US embassy cable - 05MANILA84

C O N F I D E N T I A L SECTION 01 OF 02 MANILA 000084 
 
SIPDIS 
 
DEPT FOR EAP/PMBS, INR/EAP, INR/B 
NSC FOR GREEN 
 
E.O. 12958: DECL: 01/06/2015 
TAGS: PGOV, KCOR, PREL, MARR, ECON, PINR, RP 
SUBJECT: LATEST PROGRESS ON ANTI-CORRUPTION 
 
REF: A. MANILA 0042 
     B. 04 MANILA 05834 
     C. 04 MANILA 5262 
     D. 04 MANILA 5549 
 
Classified By: Political Officer Andrew McClearn for reasons 
1.4 (b) and (d) 
 
1.  (C) SUMMARY:  The President's new anti-corruption czar 
has requested Embassy's cooperation, which Embassy officers 
will provide in addition to ongoing coordination with the 
Office of the Ombudsman.  The GRP is making progress on some 
new high profile corruption cases, most recently charging an 
Air Force brigadier general with graft in a case involving 
the alleged fraudulent sale of military equipment.  The 
criminal case involving former military comptroller General 
Garcia is again moving forward after a break for the 
holidays; his court martial is scheduled to resume shortly. 
A Philippine court finally ruled against Ferdinand Marcos 
crony Eduardo "Danding" Cojuangco's efforts to recover 
coconut industry funds he once controlled.  In addition, a 
U.S. Federal Appeals Court ruled against GRP efforts to 
control the distribution of USD 150 million in funds awarded 
to victims of the Marcos regime.  END SUMMARY. 
 
-------- 
New czar 
-------- 
 
2.  (C)  As President Arroyo informed Ambassador on January 3 
(ref A), Malacanang has now designated former justice 
secretary (current Presidential Legal Counsel) Mercedes 
 
SIPDIS 
"Mercy" Gutierrez to head a task force on corruption.  In a 
lunch with Legatt and DOJ attache on January 6, Gutierrez 
asked the Embassy to assist the task force.  Emboffs agreed 
to do so, while encouraging the task force to focus on some 
high profile agencies to investigate (notably Customs and 
Immigration) and then turn over the cases to the Ombudsmen to 
prosecute.  Embassy continues its own close cooperation with 
the Ombudsman and his staff.  (DCM will host a breakfast with 
Ombudsman and Staffdel Hawkins on January 7.) 
 
-------- 
GROUNDED 
-------- 
 
3.  (SBU) On January 4, GRP Ombudsman Simeon Marcelo filed 
"malversation and graft" charges against Air Force Brigadier 
General Vladimir de los Trino before the civilian 
anti-corruption court, the Sandiganbayan.  According to the 
charge sheet, de los Trino, commander of the Air Force's 2nd 
Tactical Operations Wing, ordered the May 2000 sale of four 
power generators at a base in Cebu in the central Philippines 
without authorization or proper use of established public 
bidding processes.  Two mid-level air force officers, Major 
Antonio Garcia and Engineer Nelmida Senen, as well as 
businessman Antonio Ularte were also charged in the case.  De 
los Trino and the other officers allegedly received USD 
16,000 (which they divided among themselves) from businessman 
Ularte for the assets, bypassing a prior public bid of USD 
24,000.  According to media, the Office of the Ombudsman 
acted upon information provided by the Office of the 
Inspector General of the Armed Forces of the Philippines 
(AFP) in filing the charges.  If convicted, de los Trinos and 
his accomplices could face jail terms in excess of 20 years. 
 
---------------- 
AFP cases resume 
---------------- 
 
4.  (SBU) The criminal case involving corruption and perjury 
charges filed against former AFP comptroller Major General 
Carlos Garcia is again moving forward after a break for the 
holidays.  (Note:  See Refs b-d for additional background.) 
Preliminary hearings in the Sandiganbayan have now resumed. 
However, the Landbank, a Filipino financial institution, 
refused an order of garnishment issued by the Sandiganbayan 
on five U.S. dollar-denominated accounts held under the names 
of Garcia and family.  The Landbank froze Garcia's two 
peso-denominated accounts, worth nearly USD 120,000. 
Landbank Vice-President Rosemarie Osoteo, defending her 
company's decision, publicly stated that the Sandiganbayan's 
freeze order did not apply to the dollar accounts, which, she 
said, were "confidential" and could only be opened in cases 
of violation of the Anti-Money Laundering Act.  (Note: The 
bank secrecy laws in the Philippines are among the strictest 
in the world. end note)  The Sandiganbayan plans to challenge 
Landbank's decision.  Garcia's court martial is scheduled to 
resume hearings on January 11.  He remains in military 
custody. 
 
5. (SBU) Separately, the trial of former AFP Chief of Staff 
and comptroller Lisandro Abadia on corruption charges is also 
scheduled to resume shortly.  Abadia has also been accused of 
perjury and engaging in illegal financial transactions. 
----------------------------- 
Marcos-Era Cases Move Forward 
----------------------------- 
 
6.  (SBU) Representing long-standing GRP efforts to retrieve 
Marcos-era plunder, the GRP won a major victory when the 
Sandiganbayan on December 28 rejected motions for 
reconsideration of earlier decisions that awarded the GRP 
ownership of stock worth millions of dollars in San Miguel 
Corporation and the United Coconut Planters Bank (UCPB). 
According to Chairman Haydee Yorac of the Presidential 
Commission on Good Government (set up to recover the Marcos 
loot), this case was one of the top priorities undertaken by 
PCGG since 1986.  Eduardo "Danding" Cojuangco, a close ally 
of Ferdinand and Imelda Marcos, and his co-defendants had 
appealed the earlier decisions, claiming that they were the 
rightful owners of the stock.  The Sandiganbayan ruled that 
the defendants had bought the stock using funds derived from 
the "Coconut Consumers Stabilization Fund levy" -- known 
popularly as the "coco-levy" -- imposed during the Marcos 
regime and thus, the stock was owned by the public, in 
particular, coconut farmers.  The court also ruled that 
Cojuangco, who had large-scale control of the coconut 
industry during the Marcos years, had improperly administered 
the fund to his own advantage and did not have a legitimate 
right to own the stock.  Cojuangco and his co-defendants are 
expected to appeal to the Supreme Court. 
 
7.  (SBU) Separately, the U.S. Federal Court of Appeals for 
the 9th Circuit based in San Francisco on December 28 turned 
down a GRP motion that it be allowed to distribute USD 150 
million in funds seized for eventual disbursement to human 
rights victims of the Marcos regime.  The court upheld a 1999 
agreement between the Marcos estate and claimants meant to 
settle all outstanding claims by victims.  The court 
dismissed the GRP's claim to distribution rights, stating 
that the GRP was not a party to the 1999 settlement. 
However, most of the funds remain deposited in a special GRP 
account in the Philippines designated for agrarian reform. 
Presidential Press Secretary Ignacio Bunye on December 30 
called the ruling "academic, because we are already holding 
the funds," while promising to earmark them for compensation 
for human rights victims as well as for land reform (pending 
enabling legislation). 
Ricciardone