This is a special seed of The Gardener’s Tales
NOTES IN FORM OF A SELECT CHRONOLOGY AS HELP IN ESTIMATING THE MARCOS WEALTH AND WHAT CAN BE DONE ABOUT IT IN THESE TIMES OF UNIQUE OPPORTUNITY
January 1980
Gold reserves were on a steady annual rise from 1978 to date, gradually increasing to 1,900,000 ounces, or an average of 8 metric tons a year, which was about the equivalent of local production. The price of gold reached an all-time high of $875 an ounce this month.
Despite this, four chambers of commerce – the European, American, Japanese, and Australian – submitted a position paper under the guise of finding ways to attract new foreign investment. Red tape, corruption, and a flawed infrastructure were delicately criticized. The message: it had not been easy doing business in the Philippines.
This was decidedly a different tune from the one they sang to Marcos when the latter first declared martial rule. Things looked rosy then but gradually the foreign business community realized even they were not playing on a level field.
June 1980
For $1,577,000.00 in New York Imelda buys Webster Hotel on West 45th Street. She rewards Gen. Romeo Gatan as a limited partner. Gatan arrested Ninoy at the beginning of Martial Law.
November 24, 1983
On this day a man named Jose Cruz-Cruzal was arrested when he arrived at Seattle-Tacoma International Airport from Manila. They found a plastic bag he was about to conceal in the small of his back. It contained documents that stated that Marcos wanted to borrow billions of dollars from banks through an American, Frank B. Higdon, living in Virginia. The collateral was “floors of gold” stored underneath a bank in Manila.
June 27, 1984
After the international reserves scandal died down, Marcos issued PD 1937, eliminating the ten-year limit on the amortization of losses at the Central Bank. Before this decree, the CB had to write off one-tenth of its losses every year. Now they could be amortized “over a period at a rate which shall be based on the adequacy of the Central Bank’s profits.” In other words, forever.
When Marcos signed this decree, the CB losses were fast approaching PhP 100 billion, or more than four times the amount known to be missing from the international reserves. Now one-tenth of these losses would no longer have to be written off annually. Incredibly, they were listed as assets!!
Sec.43 (d) of this PD read: “The Monetary Board may, whenever it deems it advisable, exclude from the computation of the annual profits and losses of any given fiscal year all or part of the extraordinary expenses incurred during the year.” Only the CB knew what it considered “extraordinary” and could be excluded from public view and scrutiny. Could these be the expenditures incurred by Marcos and Imelda for the May 14, 1984 Batasan elections? Could these be some of the source funds for “hidden wealth” stashed abroad?
Indeed, the question must be asked – what items of expenditures have been eliminated from the CB 1984 and 1985 profit and loss statements that utilized this particular seemingly innocuous section?
January 10, 1984
Jose “Jobo” Fernandez, head of Far East Bank, is summoned by Marcos to the palace and given Laya’s old job – Governor of the Central Bank.
August 1984
The IMF said the Central Bank had overstated its reserves by $264 million in 1981, $823 million in 1982, and $1.2 billion in 1983. Gross reserves had fallen $1.4 billion between June and December 1983. This means the CB now had no usable reserves. It could no longer pay its foreign debt. Bobby Ongpin reported an estimated $2 billion had flown the country in 1984 and $1 billion the year before.
What was the role of the IMF resident representative who, since 1970, had been keeping regular office hours in the CB? The CB paid for the residential mansion of the IMF resident rep and furnished him with a car with uniformed driver. Was not the IMF resident rep, who was regularly furnished papers and reports of personnel of departments and offices wittingly or unwittingly a party or accessory to the “falsification” of international reserves?
June 1985
World media, in particular San Jose Mercury News, Far Eastern Economic Review, New York Times, Wall Street Journal, the Nation, aided no doubt by the opposition in exile intensified the expose of the “hidden billions” and the draining of the Philippines.
August 1985
While Marcos battled the hidden wealth scandal, a gold deal was being offered in Israel. Oliver North was trying to find ways to fund the Contras of Nicaragua. The Israelis had 40 metric tons of gold for sale for $465 million, with a possible 20 more tons if the first deal went through. The commission would net $5 million for the Contras. Fabian Ver knew the Israelis, had befriended them when they used him to sign fake end-user certificates for arms shipments destined for Iran. When the buyers found out the seller was Ver, they approached him directly to cut out the Israeli middlemen.
October 1985
An Interpol cable stated that three suspicious shipments – one of gold and two of silver -had been made by the Central Bank. Speculation was that the Marcos family was diverting the precious metals to Switzerland to put them in their personal accounts. A bill of lading from one shipment showed that 244 silver bars, weighing 8,202 kilograms, were received by First United Transport on October 11, 1985, and moved to the docks escorted by the Presidential Security Command (Ver).
December 1985
Questionable use of aid funds is exemplified by the following: the Central Bank wired the Federal Reserve Bank in New York to pay $15 million to First Chicago International, for account of Lombard, for redemption of US dollar Treasury Notes. The Fed wired back on December 20 that there was only $6 million in the account. Then $45 million earmarked for USAID projects in the Philippines was released by the US, part of which was used to redeem the Notes.
1985
By year-end, Imelda’s Metro Manila Commission had managed to accumulate debts of PhP 1.99 billion (which included $100 million in foreign loans) in its ten years of existence.
November 1985
Sen. Edward Kennedy, citing numerous reports of corruption at the highest levels of the Philippine government, asked the US General Accounting Office to investigate economic and military assistance programs to that country. Report: $92.5 million of non-project ESF aid could not be accounted for and the team could not state that $227 million in ESF funds were not misused. For instance, the National Electrification Administration padded a $1.45 million disaster relief fund for the rehabilitation of typhoon-wrecked power lines. They had submitted false vouchers amounting to $108,441.00.
December 03, 1985 – February 19, 1986
During this time, just before the Edsa uprising, there were twenty wire transfers totaling $94 million to three Swiss banks – Banque Hoffman, Société de Banque Suisse, and Union de Banque Suisse; one Swiss company – Transammonia AG; five foreign banks in Zurich and Geneva; and the Commerzbank in Luxembourg.
Where did these monies come from? From the gold accounts abroad? The Central Bank has refused to answer this question. In fact, all Central Bank bosses have attempted to bury the Central Bank losses along with the past by restructuring the old debt.
How much was actually stolen and written off under the Special Accounts? And how much gold, if any, did Marcos take from the international reserves?
When Jobo bills were issued, they were meant to complement the operations of the Binondo Central Bank that had been organized by Marcos and Ongpin to secure dollars to shore up official reserves. Ongpin assured the big dollar traders that they would find attractive use for the Philippine pesos despite the deteriorating conditions of the country because the Jobo bills were simply too attractive, with incredibly high interest rates.
Absent money-laundering legislation it was not difficult for hot cash from all over to enter the Philippine financial system. Jobo’s Far East Bank, Philamlife, and AIG meanwhile made a killing brokering the initial placement entry phases of these hot monies into the Philippine financial system.
The short-term nature of the Jobo bills made an ideal cover for the layering phase of the money laundering process. “Heavy soaping”, i.e., maturation of bills, reinvestment, and transformation into other financial instruments like dollars TTs (services provided by Far East Bank) was gladly facilitated.
And all of this, naturally, was done at the people’s expense – who have to bear on their shoulders the heavy cross or intertemporal burden of future taxes as the huge bankruptcy losses of the old CB is amortized into the economy flows.
February 25, 1986
In leaving the Philippines, Marcos left behind a foreign debt of $27 billion. “Cash advances” for the elections from the national treasury amounted to Php3.12 billion ($150 million). The Central Bank printed millions of peso bills, many with the same serial number. Sixty million pesos in newly printed bills were found in a vehicle owned by Imelda’s brother Alfredo “Bejo” Romualdez in the Port Area of Manila, and another PhP 100 million aboard the MV Legaspi also owned by Bejo.
How massive and humongous the appropriation can be deduced from the known losses left behind.
The known losses Marcos left at the Central Bank included $1.2 billion in missing reserves and $6 billion in the Special Accounts.
Imelda charged off most of her spending sprees to the PNB or Philippine National Bank which creatively wrote off her debts as “unresponded transfers”.
Ver also used PNB funds to finance his “intelligence” operations.
The known losses at the PNB amounted to Php72.1 billion.
At the DBP, the losses Marcos left behind totalled Php85 billion; at the Philguarantee, it was Php6.2 billion; and at the NIDC or National Investment and Development Corporation (NDC) – the losses amounted to PhP 2.8 billion.
These losses were primarily due to giving loans to cronies that had little or no collateral, whose corporations were undercapitalized, whose loan proceeds were not used for the avowed purpose, and where the practice of corporate layering was common, i.e., using two or more companies with the same incorporators and officers, whereby one company which gives the loan owns the company which obtains the loan, or similar arrangements. The cronies enjoyed their closeness to Marcos. But Marcos owned them, or so he thought. The wealth of the cronies belonged to him. If only he were alive to check on them now and keep his word on giving his wealth back to the people.
Because of the free rides, the Philippine Airlines was in debt by $13.8 billion.
The conservative Grand Total for losses left behind (and therefore the kind of loot grabbed and hid) amounted to $17.1 billion.
The Central Bank, the PNB, and other financial institutions badly need an audit. The special review (not regular audit because there seems not to have been any – there are no records anyway) did not uncover wanton spending at the topmost levels.
The review gave no hint of theft or missing money, only “downward adjustments” and “proposed adjustments” to “deficiencies” and “shortages of money”.
February 26, 1986
A few hours after the Marcos party landed in Honolulu, their luggage arrived – 300 crates on board a C-141 cargo jet. It took twenty-five customs officers five hours to tag the bags and identify the contents. The process was videotaped because of all the money and jewelry found inside.
There were 278 crates of jewelry and art worth an estimated US$5 million. Twenty-two crates contained more than Php27.7 million in newly minted currency, mostly hundred-peso denominations worth approximately US$1,270,000.00 (It was illegal for anyone to depart the Philippines carrying more than Php500 in cash.)
There were other certificates of deposit from Philippine banks worth about US$1 million, five handguns, 154 videotapes, seventeen cassette tapes, and 2,068 pages of documents – all of which were impounded by Customs. The Marcos party was allowed to keep only US$300,000.00 in gold and $150,000.00 in bearer bonds that they brought in with their personal luggage because they declared them and broke no US customs laws.
There were 24 one-kilo gold bars fitted into a $17,000 hand-tooled Gucci briefcase with a solid gold buckle and a plaque on it that read, “To Ferdinand Marcos, from Imelda, on the Occasion of our 24th Wedding Anniversary.”
February 1986
When Marcos departed the Philippines, the losses in the three Central Bank accounts surpassed PhP 122 billion (more than $6 billion or some PhP324 billion in today’s terms). The big bulk of losses was attributed to the RIR account, and mainly due to two items: forward cover and swap contracts. Forward cover referred to foreign exchange provided by the CB at a fixed exchange rate to importers of essential commodities. Swap contracts referred to CB’s receiving foreign exchange from banks in exchange for pesos at the prevailing rate with a promise to deliver the foreign exchange back to them at an agreed future date.
There was no mention of losses due to CB transactions in gold or foreign exchange.
February 28, 1986
On this day, Jim Burke, security expert from the US Embassy, was tapping on the wooden paneling in Imelda’s abandoned Malacanang bedroom when he heard a hollow sound. It was the walk-in vault. Inside were thirty-five suitcases secured with locks and tape. They contained a treasure trove of documents about Swiss bank accounts, New York real estate, foundations in Vaduz, and some notepaper on which Marcos had practiced his William Saunders signature. They also contained jewelry valued at some US$10.5 million.
March 16, 1986
How much gold did Marcos take from the CB? The CB always refused to comment.
Today the LA Times reported that 6.325 metric tons of gold was unaccounted for in the Central Bank (worth about $290,039,807.20 in today’s terms). Between 1978, the year Marcos ordered all gold producers to sell only to the CB, and end 1984, the Bureau of Mines reported that 124,234 pounds of gold were refined (worth about $2,584,067,200.00 in today’s terms or the peso equivalent at today’s exchange rate , = PhP139,539,628,800.00).
But the CB reported receiving only 110,319 pounds during this same period. That left a difference of 13,915 pounds (6.325 metric tons).
March 09, 1986
A Greek-American, Demetrios Roumeliotes, was stopped at the Manila International Airport before he could leave with eight large envelopes stuffed with jewelry that he admitted belonged to Imelda – valued at US$4.7 million.
March 15, 1986
Ernesto “Ernie” Maceda, Minister of Natural Resources, revealed today that some 7 to 14 tons of Philippine gold are sold to the Binondo Central Bank annually and then smuggled to Sabah, Malaysia – this gold being part of some 20 tons produced by 200,000 panners all over the country. Maceda’s query was whether part of the gold they produced was siphoned to the “invisible gold hoard of Ms. Imelda R. Marcos.”
“We deliver to the Central Bank,” the miners said. “If it happened (the siphoning), it happened in the Central Bank.”
March 17, 1986
The Archdiocese of San Francisco in California announced that they had uncovered a gold deal involving 5,000 tons of gold bullion allegedly connected to the government of deposed president Marcos.
March 19, 1986
Michael de Guzman flew into Honolulu and talked to Irwin Ver who brought him to Marcos, Imelda and Bongbong. Calls were made to Zurich – to Ernst Scheller of Credit Suisse. Marcos prepared two letters of authority. Mike was their last hope to withdraw the moneys from the Swiss banks. Marcos had tried to on March 21 but was prevented because of the freeze order of the Swiss authorities. So, on March 24th Mike de Guzman tried his luck. No luck. He tried it again May 7th. Still the banks refused because of the freeze order. Mike knew it was time to go back home – and switch loyalty to the new Philippine government. He offered to help them get the Marcos deposits in return for a fee. Supporting Mike was Ibrahim Dagher, a Lebanese businessman. They had identified one account for $213 million and eleven foundations that held a total of $4.5 billion in deposits in nine different banks with an additional $3 billion in precious metals and securities on deposit – or a tentative total of $7.5 billion. Operation Big Bird had commenced with Mike de Guzman, Col. Joe Almonte and Charlie Avila operating.
In the end, however, Big Bird would not – could not – fly because the government had strong doubts about the integrity of de Guzman, understandably, despite the guarantees built in to the operation to prevent any treachery.
April 1986
Julie Amargo, having obtained a duplicate copy of the KLM cargo airway bill of 9 September 1983 asked the PCGG to investigate and pinpoint the persons behind the shipment.
In response the CB published, 2 months later, an article about “location swaps” done to “beef up liquidity at a time when the CB was having difficulty meeting its foreign exchange payments.”
The article was an exercise in obfuscation. It spoke of a total of 30 shipments for location swaps between 1981 December 21 and 1986 July 30 wherein a total of 6,081 bars were shipped out. Of course, the majority of the shipments, 27/30, occurred during the Marcos regime.
But the article was not clear on how much were the actual sales aside from the September 9, 1983 shipment. And the press, not the CB, reported the shipment.
To add to the confusion, the CB, when asked, admitted there were other gold shipments during the Marcos regime in addition to the location swaps but CB could not provide further information.
April 1986
An Australian broker in Sydney said that T.C.B. Andrew Tan had offered to sell 2,000 tons of gold just before Marcos’ downfall. Tan had told the broker the gold was part of the spoils of war taken by the Japanese in WWII. The gold talks continued.
June 05, 1986
A U.S. judge ordered Customs to release Marcos’ money, jewelry, and belongings. Then a timely government appeal prevented the implementation of the order. The Marcoses were being charged by the Attorney General in New York of violations of the RICO (Racketeering Influenced Corrupt Organizations) statue. The Philippine government followed suit by filing several civil cases in the U.S. Subpoenas began to arrive. Ver decided to leave, flying out of the country on a fake passport. And quietly Marcos put out the word. Find another safe haven. He wasn’t welcome anywhere unfortunately. There was nowhere to go. He became a target for con men who made a lot of promises and asked for a lot of money.
July 1986
Marcos admitted to lawyers that four Philippine government agencies – National Intelligence Security Authority (NISA), Intelligence Section of the Armed Forces of the Philippines (ISAFP), and the National Bureau of Investigation (NBI) targeted oppositionists in exile and other anti-Marcos organizations for intelligence and counter-intelligence operations through military attaches in the Philippine embassy and their consulates.
Also, using the Freedom of Information Act, lawyers obtained 400 pages of documents from US intelligence agencies related to US-Philippine intelligence dealings. They showed the CIA, FBI, and US government officials had knowledge of Ver’s intelligence activities in the US and extended him full cooperation.
August 12, 1986
The global freeze on the Marcos loot was not totally effective. P.A.L. Vine who managed Marcos’ two trust accounts at Standard Chartered Hong Kong Trustee LTD. Received instructions from Marcos and remitted $708,000 to the law firm of Anderson, Hibey, Manheim and Blair, Marcos Attorneys in Washington DC. How much more Marcos was able to move after the freeze is still a question mark.
August 28, 1986
A longer list of questions:
In 1973 reserves dropped from 1,857,000 ounces (52.75 metric tons) to 1,057,000 ounces. The CB claimed 800,000 ounces were sold. Assuming an annual production of 30 metric tons, what about the gold produced that year?
From 1974-1977, gold reserves stayed at exactly the same figure of 1,056,000 ounces. Again, what about the four years of production totalling approximately 120 metric tons?
Gold reserves began another steady annual rise in 1978. From then until 1980 they gradually increased to 1,900,000 ounces, or an average of about 8 metric tons a year. What about the other 22 metric tons annually totalling 66 tons?
In 1981, reserves took a dip, to 1,650,000 ounces, a drop of 7.1 metric tons, which was sold. But another 30 metric tons should have been produced.
Reserves rose by 6.1 metric tons in 1982, to 1,866,000 ounces. That left 23.9 metric tons unaccounted for.
In 1983 they dropped to 289,000 ounces, a decrease of 44.8 metric tons from the year before, which was sold. What about the 30 metric tons produced?
In 1984 they rose to 786,000 ounces, an increase of 14.1 metric tons. That left 15.9 metric tons unaccounted for.
In 1985 they rose to 1,478,000 ounces, an increase of 19.7 metric tons. That left 10, 3 metric tons unaccounted for.
Marcos departed in February 1986.
Is it true that Marcos propagated the Yamashita story to hide the fact that he had absolute control of the Central Bank, that its gold bars were melted down and recast in odd-size bars to make them look old (how does gold look old, anyway?).
Marcos claimed that he “received the surrender of Gen. Yamashita” after a battle with his guerrilla outfit. History has recorded that Yamashita surrendered to Lt. Co. Aubrey Smith Kenworthy and that there was no battle. Yamashita’s peaceful surrender had been arranged at least two weeks before the event.
September 30, 1986
Questioned by Philippine and US lawyers about his hidden wealth, Marcos took the Fifth Amendment 197 times. Imelda followed suit – 200 times.
July 09, 1987
Congressman Stephen Solarz exposes Marcos’ many plans to organize a loyalist army as a way to return to power. Marcos assured would-be financiers for his prospective adventures that he had $500 million in bank accounts in Switzerland and $14 billion in gold secretly buried in several different places in the Philippines which could be used as collateral. When asked about the gold, Marcos would always become vague.
At first, he implied he got the gold from the Central Bank through collusion with a former governor now deceased. He said, “It is my money but it, I borrowed it from these people who were buy, who were buying the gold…”
November 1987
Sen. Aquilino “Nene” Pimentel exposed the way the Central Bank “cooked the books”. It used a double-entry accounting system, with the losses in the Special Accounts reflected as assets in the CB’s monthly statement of its condition. He said this ran counter to accepted accounting principles.
Pimentel also wanted to know why Jobo allowed the overprinting of paper money, including the printing of peso bills with the same serial number, which led to massive overspending during the snap elections.
No one knew exactly how much had been printed. Nonetheless Jobo and the CB were not saying.
Under the CB Charter, as governor he was in charge of the gold. He could sell it at any price, at any time, to any buyer, and no one could question him, not even members of Congress.
Fernandez was also criticized for not divesting himself of his shares in the Far East Bank which he was required to do by law. It was no secret that since he became governor the overall position of Far East Bank had risen dramatically.
March 1988
In meetings with presidential Uncle Komong Sumulong and presidential cousin Ding Tanjuatco, Marcos presented a proposal. If he and his family were allowed to go home, he would give $15 billion to the Philippine government: five billion for infrastructure, another five to reduce the country’s foreign debt and $5 billion to Aquino’s family for the suffering they endured.
July 11, 1988
Marcos confided to Allen Weinstein of the Center for Democracy that he would prove his sincerity by immediately transferring the Swiss bank accounts under dispute to the Philippine government. When this became public Marcos denied he ever made the offer.
December 08, 1988
Marcos was asking Enzo (Zobel) for a loan of $250-million. Enzo said he didn’t have that kind of money but asked how the loan would be repaid if he could arrange it. Marcos asked his nurse, Teresita Gallego, to fetch a folder – an inch and a half thick and full of deposit certificates for gold stored in various banks all over the world – Switzerland, Monaco, the Vatican, the Bahamas, and other places. Zobel knew Marcos had been flying gold out of the country since martial law began and there were no more checks on any of his actions. As a pilot in the air force reserve, Enzo had a lot of friends that flew and talked about flying C-130 aircraft loaded with gold to Zurich.
1988
Nandeng Pedrosa, son of the former finance secretary, was in Taipei as a consultant when he met Robert Kerkez who was trying to negotiate a deal involving a gold certificate for 50 metric tons of gold. In Manila, the PCGG invited a retired colonel and two foreigners for questioning. They were allegedly engaged in trading huge volumes of gold bars believed to be part of Marcos’ gold hoard. Kerkez was one of the foreigners. The other was Ibrahim Dagher.
1989
Sen. Maceda asked the senate to conduct an inquiry to determine how much gold was bought and produced by the CB in the last ten years, how much gold was sold, at what price, and what persons were involved in the transactions. -end of Part 3-