By Emmanuel T. Erediano
Variety News Staff

THE Commonwealth Development Authority may be sued for “pushing hundreds of loan recipients to the wall,” Senate Floor Leader Felix T. Mendiola warned.
A majority of the 400 people who owe CDA money are facing foreclosures and many of them have been knocking on Mendiola’s door asking for help, the senator said.
He said CDA came out two weeks ago with a strategic development plan that is supposed to provide relief to the borrowers.
According to Mendiola, Covenant-Rota, the delinquencies can, in part, be attributed to CDA’s failure to provide necessary resources or adjustments to ensure repayment of the loans.
Mendiola said this is one of the reasons he wants CDA Chairman Vincent Calvo to remain on the agency’s board.
“I want to help them get the system straight,” the senator said.
In his letter to Calvo last month, Mendiola said CDA has violated applicable statutory mandates for its loan programs and “recklessly disregarded its fiduciary responsibilities.”
He said these “infractions and the non-compliance with responsibilities might have contributed to the situation of borrowers facing foreclosure.”
A majority of the borrowers who have been delinquent for many years are indigenous people who may lose their land and other “earthly possessions” which they mortgaged for the CDA loans, Mendiola said.
CDA, he added, was created to provide economic incentives and opportunities to the indigenous population to develop and promote local businesses and entrepreneurships.
Mendiola said CDA failed to provide credit and management counseling as required by law, by not having a specialized loan counselor.
As a result, he added, the borrowers are monitored only when they become delinquent.
CDA, Mendiola added, also failed to provide conscionable interest rates necessary to serve the particular socio-economic needs again pursuant to law.
He said, unlike the federal Small Business Administration which charges 2 percent interest per annum, CDA’s interest rate is 9 percent which does not even conform to the practices of the banking industry.
CDA, Mendiola said, has failed to effectively monitor the progress and financial status of the business projects it financed.
It also failed to provide technical assistance, supervision and management counseling for these projects, Mendiola said.
He noted that it was only recently, after several years, that CDA hired a comptroller, “which is critical in any financial institution.”
Now, the senator said, serious questions are being raised about whether CDA has engaged in a prudent financial management as required by law.
The senator said he has already talked to Calvo about these issues.
Variety was unable to get Calvo’s comments.