Tales from Disiniland

How to succeed in business if you know the right people

Two hours' drive west of Manila in Bataan province, a sprawling 620-mega-watt nuclear power generator is rising on a cliff overlooking the ocean. Its $1.1 billion price tag makes it the most costly single venture in Philippine history. It also represents a record-breaking financial windfall for the country's champion wheeler-dealer, Herminio Disini, 41. His total commissions from the project could top $40 million.

What makes Disini's services so valued? It might be his very close friendship with President Ferdinand Marcos, a connection that, according to veteran observers in Manila, was invoked to win a major share of the government's nuclear plant construction contract for Disini's client, Pittsburgh's Westinghouse Electric Corp. Allegations about the suspicious nature of Disini's services recently prompted the U.S. Export-Import Bank, which is providing much of the financing for the project, to ask the Justice Department to determine whether Westinghouse made improper payments to a foreign business agent. Troubled by an embarrassing international scandal, President Marcos last week told TIME Correspondent Richard Bernstein: "Westinghouse has some things to explain to our government. If there has been anything illegal committed by Westinghouse, our lawyers are considering canceling the contract with Westinghouse and giving it to somebody else."

Disini, of course, is not the only Filipino who has been known to profit from a personal relationship with Marcos. Since the President imposed martial law in 1972, his relatives and cronies, as well as those of his glamorous wife Imelda, the governor of Manila, have been amassing huge fortunes. Their blatant influence peddling has prompted one amazed diplomat in Manila to observe: "It's incredible what they've taken over." Marcos' sister Elizabeth Marcos Keon, for example, is governor of Ilocos Norte province, and Benjamin ("Kokoy") Romualdez, Imelda's brother, who owns the Times Journal, one of the capital's major dailies, is governor of Leyte province and heads the League of Provincial Governors and City Mayors. Roberto Benedicto, a frequent Marcos golfing partner, has acquired three television stations since martial law was imposed (giving him a total of four) and is chief of the Philippine Sugar Commission.

No one, however, can quite rival the meteoric rise of Disini, a Marcos buddy whose wife is a cousin of Imelda's and former governess to the First Couple's three children. In the past six years, Disini has transformed an otherwise undistinguished company, Herdis Management & Investment Corp., from a small cigarette-filter manufacturing plant into a conglomerate empire of 33 separate enterprises with assets totaling about $200 million. These firms, among other things, manufacture textiles, explore for oil and run charter air flights. Recently Disini acquired the Philippine agency for Caterpillar construction equipment and a large block of shares in the Philippine subsidiary of Reynolds Metals Co.

Herdis' extraordinary expansion seems in large part to be the result of favored treatment by Philippine officials. Not only has Disini received government guarantees for his loans--totaling $160 million--but favorable tariff treatment has also permitted his cigarette-filter business to become a near monopoly.

It was this cozy relationship with officials that Disini apparently used on behalf of Westinghouse. For a while, reported TIME'S Bernstein last week, it seemed that the nuclear plant deal had been locked up by Westinghouse's chief competitor. General Electric. The Philippine National Power Corporation had finished preliminary feasibility studies by early 1974 and had signed a contract with G.E.'s local consulting firm. According to knowledgeable Philippine businessmen, Marcos then unexpectedly intervened and stunned a number of advisers by ordering that the profitable contract be awarded to Westinghouse instead.

Even though Marcos insists that "the Westinghouse proposal was technically and scientifically better than that of G.E.," the actual details of his sudden switch remain shrouded in secrecy. Foreign and Filipino experts are convinced that--as one puts it--"the key ingredient was the entry of Disini." Marcos strongly denies this, but there seems to be considerable respect in Manila for Disini's role in influencing some presidential decisions. Jesus J. Vergara, president of Asia Industries Inc., another Disini-owned firm retained by Westinghouse, has boasted: "We leave it to Hermie [Disini] to play golf [with Marcos]. That's his job." According to some accounts in Manila, Disini bragged that Herdis and Asia Industries will bring him a 7% fee on the $616 million that Westinghouse is being paid to construct the single Bataan plant. A Westinghouse spokesman insisted last week that the commissions being paid are within "corporate policy guidelines. Westinghouse denies it has made any improper payments relating to the Philippines nuclear plant."

Apparently not content with his sales commissions on the nuclear deal, Disini acquired the Philippine Summa Insurance Corp., which promptly won a portion of the $693 million policy sold to the National Power Corporation to cover the Bataan plant. The ambitious entrepreneur also bought controlling interest in the consortium of firms that are constructing the generator under contract from Westinghouse. But the fate of these lucrative enterprises may now be in doubt. Marcos last week ordered his Department of Industry "to look into what corporations of Mr. Disini's can be legitimately divested from him, especially those for which he has obtained government help."

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