BANK SECRECY AND PUBLIC INTEREST

The author is the senior policy analyst and a member of the Management Collective of Action for Economic Reforms.

By the time the Senate investigation on the Jose Pidal issue

terminates, it is possible that the public will still be unable to make

head or tail of the truth to the claims and counterclaims made by all

parties to this issue. That will be another public interest unserved.

Certainly the public has a legitimate interest in knowing whether or

not the First Gentleman Mr. Jose Miguel Arroyo was involved in money

laundering as alleged by Senator Panfilo Lacson.

Two key factors stand in the way of finding the truth: the Bank Secrecy Law and the nature of a Senate investigation.

The details of the alleged Jose Pidal bank accounts, the existence of

at least one of which appears corroborated by evidence, should contain

facts that can help prove or disprove Senator Lacson’s allegations. But

the secrecy of bank deposits is protected by Republic Act 1405 or the

Law on Secrecy of Bank Deposits (note also Sec. 8 of RA 6426 or the

Foreign Currency Deposit Act). This 1955 enactment meant to encourage

people to “deposit their money in banking institutions and to

discourage private hoarding so that the same may be properly utilized

by banks” declares all bank deposits to be “of an absolutely

confidential nature and may not be examined, inquired or looked into by

any person, government official, bureau or office.

Republic Act 1405 and other subsequent laws provide certain exceptions

to the prohibition on disclosure. Bank deposits may be inquired into or

examined:

1. When there is written permission by the depositor (RA 1405)

2. In cases of impeachment (RA 1405)

3. Upon order of a competent court in cases of bribery or dereliction of duty of public officials (RA 1405)

4. In cases where the money deposited is the subject matter of litigation (RA 1405)

5. In cases of unexplained wealth under RA 3019 (RA 3019

6. Upon an order by the Ombudsman to produce for in camera

7. When the Bureau of Internal Revenue Commissioner

8. When banks forward to the Treasurer of the Philippines,

9. When the Anti-Money Laundering Council inquires into or

Unlike in the case of the Jose Velarde accounts when the Senate was

acting in the exercise of its power to try and decide the impeachment

case against former President Joseph Estrada, the ongoing Senate

investigation of the Jose Pidal issue is not one of the exceptions to

the law on bank secrecy. The ongoing investigation is an inquiry in aid

of legislation as provided by Art. VI, Sec 21 of the Constitution.

This leaves the fate of whether or not the public interest will be

served up to the two contending parties. Will the accuser be able

discharge the obligation of producing convincing evidence to prove his

allegations? On the part of Mr. Jose Miguel Arroyo, since he has

offered as proof of his innocence the alleged ownership of the Jose

Pidal accounts by his brother Mr. Ignacio Arroyo, will he substantiate

such assertion? After all, the owner of the account/s can waive the

privilege under the bank secrecy law by issuing a written permission

for the disclosure of the account/s.

Failing in any of these, it is reasonable to conclude that the public

interest is farthest from the minds of the parties to this issue. The

claims and counterclaims will have produced enough doubt and

speculation to polarize public opinion in time for the 2004

presidential elections. Such outcome may be all that matters to them.