is the Governor of the BSP who is authorized to represent the BSP in any legal proceedings, action or specialized legal studies; r) Finally, it must be noted that in supervising the Islamic Bank, the Monetary Board shall supervise it in accordance with the Sharia’ Law (Sec. 43, R.A. 6848)

[Pages 7, 8, 9, and 10, DOJ Resolution, on I.S. No. 99-1806, dated February 6, 2001, Manila, Philippines]

 

UNQUOTE THE DOJ RESOLUTION

Photo

The organizational meeting at the Army and Navy Club of Manila

With Grande Dianaton, April 28, 1992

Photo

The 1999 International stockholders meeting at Richmond Hotel

With Ashroff Gaffoor (center)

What happens next?

 

The malicious complaint did not progress. The lawyers were not authorized by the Monetary Board of the Bangko Sentral. They confessed to have acted on their own – not the Central Bank.

How do I see the case? Well, it was a DAC, Dead on Arrival at Court.