In the large Filipino community of Southern California, California Overseas Bank has for years been nicknamed the “Philippine Bank of Los Angeles” because of its close relations with the Manila regime of former Philippine President Ferdinand E. Marcos.
In fact, bank Chairman Roberto S. Benedicto served as the Philippines’ ambassador to Japan for six years in the early 1970s under Marcos.
Outside the local Filipino population, the small bank based in the mid-Wilshire district of Los Angeles was not well known. But all that changed dramatically Friday when the indictment of Marcos and his wife in New York also named the bank, Benedicto and former bank president Rodolfo T. Arambulo on federal racketeering charges.
The indictment also alleges that Marcos and Benedicto together owned the Los Angeles bank.
According to Alberto C. Mendoza, a Los Angeles lawyer and one-time president of the Filipino-American Community of Los Angeles Inc., Benedicto and his bank have tried with limited success to woo the favor of the burgeoning local Filipino community. But, said Mendoza, “rumors have been thick in the Filipino community about . . . the California Overseas Bank. Benedicto is known as Marcos’ alter ego.”
The indictment accuses Marcos, Benedicto and Arambulo, as well as the bank itself, of allegedly engaging in a scheme to use embezzled funds from the Philippine treasury to buy property in the New York borough of Manhattan.
The scheme is alleged to have gone on since the day California Overseas Bank opened its doors 12 years ago.
Benedicto and Arambulo could not be reached for comment Friday. But the bank’s current president hotly disputed the allegations.
“I have been around the bank since 1982 and I’ve been president since 1987, and to my knowledge there has not been any misconduct by the bank or any of its officers,” said M. Joseph Voorhees. “Neither Marcos nor his wife have any ownership interest in this bank. I think the allegations in the indictment (have no) merit.”
Voorhees said Benedicto was the majority owner of the bank.
On the surface, California Overseas Bank seems an unlikely participant in an alleged international financial intrigue.
The bank, which has five branches in Los Angeles and one in Guam, received its state charter in 1976 after a group of private Philippine investors purchased the commercial banking unit of Ahmanson Bank & Trust Co.--part of giant H.F. Ahmanson Co. in Los Angeles--and renamed it California Overseas Bank.
Ahmanson, which also owns Home Savings of America, sold the bank to meet the restrictions of federal bank holding company laws.
The purchasers, headed by Benedicto, initially invited all employees of the old Ahmanson Bank to stay on, but many soon departed, including president Donald Pearson, a former state banking superintendent.
Shortly after he resigned in 1977, Pearson felt constrained to comment publicly on rumors cropping up even then that the bank was controlled by Marcos.
“I tend to disbelieve that Marcos is in the bank,” Pearson remarked in an interview with The Times in December, 1977, after he was asked to respond to questions surrounding his partial lifting of a state freeze on the growth of foreign banks in California.
Deputy California Superintendent of Banking John Paulus said Friday that his agency is currently making no special effort to oversee the bank in the wake of the indictment.
“There’s not much of a precedent. Banks are typically not indicted,” Paulus said. He added that his agency examines banks at least once every two years for compliance with state and federal laws as well as examining its books.
However, he said. “It’s a (bank) evaluation, not an audit per se. We are concerned with things like liquidity and earnings.”
Financially, the California Overseas Bank appears to be healthy, ranking 92nd out of California’s 279 state chartered banks in amount of total deposits, officials said. The bank, which has about 120 employees, has total assets of more than $125 million and deposits of more than $106 million.
“We are hopeful that people will realize that this kind of thing can regretfully occur,” Voorhees said of the indictment. “But there is no reason for undue concern by our depositors, our employees or anyone else.”
Times staff writer Al Delugach contributed to this story.