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.