Updates on the PIPC scandal

July 30, 2007

Stocks, Mutual Funds, Forex, Finance Philippines

Make Money Online, Stocks, Mutual Funds, Philippines

Here are the latest news and updates on the Performance Investments Products Corp. (PIPC) scandal.

We continue here the timeline of the PIPC scam published early last week, with information coming from www.findmichaelliew.tk, purportedly a site put up by PIPC employees.

July 28, 2007. Second set of receivership letters for Ferrier Hodgson posted to the site. The first one issued will be used in Hong Kong, while the second one will be used in the BVI. Investors are encouraged to accomplish both forms.

July 27, 2007. Receivership letters for Ferrier Hodgson were uploaded to the site. Investors were notified to accomplish the forms on Monday, July 30, 2007 at the PPS Business Lounge.

July 25, 2007. Investors met on Thursday, July 26, at 2pm. (Few details below.)

July 24, 2007. Ferrier Hodgson Limited (an affiliate of KROLL) has been officially engaged to help in the investigation. The company specializes in Forensic Accounting, Financial Investigations and Fraud services.

July 23 2007. Letter from ABN Amro was sent to Performance Tokyo putting a stop payment order on the prior demand draft forwarded to the office.

How PIPC started

The Pinoy Money Talk (PMT) article posted last week quoted the Singapore Straits Times about the history of the company PIPC. But Manila Standard columnist Victor Agustin provided more juicy details as to the beginnings of the company.

Performance Investment started in the late ’90s as Performance Foreign Exchange Corp. (PFEC), with Liew taking in on board an ex-Allied Bank officer in Singapore, Roberto Borromeo, to help the venture hurdle the thicket of local regulatory rules.

The forex venture did immediately run into opposition from the Securities and Exchange Commission, which sued all the way to the Supreme Court, only to suffer a loss after the Bangko Sentral sided with Performance.

Even before the July 2006 favorable SC decision, Performance had already found sympathizers within the Bangko Sentral.

Liew was even accompanied by then Monetary Board Member Melito Salazar when Performance launched its Cebu branch in 2004 in ceremonies at the Marriott Hotel.

Borromeo, who admitted having already heard of the Performance implosion earlier this week, said he and Liew parted ways sometime in 2004, with Borromeo taking control of Performance Foreign Exchange, with offices at The Enterprise on Ayala Avenue, and Liew setting up Performance Investment Products in Citibank building, further down on Paseo de Roxas.

Borromeo sought to distance his company from the similarly named Liew venture, saying his Performance is limited to being an Internet-based financial intermediary, with clients themselves doing the foreign exchange trading using Performance’s software for a fee.

‘Secret’ investors’ meeting

On July 26, Thursday, a “clandestine” meeting among investors, employees, and officers of PIPC occurred but the Philippine Daily Inquirer (PDI) still got wind of the details. The PDI reported that attendees were able to enter the venue only after the correct password was disclosed, reminiscent of Stanley Kubrick’s Eyes Wide Shut movie.

During the standing-room-only meeting, investors, which included the country’s elite and prominent personalities, grilled PIPC general manager Cristina Gonzalez Tuason on the status of their investments. Tuason refused to answer any questions, which supposedly made the investors angrier.

The PDI informant claimed the meeting reached the point of being “chaotic,” with several investors raising their voices and talking at the same time, while Tuason remained mum.

Plan of action

A director of the financial forensics company engaged to help in the investigation also took the center stage to discuss possible courses of action. John Batchelor, executive director of Ferrier Hodgson, outlined his firm’s proposed plan of action:

appoint a third-party provisional liquidator to take control of the companies based in Hong Kong and the British Virgin Islands;
question PIPC staffers in Singapore, especially since Liew’s personal assistant is based there; and
obtain court approval in the British Virgin Islands for the appointment of provisional liquidators for entities within the group.

Cooperate or be charged

Meanwhile, the Securities and Exchange Commission (SEC) and the National Bureau of Investigation (NBI) encouraged PIPC investors to file a complaint in order to bolster the lawsuit against Michael Liew and other perpetrators of this scam.

But last week, the NBI went a step further by warning employees of PIPC, particularly its agents or marketing executives, to cooperate in the investigation or face charges.

“In particular, we want to know from them how the whole scheme works since they were the ones who explained it to the investors,” NBI Metro Manila regional director Ruel Lasala said.

He warned the PIPC executives that they had better cooperate in the investigation or they will be charged as accessories.

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