The hunt for the Marcos' hidden wealth continues

By Jamil Maidan Flores

This is the second of a four-part series. The first part describes the pursuit of the Marcos wealth through open and legal means.

MANILA (JP): On May 20 1991, the South China Morning Post of Hong Kong reported in a front page story that "millions of dollars deposited by deposed Philippine President Ferdinand Marcos in a Hong Kong bank account have disappeared, allegedly siphoned off by officials of the Manila agency set up to investigate Marcos assets."

At that time officials of the Presidential Commission on Good Government (PCGG) were negotiating with Mrs. Imelda Marcos on the Hong Kong deposits of her late husband. The amount originally identified was US$200 million. When they looked again, there was only US$7 million left. The deposits had been raided by relatives of former officials of the PCGG in connivance with a Marcos nominee. A nominee is a person in whose name a deposit is listed but who is only fronting for the real owner. In an overseas telephone interview with a Manila journalist, Mrs. Imelda Marcos would later confirm that the raid of the deposits had indeed taken place.

Two years later, under the administration of President Fidel V. Ramos, the Philippine government would suffer another major setback in the effort to prove that the Marcos millions were ill- gotten: A U.S. jury cleared Westinghouse of charges that it bribed President Marcos to gain a contract to build a nuclear plant on the Bataan peninsula. The plant had cost US$2.3 billion to build. Financed by foreign debt, it was costing the Filipino taxpayers some US$300,000 daily in interests alone. Because the plant was a symbol of the Marcos administration, the Aquino administration closed it down and pushed corruption charges against Westinghouse.

Actually Westinghouse could have settled out of court and got the plant into operation at a time when its 600 megawatt output was desperately needed. Metro Manila was being plagued with eight-hour power outages. But the Philippine Congress thought a favorable court judgment would bring a windfall in dollars and scuttled the negotiations. They were sadly mistaken. The cost of litigation to the Philippine government was estimated at US$56 million, with about half of that going to lawyers. And the plant produced not a single watt of electricity.

By then it had become a pattern and a refrain, the PCGG losing its cases.

In comparison to these troughs on the litigation front, the clandestine effort to ferret out the Marcos wealth from the Swiss banks where they had been deposited, "Operation Big Bird," fared quite a bit better.

Because of "Big Bird," nearly US$600 million identified as Marcos deposits in Swiss banks could be transferred in escrow to the Philippine National Bank in 1998. Because of "Big Bird," the rest of the Marcos deposits in Swiss banks, by some estimates amounting to $20 billion, have been frozen since 1986 and today probably remain beyond the reach of the Marcoses themselves.

The implementors of "Big Bird" also claim that they caused some $7.5 billion in Swiss bank deposits of the Marcoses to be identified. Certainly the documents of "Big Bird" could have been useful in the New York trial of Mrs. Marcos -- some say it could have turned the tide in favor of the prosecution, but strangely the Philippine government and its lawyers failed to make use of them.

One factor that worked in "Big Bird's" favor was that by the time it had a name in 1986, it had been a long time in hatching. As early as 1982 when Marcos was not yet showing any of the symptoms of the disease that would sap his physical strength and reduce his acumen, a number of individuals were already looking for a clandestine way of bringing the Marcos deposits and those of other cronies in Swiss banks back to the Philippines.

The principals of this effort were:

* Michael "Mike" Cesar U. de Guzman (not the same as, and probably no relation to, the Mike de Guzman of Busang gold infamy), a banker who had helped the Marcos administration in a number of financial projects;

* Brig. Gen. Jose T. Almonte, an intelligence officer who fought on the side of the Vietcong during the Vietnam war and at that time a core member of a secret reformist society in the Philippine military;

* Victor Bou Dagher, a Lebanese banker who ran a network of well-placed contacts not only in the Swiss banking system but in the various banking centers of Europe and the Middle East; and

* A "Group of Individuals" who belonged to that network and who had access deep into the labyrinth of the Swiss banking community.

It was a potent combination, but it had no chance to be effective until the EDSA Revolution broke out in February 1986 and Marcos was toppled and he and his family and closest associates were spirited by the American government to Hawaii. There, the Marcoses lived in a virtual glass cage at the Hickam Air Force Base in Honolulu, their every little move closely monitored by the U.S. government.

They were therefore in no position to control whatever assets they had in foreign countries or even in the Philippines. Meanwhile, the Swiss banking authorities were poised to freeze the Marcos assets in the Swiss banks. The Marcoses needed to bring their deposits out of Switzerland but they did not want to be observed doing it by the U.S. and the Philippine governments. All the family members, close associates and friends were under close watch. So who would do this for them?

This was the chance for "Big Bird" to move in.

According to Mike de Guzman, he was known but not close to the Marcoses. They knew him as a man with excellent ideas in financial operations. He had been helping the Marcos administration attract Filipino funds deposited abroad to come back to the Philippines as investment. For this purpose he had set up a bank of his own in Vienna, the Export-Financierungsbank. Rather unkindly the Philippine press often referred to him as a "bagman" of the Marcoses.

In a testimony before the Committee on Public Accountability of the Philippine House of Representatives in 1989, he would recall how "Big Bird" was hatched, how it matured, flew high and got shot down.

Although De Guzman maintained that he was only a peripheral acquaintance of the Marcoses, he freely spoke of his close friendship with Col. Irwin Ver, the son of Gen. Fabian C. Ver, the trusted military aide and relative of President Marcos.

In the middle of March 1986 (according to that sworn recollection), Mike de Guzman, after consulting with Gen. Almonte by long distance telephone, and accompanied by Victor Bou Dagher who was advising him and feeding him ideas all the time, flew to Honolulu, Hawaii. His purpose: to convince the Marcoses to give him the authority to withdraw their Swiss bank deposits. In Honolulu, Mike de Guzman was able to get in contact with Col. Irwin Ver.

After consulting with his father, Gen. Fabian C. Ver, Col. Ver brought de Guzman into the presence of Mr. and Mrs. Marcos at Hickam Air Force Base.

To the deposed President and his wife, de Guzman proposed that some of their funds be transferred to his bank, the Export- Finanzierungsbank in Vienna, because the Swiss government was poised to freeze their deposits. He told them that this was not the time to trust the Swiss banking system. He reminded them of well known cases of depositors whose assets were now forever frozen in Swiss banks.

It was pure audacity but it succeeded, according to de Guzman in his sworn testimony. Mr. and Mrs. Marcos, through Ferdinand "Bongbong" Marcos Jr., each gave de Guzman a certificate of power of attorney to withdraw a number of deposits in Switzerland and transfer these funds to de Guzman's bank in Vienna. That means they gave him notarized documents certifying that he was their agent when it comes to these deposits.

Mrs. Marcos also gave him travelers' checks worth $300,000 to hold until further notice. A little later, Gen. Ver himself would entrust a check for $150,000 for de Guzman to encash. That check, de Guzman said, had been issued by business tycoon Lucio Tan, today the majority owner of the embattled Philippine Air Lines (PAL). All that money, he said, would be used to help finance "Operation Big Bird."

Betrayal, of course, is always a dirty thing and, according to de Guzman, he agonized over it during the operation in Hawaii, not because he gave a damn about the Marcoses but because he cared deeply for Col. Irwin Ver. One of Col. Ver's sons had de Guzman for a godfather. Among Filipinos, enormous sentiment is attached to such a relationship. But, he said, he had to do the right thing, which was to deceive and betray the Vers and the Marcoses.

Armed with the certificates of power of attorney, de Guzman and Bou Dagher rushed to Switzerland. But by the time they could meet with the Swiss contact of the Marcoses, Ernest Scheller of Credit Suisse, on March 26, 1986, the Swiss Banking Commission had issued a freeze order on the Marcos deposits.

"The freeze is on," Scheller kept repeating. De Guzman questioned the legality of that order on grounds the Commission had no authority to issue it. But Scheller stalled while the Swiss banks went to the Swiss Federal Justice and Police Department to get a proper and legal freeze order on the Marcos deposits. That second freeze order, unquestionably legal this time, was issued on April 20 1986.

But "Big Bird" was not by any means doomed. It had succeeded in documenting the existence of a number of Marcos deposits and the receipt by a bank of the powers of attorney regarding those funds. The deposits in Credit Suisse and various other banks were recorded to be owned by 11 foundations with such names as "Aurora," "Avertina," "Carmello," "Lazano" "Vibur," "Palmy," etc.

More information was being dug up by the "Group of Individuals." They told de Guzman, however, that they would turn over the information only to a representative of the Philippine government. They were also asking for 20 percent of the initial batch of deposits that would be recovered. That would mean about $42 million, an investment that, if de Guzman's estimates were correct, could lead to the recovery of $20 billion.

Sometime during the attempts of de Guzman and Bou Dagher to withdraw the Marcos deposits in March to April 1986, the contact man, Ernest Scheller of Credit Suisse, telephoned Marcos in Hawaii to verify if he had indeed given power of attorney to de Guzman. Marcos confirmed this and agreed to the move. But apparently Scheller managed to stall until the freeze order could arrive.

What de Guzman did next was to go to Manila toward the middle of June 1986 to brief Gen. Almonte on these developments. Both of them sought the help of Mr. Jose "Peping" Conjuangco, younger brother of President Aquino, to get the necessary authorization from the Philippine government to seek a selective de-freezing of the Marcos deposits. "Peping" Cojuangco was a former member of the House of Representatives and would soon be a lawmaker again but at that time he was out of office.

Once the Marcos deposits of $213 million were de-frozen these would then be transferred to de Guzman's bank in Vienna from where they would be transferred to the Philippines. "Peping" Cojuangco got Gen. Almonte and de Guzman to meet with PCGG Chairman Jovito Salonga to get the government's support for the operation.

Salonga was from the beginning skeptical of the whole idea but he finally gave de Guzman a letter of introduction to Ambassador Luis V. Ascalon in Switzerland with instructions to arrange for a meeting with the Swiss lawyers hired by the Philippine government so that de Guzman could discuss with them "alternative strategies for the recovery of the Marcos deposits."

A PCGG Commissioner, Raul Daza, was willing enough to join de Guzman in Bern to secure the de-freezing of the Marcos deposits, but Salonga canceled his trip at the last moment. De Guzman then asked Gen. Almonte to go with him in place of Raul Daza because a representative of the Philippine government must meet with Bou Dagher and the Group to get the freshly dug-up information about other Marcos deposits. Gen. Almonte made the trip.

At a meeting in Bern, Switzerland, on June, 25 1986 the Group put into the hands of Gen. Almonte written information on other Marcos deposits in Switzerland. The following day they met the lawyers hired by the Philippine government, Dr. Sergio Salvioni and Moritz Louenberger (both of whom, strangely, were members of the Swiss Parliament) and Guy Fontanet. During that meeting, Salvioni told Gen. Almonte and de Guzman that any request by the Philippine government for a de-freezing of the Marcos deposits had to be signed by the Solicitor General of the Philippines.

Back to the Philippines Gen. Almonte and de Guzman went. Together with Peping Cojuangco, they sought the advice of the older brother of the President, Pedro Cojuangco. The older Cojuangco's advice was that they should brief the President on "Operation Big Bird." On July 1, 1986, de Guzman and Gen. Almonte briefed President Aquino who then gave approval to the operation.

A team was formed with Solicitor General Sedfrey Ordonez as head and Gen. Almonte and Mike de Guzman as members. They would go to Switzerland and seek the de-freezing of the identified Marcos deposits, making use of a Swiss law on International Mutual Assistance on Criminal Matters (IMAC). The essence of that law is that if a government is able to prove that a Swiss bank deposit was stolen from a country, the bank concerned must turn over the deposited funds to the government claiming it.

The team arrived in Switzerland on July 4, 1986. They presented the Philippine request to the Swiss Federal Justice and Police Department. As Gen. Almonte recalls it today, at that time the Swiss government had announced that it would turn over the funds to the Philippine government if the Philippine government could identify the Marcos deposits. Now here were the deposits identified through genuine certificates of power of attorney. On July 7, 1986 the Department issued the order unfreezing the relevant accounts. Again, Ernest Scheller notified Marcos of the new move of de Guzman to transfer the deposits to the Export- Finanzierungsbank in Vienna. Again Marcos agreed to the move.

So everything was set for the transfer of the $213 million from Swiss banks to de Guzman's Vienna bank. The achievement would later be considered by international observers as a watershed event in the history of "frozen deposits" in Swiss banking.

What was the guarantee that de Guzman would not run away with the money once it was placed in his bank? Among several safeguards was the fact that the only signatories concerning that money were Gen. Almonte and Solicitor General Ordonez. There was supposed to be no way he could move that money from any place to anywhere without their signatures.

By then, Gen. Almonte and Solicitor General Ordonez had become directors of that bank, together with Alejandro "Alex" Melchor, an estranged former Executive Secretary of Marcos who would subsequently become Ambassador to Moscow of the Aquino administration. Two representatives of the Austrian Minister of Finance were also members of the board as required by Austrian law. So how, it would be pointed out before the House Committee on Public Accountability, could de Guzman run off with the money?

It was at this point that the "Big Bird" team received news that the Group of Individuals had succeeded in identifying more banks in Switzerland that were holding Marcos deposits with a total amount of $3 billion. They said they were also on the trail of another batch of deposits that would up the total deposits identified to $7.5 billion.

Gen. Almonte and de Guzman were therefore in high spirits. It was also at this point that "Operation Big Bird" was winged.

On the pretext of visiting a relative in Vienna, Solicitor General Ordonez disappeared from view while Gen. Almonte and de Guzman waited for the actual transfer of funds to take place. This did not happen.

It would later be revealed by the Swiss lawyer Salvioni that when Solicitor General Ordonez was in Vienna, what he did was not to visit relatives but to get a look at the Export- Finanzierungsbank and there tried to register his signature. He found the bank to be something of a hole in the wall with only one employee.

The research of the lawyers also showed that the bank was not very solvent and that personalities identified closely with Marcos were involved in it. This should not have been considered strange since the bank, according to de Guzman, was precisely put up as an instrument of the Marcos administration. But Ambassador Ascalon, Solicitor General Ordonez and the Swiss lawyers were worried. They were also all the while receiving instructions from PCGG Chairman Salonga.

That was when the Solicitor General, on behalf of the Philippine government, sent a request to the Swiss authorities for a change in the procedure of payment so that the funds would not be transferred to the Vienna bank of de Guzman but directly to the Philippine government "in a manner that would be specified later."

It would later be specified that the money be transferred to a branch of the Credit Suisse in another city in Switzerland in the account of the Philippine government. There, naturally, it would remain frozen.

De Guzman who had betrayed his friends to help the Philippine government now felt betrayed by officials of the government he was trying to help.

The request for the change in the manner of the transfer of funds was clearly not in accordance with the powers of attorney issued by the Marcoses.

As a matter of course, Marcos was notified of the change. Marcos, who until that time probably suspected nothing, now promptly did the logical thing: he rescinded the power of attorney he gave to de Guzman by certifying through telefax that he did not know de Guzman, that he never gave de Guzman power of attorney, and that he did not have a deposit in any Swiss bank.

Inexplicably Mrs. Marcos never rescinded the authority that she gave to de Guzman. Of the US$213 million in deposits covered by the certificates of power of attorney, US$13 million was hers. For the second time, the Swiss Federal Justice and Police authorities froze the Marcos assets. Acting on the petition of Marcos lawyers, a cantonal court in Zurich overruled the July 7 de-freeze order of the Swiss Federal Justice and Police Department. "Big Bird" had been shot.

As de Guzman would later point out in his congressional testimony and to which the Special Committee on Public Accountability of the Philippine House of Representatives would essentially agree, the Swiss lawyers of the Philippine government could have successfully questioned the legality of the second freeze order and the ruling of the cantonal court.

In the first place, the court order was issued without hearing the side of the directly affected party, Michael de Guzman. In the second place, Mrs. Marcos never rescinded the power of attorney given to de Guzman and that power of attorney was therefore still valid. But the Swiss lawyers of the Philippine government refused to act. De Guzman and Gen. Almonte concluded that the lawyers were following instructions from higher Philippine government officials.

Still, the Swiss authorities indicated that they were willing to accommodate the Philippine government if it made a new request for a de-freeze order. But the leader of the "Big Bird" mission, the Solicitor General, refused to sign the necessary papers. He would no longer work with Gen. Almonte and Mike de Guzman. "Big Bird" was dead.

The documentation work of the Group of Individuals ground to a halt, having been operationally and financially compromised. The Group had spent some US$2.5 million in their part of the operation.

Question: Why did Gen. Almonte not make use of the information on the other Swiss bank deposits of the Marcoses that the Group gave him?

His answer: With the Marcoses and the entire Swiss banking community already alerted to "Operation Big Bird," it was only a matter of hours before these deposits could be re-documented, given new names or numbers, and transferred from one bank to another in a circle of operationally linked banks. That kind of information is useful only when the banks do not know you have it.

Late in December 1986, President Aquino, probably wondering whatever happened to "Operation Big Bird," summoned both General Almonte and Michael de Guzman to Malacanang Palace. Both would later testify under oath that they complied with the President's summon and went to Malacanang but were prevented from seeing the President by then Executive Secretary Joker Arroyo.

She would only hear of "Big Bird" again three years later. (To be continued.)

The writer, a former Manila journalist, wrote this piece in a strictly Philippine context without reference to the situation of any other country. The views expressed here are his personal views.