Buried Treasure: Much Marcos Wealth, Still Carefully Hidden, Eludes Investigators --- Political and Legal Problems May Help Ex- President Avoid Trial in Some Cases --- Huge Lists of Stolen Assets By June Kronholz Staff Reporter of The Wall Street Journal 11 February 1987 The Wall Street Journal (Copyright (c) 1987, Dow Jones & Co., Inc.) MANILA, the Philippines -- Ferdinand Marcos had been in his Hawaiian exile less than a month last March when Michael De Guzman, a Filipino who ran his financial errands, presented Zurich-based Credit Suisse bank with a two-sentence power of attorney from the former president and proposed to withdraw $213 million from his accounts. As investigators tell it, Credit Suisse balked at the size of the withdrawal and asked Mr. De Guzman to return the next day. Then, bank officers called the Swiss banking superintendent, who called the finance minister, who at a party that evening cornered other members of the Federal Council, the country's executive. Mr. Marcos later tried to withdraw the De Guzman letter. "Whatever authority or power of attorney which Mr. Mike De Guzman may be using to represent me . I hereby declare null and void," he wrote the bank. But he acted too late: Switzerland froze the accounts, where most of his fortune is believed hidden, and invited the surprised government of President Corazon Aquino to petition for its return. Mr. Marcos's fall from power began with a stolen election a year ago and ended, ignominiously, when he fled his outraged people 18 days later. For a time, Mr. Marcos's own greed and the ire of governments that once supported him seemed to promise that the fortune he had stolen would be quickly returned to the national treasury and that the economy he had subverted would be just as quickly returned to honest hands. But so carefully hidden is Mr. Marcos's wealth that investigators still can only guess at its size. Some of his investments may never be found because they are adroitly disguised and buried in layers of ownership. Some of the cases being prepared against him may never come to trial because they are politically troublesome. Marcos loyalists remain entrenched in the government bureaucracy and can stymie the investigation, and they are so powerful in business that they still largely control the economy. When Mr. Marcos fled last February, he left behind in Malacanang Palace 75 file cabinets of documents, three paper shredders disabled by overuse, and two bonfires that had flared briefly on the fuel of his private correspondence and then faded with his regime. The Marcos papers tell of Liechtenstein foundations, Netherlands Antilles corporations, Hong Kong money changers and coded Swiss accounts. They include stock certificates for companies nationalized by Mr. Marcos; an adding-machine tape that tots up his $2.3 million "commission" on a shipbuilding contract; and offers of "donations" from Manila businessmen in return for the right to sell sugar, import sardines or build a hydroelectric plant. There is a careful accounting of $11,210,433 under the heading "Commissions received from Westinghouse 1976-1982." There are jewelry receipts ("to change rubies to real ones $64,000 less 10%," reads a note by daughter Imee Marcos Manotoc) and tantalizing hints of a 500-ton gold sale by Mrs. Marcos in 1982. There are orders to the national bank to move money into a fund to finance the war against a left-wing insurgency -- and withdrawals from the fund for Mrs. Marcos's shopping trips to New York. The Malacanang papers illustrate how Mr. Marcos looted the country, siphoning off even war reparations from Japan. But for all their startling detail, Mr. Marcos's fortune remains elusive and unlikely to be returned for years. The central case against Mr. Marcos charges him, his wife and children, and 25 other people with graft and corruption. The complaint is so broad that it covers much of the economic activity of the Philippines for the past 20 years. But more troublesome, it is a criminal case, and Mr. Marcos would have to be brought home if he is to be tried. Mr. Marcos and Mrs. Aquino bluff about his return. He says he yearns to come home to defend himself, but his passport has been lifted, and besides, he says, he is being held prisoner by the U.S. She says a Filipino doesn't need a passport to return, and besides, the U.S. and the Philippines don't have an extradition treaty. But Mr. Marcos faces almost-certain conviction in a court armed with 20 years of evidence in his own handwriting, and Mrs. Aquino fears that simmering Marcos sentiments could ignite if he returned. Even so, only by filing a criminal case in Manila can the Aquino government petition Switzerland for return of the Marcos holdings there, and nowhere are the stakes greater than in Switzerland. Two hours after Mr. Marcos fled Malacanang, Joker Arroyo, Mrs. Aquino's executive secretary, entered the former president's fetid bedroom and found the bank records that set off the paper chase to recover his fortune. Mr. Marcos claimed a net worth of $60,000 - - half of it in law books -- in his 1966 tax return, filed his first year in office. In two decades as president, he received an additional $250,000 in salary. But the Malacanang papers included account statements for eight Swiss banks and 15 trusts into which Mr. Marcos poured a fortune. Among them, for example, two trusts called the Wintrop Foundations had bond portfolios worth $25.9 million. Two more, the Avertina Foundations, had cash accounts worth $115.5 million. And the Valamo Foundation, with Getty Oil, General Dynamics and International Business Machines bonds among its holdings, was worth $65.5 million. Mr. Marcos's Manila lawyer, Rafael Recto, calls the Swiss bank records "forgeries" planted to incriminate the former president. Mr. Recto also says, in an unusual defense, that Mr. Marcos accumulated his money honestly but was a tax cheat: He vastly understated his net worth in 1966, then paid back "hundreds and hundreds of thousands of pesos" in a tax amnesty that he declared later. That argument isn't likely to convince the Swiss. Largely because of pressure from U.S. prosecutors chasing drug pushers and money launderers, Switzerland eased its bank-secrecy laws last year to allow foreign governments access to a depositor's bank records if they suspect the money was accumulated illegally. Based on the Philippines' criminal case against Mr. Marcos, Swiss magistrates recently ordered the banks to open their records to Philippine prosecutors. Mr. Marcos has appealed the rulings and probably will take the case to the Swiss supreme court. So new and untested is the Swiss law that the Filipinos aren't sure of getting the money even if the courts rule for them. Certainly, the banks will disclose the size of Mr. Marcos's deposits. A Philippine-government case filed against the Marcoses in California estimates their Swiss holdings at $1.5 billion, but "that's only a floor price," says Severina Rivera, who is coordinating the Philippines' recovery efforts in the U.S. Whether the Swiss banks also turn over the money or, instead, wait for a judgment in the criminal case "isn't clear," says Abram Chayes, a Harvard professor advising the Philippines on international law. What is clear is that if the Swiss demand a judgment, the Aquino government faces a dilemma: Should it risk its political stability by trying Mr. Marcos or its financial recovery by abandoning his fortune? Meanwhile, recovering the Marcoses' other overseas assets requires that the Filipinos also try the couple on civil charges. Foreign courts are loath to get involved in enforcing another country's criminal laws; instead, they want a Philippine civil-court ruling against the couple before they order Mrs. Marcos's Picassos, say, returned to Manila. But the path to a civil judgment is at least as tortuous as a criminal case. Imelda Marcos liked nice things. She took 408 pieces of jewelry into exile with her, including a bracelet and earrings appraised at $1.5 million by U.S. customs agents who seized them. Sotheby's once canceled a two-day art auction when Mrs. Marcos bought the entire collection with a $6 million check -- and then tried to buy the apartment where it was kept. The Philippine solicitor general says the Marcoses bought 11 prime New York office buildings, plus houses in New Jersey, Manhattan, Long Island, Los Angeles, Hawaii, Cancun and Rome. In their first action to recover that haul, the Aquino government in December sued the Marcoses to get back four of the New York office buildings. Mr. Marcos doesn't have to be in court, or even in the country, to be tried on civil charges. But if the former president is kept from the courtroom because his passport has been lifted or if he can't call witnesses because they, too, are in exile, U.S. courts might decide that he didn't receive a fair trial, and they could refuse to recognize the judgment. "You have to give the guy an opportunity to defend himself, but how do you do that in a case like this?" Harvard's Mr. Chayes asks. Mrs. Aquino's solution is to authorize a special anti-graft court hearing the case to hold sessions in Hawaii. Even then, the case will be far from settled. Only a U.S. court can decide who really holds title to property in the U.S., and all the Marcos buildings were bought through tiers of offshore holding companies.