Estrada owned stock at heart of market scandal

Estrada owned stock at heart of market scandal

MANILA (AP): Philippine President Joseph Estrada secretly owned stock in a gaming company and made huge profits from a dramatic surge in its share price, a former Estrada cabinet member said on Thursday.

Testifying in Estrada's impeachment trial, former Finance Secretary Edgardo Espiritu, who resigned in January 2000 over allegations of corruption in the administration, said the president admitted owning shares in BW Resources Corp., which became the center of a stock manipulation scandal.

Espiritu said he talked with Estrada alone in the president's office in mid-1999 and was surprised at the Estrada's reaction when they discussed the rapid gains of BW shares.

"In the excitement of the president in regard to the upsurge in BW shares, he told me, 'I am now making a lot of money in BW shares,"' Espiritu said.

Estrada told reporters Thursday he's saddened but unperturbed by Espiritu's decision to testify. "It's very unfortunate, he used to be a member of my official family," the president said.

Estrada's impeachment trial began Dec. 7. A conviction on any charge by two-thirds of the 22-member Senate would force him from office.

Estrada's role in the BW scandal has dominated the trial for two days, with two stock exchange regulators claiming the president tried to get Dante Tan, BW's then-controlling shareholder, cleared in their investigations into price-fixing.

Espiritu said Estrada indicated he did not want Espiritu to testify. Espiritu said Estrada called him at the airport shortly before he boarded a plane to spend Christmas holidays in the United States.

"Ed, I heard you will be testifying," Espiritu quoted Estrada as saying. "He told me, 'We are friends, aren't we? Just tell me if I can help you with anything."'

Presidential spokesman Ernesto Maceda said on Thursday Estrada did call Espiritu but it was only to wish him a good trip. "The president told me that he has never discussed BW with Espiritu," said Maceda.

At the trial, Espiritu said Tan told him that part of Tan's BW holdings were actually owned by Estrada.

Espiritu said he realized Tan was telling the truth after Estrada claimed both he and Tan lost a lot of money following the collapse of BW share prices in late 1999 and that they were the "victims" in the stock price manipulation.

He said Tan claimed the price manipulation was engineered by three of his business rivals, including businessman Mark Jimenez, also a friend of Estrada.

Estrada later called the three businessmen and ordered them to "restore" Tan's profits, Espiritu said.

Espiritu said he appealed to Estrada to "do something" to prevent the scandal from further damaging the economy. "I told the president the problem was becoming so big," he said. But he said Estrada expressed more concern about his personal losses. "I was discouraged," Espiritu said.

The stock scandal centers on dramatic price swings in BW stock prices in 1999. The shares rocketed 5,200 percent to 107 pesos (US$2.1) before plunging, damaging many small investors and setting off a government probe.

Tan was charged in December with violating the securities act after investigators found he engineered a rise in BW stock and failed to disclose his ownership of the company.

Espiritu said he resigned in January 2000, telling the president he "could no longer take what is happening to our government, which is against my conscience."

He said he told Estrada to "do something" with his "unofficial friends" and the difficulty he had in handling corruption in the internal revenue and customs agencies.

He said he warned Estrada that BW scandal "might explode. I told the president that despite your losses, the more important thing is the remaining four years of your administration."

Estrada was implicated in the stock scandal when former Securities and Exchange Commission chairman Perfecto Yasay accused the president of ordering him to clear Tan in his investigation. Estrada called Yasay a liar.

Allegations of corruption first surfaced in October when Ilocos Sur Gov. Luis Singson, a former drinking buddy of Estrada and a reputed illegal gambling boss, accused the president of pocketing more than 400 million pesos (US$8 million) in bribes from illegal gambling lords and 130 million pesos ($2.5 million) in tobacco tax kickbacks.