The Philippines Chasing Marcos' Millions

By Susan Tifft

The documents arrived at the office of New York Democrat Stephen Solarz, chairman of the House Subcommittee on Asian and Pacific Affairs, in three bulging brown folders. Hours before, at the State Department, an identical package had been delivered to Jovito Salonga, head of the official Philippine commission charged with recouping the scattered wealth of deposed President Ferdinand Marcos and his free-spending wife Imelda. In all, the 2,300 pages formed an intriguing if incomplete treasure map of the vast fortune that Marcos, his family and cronies command. The cache only confirmed much of what Salonga had already unearthed among the personal effects the Marcoses abandoned in Manila more than a month ago. But he was outraged nonetheless. "I am shocked," he said. "I cannot imagine this kind of greed."

The papers released last week merely added to the mounting evidence of Marcos' misdeeds, including apparent fraud, corporate kickbacks and attempted embezzlement of U.S. aid. The incriminating material, which Marcos brought with him to Hickam Air Force Base in Hawaii when he fled, became available after more than two weeks of legal wrangling among Solarz, Salonga and Marcos' lawyers. The maneuvering gave the Philippine government a foretaste of what it will face in the months, and perhaps years, ahead as it tries to recover the former leader's riches. The jockeying was also an early test of relations between President Reagan, who has personally pledged to treat Marcos with "dignity," and Philippine President Corazon Aquino, who has indicated she would consider it an act of bad faith for the White House to protect the wily former President. Last week Washington attempted to strike an artful balance between the competing interests. While the Justice Department intervened in federal court to help secure release of the documents, the State Department was busy trying, unsuccessfully as it turned out, to negotiate a safe haven in Panama for Marcos, who was reportedly fearful of being subpoenaed for congressional hearings or brought to trial in U.S. courts.

The Marcos papers, carried from Manila in six suitcases, hint at a worldwide network of almost unimaginable wealth. One balance sheet alone lists a total of $88.7 million in five banks in the U.S., Switzerland and the Cayman Islands. Imelda Marcos' taste for opulent adornment was also in evidence. A document dated November 1984 shows $411,746 in purchases of jewelry, including emeralds, rubies and one 519-carat sapphire. There were indications that the Marcoses may have sensed their impending ouster. Among the papers were $4 million in certificates and bearer bonds, most of which were issued in the month before the couple departed Manila.

One of the most provocative discoveries was a one-page typewritten memo that appeared to be a ledger of 1980 contributions made by a San Francisco-based organization called the Mabuhay Corp. The firm was headed by Leonilo Malabed, a physician and longtime Marcos friend. The document, dated Feb. 15, 1982, lists $50,000 donations to G.O.P. Presidential Hopeful Ronald Reagan, Incumbent President Jimmy Carter and Democratic Senator Alan Cranston of California. The memo was not initialed or signed, and there was no evidence that these contributions, which would have violated federal law, were ever received. All three men vehemently denied ever getting money from Marcos, although Cranston later discovered that Malabed and an associate had contributed $1,000 to his 1980 campaign.

Though born a Filipino, Malabed is now an American citizen living in San Francisco and therefore could have contributed to U.S. political coffers without arousing suspicion. According to the documents, the source of Mabuhay's beneficence was Philippine military intelligence. On paper, only a fraction of the corporation's funds went into U.S. campaign coffers. Most of the money bankrolled travel for the Marcos family. In 1981, for example, Imelda Marcos spent $800,000 on "official" visits to Iraq, Kenya, Mexico and the U.S.--all at the expense of the military. Noted Congressman Solarz: "Imelda used the Philippine intelligence budget as the equivalent of the American Express Gold Card."

The documents also point to millions of dollars in kickbacks to the Marcoses from U.S. and Japanese companies doing business in the Philippines. One note refers to "amounts received" from five Japanese companies totaling more than $1 million. Others showed that Westinghouse Electric Corp. paid $11.2 million from 1976 to 1982 to obtain a lucrative contract to build the first Philippine nuclear power plant. The company last week reiterated that it had actually paid a grand total of $17 million over a ten-year period to Marcos Crony Herminio Disini, head of a now defunct construction conglomerate, to help cement the deal. Westinghouse insists the payments were legal and says it was unaware the money was destined for Marcos. The matter is being investigated by a grand jury in Pittsburgh.

In Manila, government auditors last week charged that Marcos diverted $6.25 million in interest on U.S. foreign aid money for his personal use. Initially, J. Roberto Abling, the former executive director of the Economic Support Fund, a subsidiary of the U.S. Agency for International Development, admitted that Marcos may have pumped $1.75 million of that amount into the last election. Other AID officials denied there were any irregularities, although they said Marcos did make an unsuccessful attempt in late 1985 to siphon off foreign assistance.

Malacanang Palace, the former presidential residence, continued to yield evidence of Marcos' ostentatious ways. No fewer than 15 limousines, five standard Mercedes-Benz cars, a BMW, a Datsun and a Nissan still sit in the mansion's garage, as does the plush personal bus that Imelda used for political outings. Its appointments include 14 armchairs, two beds, a kitchen and bath. Parked nearby is the hospital-on-wheels that accompanied Marcos on his campaign stops earlier this year, its dialysis machine and operating table pointed reminders of the former President's frail health.

Documents found in the palace also led to the discovery of five previously unknown guest cottages, paid for by the government but used by Marcos' relatives and friends, bringing the total of such buildings to 30. Another paper listed a $60,000 emerald necklace supposedly given by Imelda Marcos to First Lady Nancy Reagan. The White House denied that any such gift was received.

The hunt for Marcos' fortune promises to be long and complicated. "It's a lawyer's dream," says former State Department Counsel Davis Robinson. Salonga's Good Government Commission has already decided on an initial strategy: it intends to ask individual U.S. courts to freeze Marcos' assets pending adjudication of the claims in Philippine courts. Then it will ask the U.S. to enforce the decisions of those courts. The legal argument for hearing the cases in the Philippines is that the U.S. is forum non conveniens, literally an inconvenient place to try a matter involving so many Filipinos. The danger, of course, is that such a judicial process might be deemed unfair by the U.S. because Marcos would be unable to defend himself in a Philippine court. The resulting judgments therefore might be rendered unenforceable.

That hurdle might be overcome by deposing Marcos in the safety of a foreign refuge. Even so, Marcos might try to maintain that he is President-in-exile and thus still the sovereign of a foreign country, entitled to immunity from challenges in U.S. courts. The Aquino government's strongest counterargument is probably that sovereign protection belongs to the state, not to the individual, and terminates when he leaves office. "He might have had immunity while President," says Lori Damrosch, associate professor of International Law at Columbia Law School. "That has come to an end."

The Salonga commission has already succeeded in temporarily blocking the sale or transfer of five buildings Marcos allegedly owns in New York and Long Island and two homes linked to him in New Jersey. Last week Philippine government lawyers presented "smoking-gun" documents to the federal district court in New York that tied Marcos to four Manhattan properties worth an estimated $300 million. The papers, two handwritten declarations of trust dated April 4, 1982, and April 5, 1982, are signed by Joseph Bernstein, a New York real estate mogul. In them Bernstein states that, with respect to the Lastura Corp., the offshore corporation that owns the disputed properties, he is acting as a trustee for Marcos. In another development, the Aquino government went to court last week in Houston, claiming that Marcos, his family and several associates conspired to defraud the Philippines of some $500 million in order to buy property in five Texas counties. Requested damages: $2.5 billion.

As the search for Marcos' millions continued, President Corazon Aquino presided over a three-hour Cabinet meeting that failed, once more, to resolve the question of whether her technically illegal regime would be declared revolutionary, a move that some Aquino advisers fear would give the new government a dangerously authoritarian cast. Later, Justice Minister Neptali Gonzales said that Aquino intends to avoid further discussion of the issue. Instead, early this week she is likely to form a provisional government and announce plans for a new constitution, a return to a bicameral legislature, and local and parliamentary elections within one year.

The move is certain to please Defense Minister Juan Ponce Enrile, who has been an outspoken critic of the revolutionary approach. But it does not answer other concerns of the military, which doubts the wisdom of Aquino's well- publicized scheme to declare a six-month cease-fire with the Communist insurgents. Indeed, late last week Enrile set back Aquino's plans when he ordered troops to hunt down the insurgents who killed a town mayor and 15 others in the northern province of Cagayan. Declared Enrile: "We cannot allow innocent civilians and our soldiers to be butchered."

The strains between Aquino and the military could grow as the results of Salonga's Good Government investigation roll in. Privately, one pro-Aquino assemblyman suggested that the commission exercise prudence and not recklessly disturb Enrile, who served Marcos for more than 20 years. If the Defense Minister finds himself entangled in some complex commission investigation, say some Aquino supporters, Enrile, who oversees the country's 230,000-strong military, could easily do to Aquino what he did to Marcos: desert her government and move to establish his own.

& Aquino's establishment of a seven-member human rights-committee last week only heightened concern. Committee Chairman Jose Diokno announced that the government would reopen an investigation into the assassination of Aquino's husband Benigno, who was gunned down in August 1983 at Manila International Airport. When asked what would happen if the committee found evidence that former Marcos officials now allied with the Aquino government were involved in the murder, Diokno replied, "If they knew about it and did nothing, they are at least administratively guilty."

Marcos, for his part, spent another frustrating week at his Hickam Air Force Base residence trying to find a permanent home. The deposed ruler reportedly feels that the Reagan Administration has "thrown him to the wolves." Last week he asked the State Department to help him find a more suitable haven. Spain, his first choice, rejected him for internal political reasons. Then, late in the week, Panamanian President Eric Arturo Delvalle also refused to take the homeless leader, after his safe haven there seemed virtually guaranteed. Delvalle apparently made the decision in response to critics who said the issue was a "banana peel" that could jeopardize the stability of Panama. The unexpected move leaves the Reagan Administration in an increasingly uncomfortable position. Said one weary State Department official: "It looks like we're stuck with him." That may be premature. This week the U.S. will press ahead in its search for a home for the former President turned persona non grata.

With reporting by Nelly Sindayen/Manila and Alessandra Stanley/Washington