Recovering Marcos’ ill-gotten wealth: After 30 years, what?

By Philip M. Lustre Jr.

Source: Rappler.com

 

The irony – or tragedy – is that despite overwhelming evidence against them, not one of the Marcoses and their cronies had spent a day in prison for plundering the nation

MANILA, Philippines – The figures look staggering and impressive.

The Presidential Commission on Good Government (PCGG), tasked to recover the ill-gotten wealth of dictator Ferdinand Marcos, his family, and cronies, has recovered over the last 30 years at least P170 billion (nearly $3.6 billion) in cash, despite working on an overall budget of P2.9 billion ($61 million) over the same period.

Various estimates put the total Marcos loot at between $5 billion to $10 billion, however.

The total recovery efforts could reach over P200 billion ($4.2 billion), as the PCGG winds up its task and sells the remaining illegally acquired assets in its possession and recover some more illegal assets in civil cases pending in various courts.

But it’s been a period of false starts and dead ends, cloak-and-dagger operations, and, ultimately, successes, failures, and the ubiquitous feelings of frustration, helplessness, and powerless among the people tasked to do the job.

The illegal asset recovery program has been problematic, both in the way it was thought out and how it was implemented.

Following are the key concerns:

  • Inconsistency in strategy. Because it did not have a template to work on, the government committed various hit-and-misses in its strategy to recover Marcos’ ill-gotten wealth. This was exacerbated by changes in post-EDSA administrations.
  • Burden of legal processes. Anchored on the spirit of a democratic system, the recovery efforts had to adhere to strictly legal processes, that often proved cumbersome. To this day, the anti-graft court Sandiganbayan is still hearing recovery cases on the properties of Marcos and his cronies.
  • ‘Doves’ and ‘Hawks’. Following Cory Aquino’s two executive orders on how to recover ill-gotten wealth, factions in her Cabinet shared opposing approaches to the problem. One group pushed for the immediate sequestration of ill-gotten properties and file appropriate charges in court. Another wanted to negotiate with Marcos cronies for an out-of-court settlement. One more group planned unconventional attempts to recover Marcos’ bank deposits, among them the botched “Operation Big Bird.”

Does crime pay?

The irony – or tragedy – is that not one of the Marcoses and their cronies had spent a day in prison for plundering the Filipino nation.

Despite the overwhelming pieces of evidence showing the Marcoses and their cronies’ participation and complicity in the unparalleled raid of the national treasury and the subsequent transfers of their loot elsewhere, the post-Marcos administrations have hardly succeeded to bring any of them before the bar of justice.

The lesson in history seems to be that crime pays. When one steals, he has to steal big to buy his freedom. Indeed, the issue ill-gotten has yet to reach an acceptable closure after 30 years.

It is said that the post-EDSA Revolution administrations, except Corazon Aquino’s, are hardly serious in running after the plunderers. Proof: Except for the dictator, who died in 1989, the Marcoses are back in power.

LEFT BEHIND. The Marcos family leaves behind documents and personal belongings in Malacañang. Photo from the Presidential Museum and Library

Son Ferdinand Jr. is now a senator and running for vice president in the May 9 presidential polls. Daughter Imee is now the Ilocos Norte governor. Wife Imelda is a lawmaker representing Ilocos Norte’s 2nd district.

They do not live on bended knees, as what scions of dictators do. They wield influence along the corridors of power. They are back with vengeance, as if to mock the restored democracy.

They are revising history, using the loot to rewrite and reinterpret what had transpired during the martial law days. (READ: Bongbong Marcos: EDSA disrupted Marcos’ plans for PH)

The scuttlebutt is that the Marcos loot is so big that it would take many decades to recover them. Besides, they have successfully hidden an undetermined amount of the illegal wealth to empower them to stage a political comeback. They have done their comeback with flying colors.

 

Destabilized regime

Both Bautista and Amurao acknowledged that the overall recovery efforts have been anchored within the spirit and parameters of the democratic system, which the Cory Aquino government had sought to rekindle, restore, and reinvigorate immediately the EDSA Revolution.

Hence, the PCGG has largely stuck to the legal processes in their search for the hidden Marcos loot.

“Please remember that we did not have a template to recover the ill-gotten wealth of the Marcoses and cronies,” Amurao said. “It was a mandate imposed on us by the Filipino people in the EDSA Revolution.”

In the august hall of the Senate, Rene Saguisag, then a senator, used to say that the failure to go after and jail the plunderers and cronies stemmed from the inherent weakness of the Cory Aquino government.

It was a fledgling government threatened by military mutinies and political destabilization.

“We did not even know if we would be around by tomorrow,” Saguisag said with an intense feeling of exasperation, as he recalled the government’s exercises of brinkmanship to survive the debilitating onslaughts of coups and destabilization campaigns. It was an open admission of the limitation of the first post-EDSA government that conceived and pursued the recovery efforts.

 

Martial law and failed promises

After declaring martial law in 1972, Ferdinand Marcos, who was first elected in 1965, ruled for another 13 years. But the promised changes did not happen. Instead, he created the following legacy:

  • Centralized corruption, where he earned fat under-the-table commissions from big-ticket state projects and deposited the illicit proceeds in various foreign banks, mostly in Switzerland and Liechtenstein, which serves mainly as a tax haven;
  • Crony capitalism, where his stable of cronies replaced the pre-martial law oligarchs, cornering fat state projects, forming monopolies in the coconut and sugar industries, obtaining special import privileges in select industries in the manufacturing sector, and grabbing monopoly contracts in the services sector, which included the waterfront; and
  • Unrestrained and wanton human rights violations, where tens of thousands of student activists, religious workers, and other anti-Marcos Filipinos were arrested and imprisoned without charges, released without any explanation, tortured, and summarily executed, and disappeared without any trace.

Although the first 4 or 5 years brought about sustained economic growth, Marcos ruled without mandate, triggering widespread criticism in the domestic front and the international community. He was not popularly elected beyond 1973, but held several rigged referenda to reflect ostensibly the people’s approval of his martial law regime.

Marcos, Imelda and their cronies, which constituted the martial law-sponsored new oligarchy, were behind what is plain and simple kleptocracy, or the use of power and state structures to plunder and accumulate wealth and enable them to live like kings and queens even for 20 lifetimes.

Former Senate President Jovito Salonga, the first PCGG chair, estimated their total loot at between $5 billion to $10 billion. After 30 years, the estimate stands. Even the international community accepts these figures.

 

1986: Game-changing revolution

The four-day EDSA People Power Revolution in 1986 was the game-changing political upheaval that led to the determination of the scope and extent of the illegal wealth the Marcoses and their cronies had acquired and stashed here and abroad.

Marcos left many documents in Malacañang and these documents revealed the paper trail of an intricate web of corruption that led to their accumulation of illicit wealth. The paper trail has led to the discovery and identification, although not all, of the illegally acquired wealth and the dynamics of corruption.

Hence, the first order of the day for the administration of President Corazon Aquino was the full documentation and recovery of the illegally acquired assets of the Marcoses and cronies, and the prevention of their dissipation and transfer to other parties.

Three days after she took her oath as president at the historic Club Filipino in San Juan, Mrs. Aquino issued Executive Order No. 1 creating the PCGG as the quasi-judicial, collegial body tasked primarily to recover the illegally acquired wealth that accumulated during the dictatorship.

It was her first official act as president. She named Salonga as chair, and Ramon Diaz, Pedro Yap, Raul Daza and Mary Concepcion Bautista as commissioners.

EO 1 signaled to the world the political will of the new government to address the problems caused by the dictatorship.

With the national coffers emptied by the toppled dictator, Mrs. Aquino was then hoping that her government could recover a respectable portion of the illegal assets to provide social services for the Filipino people.

But this did not happen overnight.

 

No confiscation

Corazon Aquino, as the first post-EDSA Revolution president, declared her government as “revolutionary,” with her exercising the executive and legislative powers until a new constitution was put in place.

Governing under the temporary “Freedom Constitution” that later gave way to the 1987 Constitution, Mrs. Aquino was a virtual dictator during those days. But she chose not to be one.

The Aquino administration did not pursue immediate confiscations of suspected illegal assets. Broadly, Mrs. Aquino, through EO 1, gave PCGG the task to recover their ill-gotten wealth and take over or sequester business enterprises and entities they owned or controlled.

EO 1 also sought to adopt safeguards to avoid any repetition of large-scale corruption under her government and institute adequate measures to prevent any backsliding.

 

Second EO

Mrs. Aquino clarified her stand on the illegal wealth issue, when, on March 12, 1986, she issued Executive Order No. 2, which states that all claims on those illicit wealth and funds of the Marcoses and cronies should follow “the requirements of justice and due process.”

Clarifying the broad strokes of EO1, EO 2 said: “It is the position of the new democratic government that former President Marcos and his wife, Imelda Romualdez Marcos, their close relatives, subordinates, business associates, dummies, agents or nominees be afforded fair opportunity to contest these claims before appropriate Philippine authorities.”

EO 2 has led to the freezing of those assets and pieces of property of the Marcoses and cronies in the country, the prohibition of any person from transferring, conveying, encumbering or depleting or concealing those assets, and the requirement that persons holding those assets should make full disclosure to the PCGG.

Furthermore, EO 2 empowered the PCGG to make representations with foreign governments, where the illegal assets are based and appeal or request foreign governments to prevent their transfer, conveyance, encumbrance, concealment, or liquidation by the Marcoses and their ilk, pending the outcome of the investigations whether those assets were acquired by improper or illegal use of state funds.

Because of the two EOs, the PCGG had sequestered numerous assets and business enterprises suspected of being part of the illegal wealth of the Marcoses and cronies and, for business enterprises, placed fiscal agents to prevent their transfer and dissipation and ensure continuity of their operations until the settlement of the ownership issues.

 

Clashing views

Despite the marching orders, the PCGG was beset with controversies stemming from clashing views of its leaders on the implementation of the two presidential orders.

A faction believed to go all-out in the recovery efforts by sequestering those questionable assets and filing appropriate charges before the court. Constituting the hawks within the PCGG, they did not want to give any quarters to the dictator and his ilk.

But another faction felt it made better sense to negotiate with cronies for an out-of-court settlement. Court battles are messy; they take time before decisions are rendered. The prospect of out-of-court settlements, where Marcos cronies would return sizable amount of illegal assets in exchange for immunity from lawsuits, loomed as an option. (READ: Search for Marcos’ wealth: Compromising with cronies)

In the end, the Cory Aquino government adhered to the two approaches.

In most instances, the PCGG has filed court charges – criminal and civil – against the Marcoses and certain cronies.

But, in other instances, the government entered into out-of-court settlements, albeit selectively, with certain cronies.

It was the best of both worlds. But Amurao noted that quite a number of those court cases remain pending in various local courts.

In hindsight, Amurao said it would have been better for the PCGG to have immediately filed forfeiture proceedings on those suspected illegally acquired assets instead of going through the circuitous route of criminal and civil suits.

“The burden of proof would have been on the Marcoses and the cronies, not on the government,” Amurao said. “In forfeiture proceedings, they would be the ones who would explain the ownership issues.”

 

Botched attempts

Unconventional attempts were also conceived and considered to recover the secret Marcos bank deposits in Switzerland, Liechtenstein, Vanuatu, British Virgin Islands, Cayman Islands, Bahamas, Monaco, Austria, Hong Kong, the Netherlands, United States, among others, and bring the funds back to the country.

Operation Big Bird, quietly conceived few months after the Marcos downfall, sought to recover the alleged $7.5 billion of secret bank deposits and assets scattered in various parts of the world. Banker Michael de Guzman was the prime mover of the scheme to withdraw the Marcos bank deposits and remit them to the Philippine government on one condition: a commission of a 20 percent from all recovered funds. (READ: What Bongbong Marcos knew of Swiss deposits)

De Guzman claimed that he had personal knowledge of those secret funds. No less than Marcos told him of those deposits when he met him in the Marcoses’ house in Honolulu in March, 1986. Marcos tapped him to withdraw their Swiss bank deposits after Swiss authorities froze their assets there.

De Guzman claimed that he met Marcos largely through the intercession of Col. Irwin Ver, son of Gen. Fabian Ver. At that time, Marcos was frantic because of the freeze order on their Swiss assets. Marcos issued the document giving him the power of attorney to withdraw those funds. He claimed to have gone to Switzerland thrice to withdraw those deposits, but he failed.

Because of his failure, de Guzman said he had decided to switch sides. He claimed to have networked with Victor Bou Dagher, a Lebanese national residing in Austria, who claimed to have connections with the European banking network. De Guzman and Dagher sought audience with retired Brig. Gen. Jose Almonte, who approved and joined the plan along with activist Charlie Avila.

Almonte later brought the scheme to Mrs. Aquino’s attention, but Salonga, in his capacity as PCGG chair, did not buy it, as he thought it could be a sting operation.

Then Solicitor General Sedfrey Ordoñez rejected it upon learning that de Guzman wanted an advance of $250 million for the operations.

Operation Big Bird did not take off. But it had succeeded to bring to the attention of the international community the unbelievable magnitude of the Marcos loot abroad.

Operation Big Bird was not the last scheme of its kind. In 1991, Operation Domino became public, as its proponent, Rainier Jacobi, an Australian national, claimed he had identified after 12 years of sleuthing the alleged Marcos gold bullions worth $13.2 billion hidden and deposited in a warehouse in Kloten Airport in Switzerland and secret Swiss bank deposits of $14 billion under the name of Irene Marcos Araneta, the youngest of the three Marcos children.

Just like de Guzman, Jacobi said he intended to work for their recovery and return on one condition: a 10 percent commission. But the PCGG did not take Jacobi seriously. It viewed de Guzman and Jacobi as a pair of treasure hunters, whose hunt could be more of a miss than a hit.

 

Drastic moves

The PCGG took the country by surprise when, in 1986, it sequestered 263 firms and shareholdings of 146 other firms, and assigned a number of fiscal agents and volunteers to prevent the dissipation and transfer of resources in the sequestered firms. But the PCGG dismissed over the next two years a number of erring fiscal agents and volunteers.

The PCGG likewise took custody of the identified local Marcos assets, including the jewelry collection the Marcoses hurriedly left in Malacañang, filed the first 39 civil cases for the recovery of the Marcos assets, and recovered P157 million ($3.3 million) in cash dividends from Philippine Overseas Telecommunications Corp. (POTC) and Philcomsat, two sequestered firms.

It was also in 1986 when the PCGG, showing political will to recover Marcos assets in foreign countries, worked on two most difficult issues of the entire recovery efforts: the recovery of the Marcos bank deposits in Switzerland and the criminal prosecution of the Marcoses.

The PCGG filed with Switzerland a request for legal assistance to recover the identified Marcos Swiss deposits of $340 million at that time. In the absence of any bilateral treaty on treatment of illegal wealth deposited in Swiss banks, the PCGG relied on the provisions of the International Mutual Assistance on Criminal Matters Act (IMAC) as its legal bases.

The IMAC, also called mutual legal assistance treaty (MLAT), is a pact between two or more countries for the purpose of gathering and exchanging information mainly to enforce public laws or criminal laws.

The Swiss government froze the Marcos assets there, but it was in 1987 when the Swiss Supreme Court, in an unprecedented decision, upheld the Philippine claim on the Marcos deposits and agreed to lift the banking secrecy on these deposits. The lifting enabled the PCGG to identify other Marcos deposits, raising the total of Marcos deposits to $658 million after 25 years.

What the Swiss Supreme Court did was a breakthrough.

It was the first time that the Swiss government gave way to claims on illegal wealth of dictators. The Swiss government had reacted to widespread perceptions that the country’s banking system, enjoying iron clad guarantees for the secrecy of their deposits, had become a haven for dictators.

 

Imelda’s acquittal

It was also in the turbulent 1986, when the PCGG filed criminal charges against the Marcoses in the US District Court for violations of the Racketeer Influenced and Corrupt Organizations Act, or the RICO Act. It accused the Marcoses of racketeering, as they converted the Philippine government machinery into a virtual criminal organization geared to plunder the country of its resources.

The court trial involved only former first lady Imelda Marcos; husband Ferdinand died in 1989. It had its drama, but the jury acquitted her in 1992 in what was a major setback for the recovery efforts. Her acquittal enabled the exiled former first lady to return to the country.

The PCGG likewise secured in 1986 from the New Jersey Supreme Court the award of titles to two Marcos assets in New Jersey: the Princeton Pike property, which the PCGG sold in 1987 for an amount equivalent to P34.6 million (around $727,000), and the Pendleton Drive property.

Moreover, the PCGG filed a $200 million claim in 1986 on four New York buildings that constituted the hidden assets of the Marcoses there: Crown Building; Herald Center on the 34th and 6th Avenues; 200 Madison Avenue; and 40 Wall Street on the 57th and 5th Avenues. The New York City Federal Court responded by freezing those four New York assets.

The PCGG found out quite belatedly that the four New York buildings were heavily mortgaged. When sold to private parties, the proceeds the government received were quite measly when compared to the original claim of $200 million. The Herald Center was sold in 1989 for $25 million, but only $1.5 million went to the government due to heavy mortgages.

The 40 Wall Street (Trump Building) property was sold in 1989 in a foreclosure sale of $3.25 million. The Crown Building was sold in 1991 for $93.6 million, but only $769,852 went back to the government because of heavy mortgages.

The PCGG recovered only $189,149 from the sale of 200 Madison Avenue property. The PCGG received the equivalent of P58.3 million ($1.2 million) from the sale of Olympic Tower, a New York property, which was not included in the original list of 4 New York assets.

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