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1981 To protect corporate borrowers who were unable to make payments on their foreign loans because of the shortage of dollars, the CB devised a third account called the ESAA or Exchange Stabilization Adjustment Account. The CB allowed borrowers to deliver to it the peso equivalent of their payments at prevailing exchange rates. If the peso decreased in value, the extra cost was borne by the CB and written off in this new account, the ESAA. - a great, great boon to the Marcos cronies, and, therefore, to Marcos himself. Before the ESA, the CB's original charter provided for only two Special Accounts. The MAA or Monetary Adjustment Account was one and the other was called the RIR or Revaluation of International Reserves Account. What did each do? The MAA was responsible for the cost of printing notes and minting coins, extraordinary costs in the issuance and servicing of evidence of indebtedness, interest on deposits of the national government, interest on reverse repurchase agreements [dig that!] as well as payment of gold trader's commissions and handling fees. The RIR was a special frozen account related to the revaluation of the CB's assets and liabilities in gold or foreign currencies due to: * changes in the gold value of the peso; * changes in parities or exchange rates of foreign currencies vis-à-vis the peso; *changes from any other CB transactions in gold or foreign exchange. Then came the third - the ESA. January 1981 Because the Pope had made it clear that he would not visit a dictator, with great fanfare Marcos announced martial law would end on January 17,1981. The urban guerrilla actions of destabilization had taken its toll on the regime during all of 1980 and did not show any sign of stopping unless martial law was lifted. At the Central Bank, Licaros was tired. He was allowed to retire with one-year left of his second six-year term. Jaime C. Laya had no sooner taken his oath as the new CB governor when the financial crisis began. Dewey Dee left the country with an estimated Php635 million debt. A crony, he had borrowed most of the money using nothing more than his name as collateral. Banks tightened their credit. The cronies were hardest hit. But they would be bailed out again. More than $3 billion in bail out funds would be provided to them (i.e. to Marcos since he owned the cronies) over the next two years. January 16, 1981 Marcos (face)lifted martial law and signed Presidential Decrees 1834 and 1835. These infamous Death Decrees authorized trials in absentia of his political opponents and confiscation of their property if convicted. Anti-government agitators and publishers could be executed. February 1981 The 12 acre Lindenmere estate at Center Moriches on Long Island was purchased for $550,000 by a so-called 7 Development Corporation of New York. Ownership was later transferred to Ancor Holdings, an outfit controlled by Floirendo, in December 1982. The other major activity of Ancor Holdings was to loan actor George Hamilton $1.5 million to purchase a mansion on Summit Drive in Beverly Hills in 1982. February 1981 Imelda spent $13 million on a new statehouse made of coconut products for the Pope's forthcoming visit. The Pope did not appreciate such an ostentatious display and declined her invitation to stay in the coconut palace. May 10, 1981 Today Imelda issued handwritten instructions to liquidate the Rayby Foundation and transfer its assets to Trinidad.Then she ordered Trinidad dissolved and the assets transferred to Fides Trust Company at Bank Hoffman in Zurich. The next day Marcos issued written instructions: liquidate Valamo and transfer assets to Fides; liquidate Verso and transfer assets to Fides. April 1981 Rayby was dissolved. April 1981 For the nth time, Marcos announced a new constitution, supposedly based on the French model. He included a provision not mentioned in the French version: granting him and all government officials lifetime immunity from any legal action. May 1981 Four more foundations were established - Vibur, Avertina, Spinus and Palmy. June 1981 Valamo was dissolved. June 19, 1981 A balance of 800,000 ounces of gold in the Palmy Foundation was remitted to Bank Hoffman AG. This would be equivalent in the most conservative estimates to some US$800 million. The 800,000 ounces of gold were earlier kept by Marcos' Trinidad Foundation. This year, 1981, Imelda instructed Markus Geel, a member of the staff of Swiss Bank Corp., to transfer her Trinidad accounts to her account in Fides Trust. After the Trinidad Foundation was collapsed, upon her instructions, its assets were transferred to a third foundation named Palmy. These gold deposits were neither declared nor frozen although they would be mentioned in a PCGG report much later - on May 30,1991. Inconsistently, however, according to Swiss authorities, Palmy Foundation's account balance as of December 31, 1989 was just over $17 million including a gold account worth just over $320,000.00. July 1981 Imelda launches another program called the KKK or Kilusang Kabuhayan at Kaunlaran, a movement of national livelihood. Like all her other projects, this latest one did not have public accountability of funds. Later a government commission uncovered some of the results. Fictitious contractors were paid Php198 million ($10.5 million) for work done on non-existent "ghost" projects. August 25, 1981 Through Vilma Bautista in New York, Imelda purchased a heart-shaped necklace with pearls and matching earrings for $1.1 million; a necklace and matching earrings with rubies and diamonds for $130,000; a necklace of Egyptian coral and onyx for $255,000.00. August 27, 1981 Imelda purchased $610,640 worth of antiques, including a rare mahogany China cabinet for $100,000; a pair of eighteenth century carved and gilt wood Georgian armchairs for $41,600; an eighteenth century red lacquer grandfather clock for $12,000; and eighteenth century English cut glass chandelier for $33,600.00. September 1981 Through Glecy Tantoco, Imelda bought the entire estate of Leslie R. Samuels, a New York philanthropist, for $5,950,000.00 - which included rare books, paintings by the old masters and stately furniture. The Philippine National Bank through Oscar Carino provided $5,450,000.00 of these funds. September 1981 Razon said he did not need a $30-million new cargo handling equipment but, despite the shortage in dollar reserves, Marcos instructed him to submit a loan request to make such a purchase. The request was approved by the Monetary Board upon recommendation by the Mediad - the Management of External Debt and Investment Accounts Department. Razon never received the money. It was wired to New York as part of the $43.5 million purchase price of the Crown building. The corporation Marcos used for the purchase was the Lyra Corporation, a Netherlands Antilles company. Gapud supervised all these real estate purchases through a maze of companies clearly designed to hide the true owners but which, nonetheless, the opposition in exile was able to unravel in rapid fashion through its creative and energetic cadre of special investigators. They found out that after Lyra , Lastura corporation was formed and the Crown Building assigned to it. Then shares of Lastura were pledged to three Panamanian companies - Yewell, Panelpor, and Trade and Commodities which would later pledge their shares to a bank for a loan. September 15, 1981 PNB's Carino made out two checks totaling $4,450,000.00 as a down payment on the Crown Building in New York. PNB President Domingo, in a memo dated September 4th, authorized the payment. September 30, 1981 A memo to PNB President Panfilo Domingo, dated today and signed by Marcos authorized the disbursement of $200,000.00 from Intelligence Fund Account No. 2 for "expenses incurred in connection with the official trip of the First Lady to Iraq." October 01, 1981 Today the Makati Business Club was formed - a group of businessmen who would become increasingly vocal and critical of Marcos and his economic policies. November 1981 Maler Corporation, which had been purchased from Swiss Bank Corporation, Geneva, in 1968, was transformed into a foundation. November 17, 1981 Imelda purchased the Herald Center in New York for $17.4 million - a sale which closed on February 17,1982 using Voloby Corporation, another nonentity, as buyer. A total of $19,430,000.00 was wired from Philippine banks to U.S. accounts. Imelda pocketed the difference to pay her jewelers. December 1981 Laya's ambitious project began this month, supposedly to optimize the yield of the CB's gold assets. It would exchange good delivery bars in its vault for good delivery bars at a foreign financial institution, usually in London or New York. This was termed "a location swap" wherein a representative of the foreign institution would accept delivery of the bars at the Central Bank and be responsible for shipping them. In return the CB would pay a swap fee to cover shipping, handling, and insurance costs. It would also be easier to sell gold under this system although the CB was quick to say the policy was not to sell gold at all but to stockpile it in the reserves. But rumors persisted this month: someone in the Philippines was selling 525 metric tons of gold worth about $5-billion. The rumor may have started because of the gold leasing program - the 525 tons was supposed to have left Manila on January 4, the same day a legitimate shipment of 100,000 ounces (2.84 tons) left the country. After that, the country's gold reserves stood at 1,550,000 ounces, or 44 metric tons. December 1981 Laya received a note from Marcos. The CB approved a request for $8 million for a construction project in Iraq for Cuenca's CDCP. Gapud provided the pesos for the dollars from the 7700 accounts at Security Bank and Trust Company. Cuenca purchased the dollars and Gapud took it from there. The money was wired to New York as part of the purchase price of the Herald Center. Benedicto wired money from his Traders Royal Bank. Genito wired money from Angenit. A team effort of top cronies committing wire fraud and the Central Bank giving the finger to its own regulations. December 30, 1981 Fe Roa Geminez made three fund transfers: first, $100,000 to Hanover Trust of Danaos, the corporate name of jeweler Bulgari; the second transfer consisted of three checks - $830,000, $90,000, and $150,000 - payable to Mario Bellini, an Italian art dealer; the third transfer was two checks for $80,000 and $51,350 to jeweler Isi Fischzang at National Bank of North America. Glecy Tantoco had already given Bellini two checks totaling $1 million on December 26. So in her entry today Fe wrote "A. Bellini - balance of $1.70 million for Flemish paintings." These were shipped to Malacanang on January 12, 1982. 1982 Marcos, under pressure from the IMF, slashed all government ministry budgets by 18 percent. But Imelda's programs were exempt from the slashing and the freezing. January 22-28, 1982 Imelda disbursed $5,021,136.00 for various purchases of jewelry and artworks in Hong Kong and Milan, Italy February 1982 Glecy Tantoco received from Security Bank $4.65 million and purchased a Flemish painting for $4 million and a silver service for $428,000. She would buy more art works from Jack Tanzer later for $2 million with the bill of sale first made out to Rustan's and then later changed to Metropolitan Museum of Manila. February 1982 Ron Lusk (not his real name, it turned out), arrived in Manila to arrange the confidential shipment of 50 metric tons of gold to Switzerland. He was guest of Fabian Ver and Gen. Cannu with the reputation of being able to do anything, smuggle anything, being able to fly anything from a helicopter to a Boeing 747. According to Lusk, the gold Cannu showed him was stored "underground, with a warehouse over the top of it, somewhere outside of Manila." He also said that the gold had Chinese or Japanese markings and was stored in copper boxes. Lusk made plans to fly the gold to Switzerland but all of a sudden the mission was scrubbed. He was never told why. Was he merely used as a decoy while a decision was made to hire another guy? May 1982 The Central Bank this month changed the format for reporting the country's external debt. Revolving credits, which were mostly short-term external borrowing, would be excluded. Under the old format, the outstanding debt was $16-billion. Under the new, it was $11.5 billion. Alice in Wonderland again: by a change of definition, the Philippines lowered its outstanding debt by $4.5 billion Not only that: the Central Bank definition of the debt-service ratio was also changed to keep within the 20 percent lending limit. Annual foreign borrowing heretofore could not exceed 20 percent of the average annual export earnings over the past three years. This was later changed to 20 percent of the previous year's earnings. This year, 1982, it was changed again. Short-term loans were excluded (thus decreasing the numerator) and foreign borrowings were added to export earnings (increasing the denominator). What did this accomplish? It effectively allowed the government to borrow short term ad infinitum without disturbing the ratio. August 12, 1982 A telex was sent to Gapud: " Further to conversation 130AM this date our time with your office the money has been placed in position by the Saudi National Bank in Madrid to purchase the first 6,000 tons metric of product discussed.. Bill Erbe, President, ITM." Would this be evidence that Marcos had a huge amount of the metal or was he running some kind of scams on a huge scale? August 19, 1982 Andrew Genito withdrew $1-million from Wing Lung Bank in Hong Kong and brought it to Marcos before the state visit to Washington. Danding Cojuangco gave Imelda $500,000 and Domingo of PNB provided $200,000. Lucio Tan, JYCampos and Nemesio Yabut also gave substantial amounts for this trip. September 14-25, 1982 Imelda purchased a black fox-trimmed stole for $3,500, jewelry from Fred Leighton for $133,500, from Cartier $52,000 and portraits of herself and Marcos from Ralph Cowan for $62,000. October 16, 1982 The 1979 US Bases Agreement gave the Philippines $500 million in compensation over a five-year period. It was due for review in 1984 but Reagan now agreed to accommodate his old friend Marcos and start negotiations early. The rents were raised to $900 million over a five-year period, beginning October 1, 1984. That would bring in some desperately needed dollars. October 1982 The base year for determining the CPI or Consumer Price Index, namely, the year 1972, was changed. Now it would be 1978. In one stroke of the pen, again, the Central Bank this year, 1982, "lowered" the external debt, and "raised" the purchasing power of the peso. And it was true: gold reserves continued to rise up to 1,866,000 ounces. December 1982 The biggest purchase of all - the property at 40 Wall Street for $70,126,228.00 - with moneys coming from two accounts managed by Gapud, from Traders Royal Bank, and from funds of the Philippine National Oil Company. The latter's president, G. Velasco, instructed his treasurer to wire dollars earned from oil exports to PNOC's account at Chemical Bank, New York. Gapud reimbursed him in pesos from the 7700 accounts. The official buyer of 40 Wall Street was Nyland Corporation, a Netherlands Antilles offshore corporation - which had threee shareholders: Beneficio Investments, Inc., Excelencia Investments, Inc. and Bueno Total Investments, Inc. - all Panamanian companies set up by Gapud in 1980. The two HK trust accounts at Standard Chartered Hong Kong Trustee Ltd. owned the corporations. 1982 The Marcos-Danding (Cojuangco) monopolization of the coconut industry is completed. The small coconut farmers have been forcibly taxed to the tune of Php 9.6 billion through the collection of a levy on copra between 1973-1982 - a levy fund that has now (1999) grown to about Php 100 billion. The levy funds were then used to beef up a bank (depositing all of it there interest-free) previously bought from Danding's uncle Jose Cojuangco, Sr. by the Philippine Coconut Authority using government funds as purchase money and giving Danding, a PCA Director, ten percent of the bank shares for starters. The new bank was then tasked to administer the multi-billion peso levy for the benefit of Marcos, Danding, (to an extent, as well) JP Enrile and the whole Angara group of lawyers that styled itself ACCRA and cleverly devised the "legal" ways of stealing the funds and, also, for the benefit of the big coconut landlords headed by Clara Lobregat. Corporations galore were made to spin off from these levy funds (including acquiring food-and-beverage giant San Miguel Corporation and smaller companies like Dutch Boy paints). Although the funds were clearly public in character because they were tax money (what is a levy if not a tax, albeit a special tax collected for the benefit of a given sector and not for merger with the general funds), the dictatorial character of the regime allowed the surreptitious, immoral and illegal privatization of these moneys by the Danding few through 14 holding companies set up by the Danding managers and lawyers funded by the levy. Before long the levy funds effectively ceased to be regarded as public trust funds for the benefit of the small coconut farmers. To add insult to injury, because the small farmers were either not given receipts or were not able to secure receipts of levy collection due to the complex documentary procedures required by the series of Marcos decrees which imposed the collection of the tax, they were now rejected as being the true taxpayers so that a justification could be had to deny them the benefits accruing from the levy funds. The Danding monopoly was, of course, in line with the overall Marcos strategy of carving up the whole Philippine economy for himself through his specialized cronies: Benedicto - sugar; Floirendo - banana; Campos - drugs and real estate; Disini - nuclear energy; Danding -coconut; Silverio - motors; Cuenca - infrastructure; et cetera, etc. et alia with (after 1979) Rolly Gapud as overall financial adviser and Ronaldo Zamora acting as legal adviser to Marcos and his overall system of crony capitalism. It was an effective collection system`- it gave billions to the conjugal dictators. And, of course, the cronies could not complain. They succeeded in business without having to compete. Plus, the whole government banking system, including the Central Bank was theirs to use and abuse. January 1983 Imelda hosted her pet project, the Manila International Film Festival. She constructed a new film center at a cost of $21 million. An additional $4-million had been contributed by government agencies, ministries and the Central Bank. February 02, 1983 On this date at Luxembourg, a bank employee turned over to US authorities photocopies of notarized documents of a sales agreement involving three quantities of gold totalling 4,207,138 bars, each weighing 12.5 kilograms, and hallmarked Banco Central, This incredible size would have been 52,589 metric tons of gold valued at more than $800-billion. A memorandum accompanying the agreement was signed by Konsehala Candelaria V. Santiago, "Trusted woman of President & Secret-Seller". At the Central Bank, reserves dropped to 289,000 ounces, a decrease of almost 1.6 million ounces (44.8 metric tons) from the year before. This was almost twice the amount of 1972 - with the same excuse: the liquidity crisis; therefore gold had to be sold for badly needed foreign exchange. April 20, 1983 Marcos had now become a very sick man - with systemic discoid lupus. But he was not too weak to negotiate gold deals. His men invited to Manila one John Doel on this day. Doel negotiated nine contracts with Marcos men Domingo Clemente and Pedro Laurel who said the gold in question belonged to Marcos and the amounts far exceeded the 5,250 tons initially discussed. May 16, 1983 Imelda paid $273,500 for fifty two paintings by a little known French Impressionist Paule Gobillard which nobody had collected before causing a few snickers in art circles. May 28, 1983 Norman Lester "Tony" Dacus, representative of two offshore companies in the Bahamas - Remington Limited and Bistre Limited - met with Marcos four times but dealt primarily with Fabian Ver in two gold transactions: one, for the delivery of 60 metric tons a week with a total volume of 15,600 metric tons at a benchmark of $400 an ounce, and a second for 10 metric tons a week with a total volume of 4,000 tons at the same benchmark price. Marcos signed both contracts as seller. Both contracts stated the bars were 10-kilogram and stamped with the Central Bank hallmark. The gold for the first transaction was already in Hong Kong and the gold for the second was stored at United Coconut Planters Bank. Dacus said he saw the gold bars at the latter place in August 1983 and estimated that 100 metric tons were stored there. May 30, 1983 Fe signed checks for jewelry totaling $577,920. Two weeks later - for $635,000. And to Bellini the start of payment for art works that eventually total $8.3 million. June 1983 Overreacting to her being denied an invitation to the wedding of Prince Charles and Princess Diana, Imelda decided the wedding of daughter Irene would be a full-blown state occasion. The location: Sarat, Ilocos Norte, home town of Marcos and Ver. Imelda transformed the town to look like a seventeenth century Spanish colonial town. The homes of Marcos and Ver were reconstructed to give the impression they came from the aristocracy. Native huts were replaced by European houses. Some were livable while others were just facades. The cost exceeded the $10 million mark. Some of her critics described her penchant for lavish building projects as an "edifice complex." She built numerous estates all over the country for herself and her family. August 07, 1983 On this day Marcos secretly underwent a transplant to replace one of his failing kidneys. The operation did not go well. He would need another transplant a year later. He was a very sick man when Ninoy returned to the Philippines. Is this why he wanted Ninoy to postpone his return by another month and Ninoy compromised with two weeks? 1983 From the communications room between Ferdinand Marcos' office and the office of his private secretary, telexes were being sent to foreign creditors announcing that the Philippines could no longer meet its foreign obligations. This was the first inkling that something wasn't right, that dollars were scarce, that somebody was pillaging the Central Bank. September 09, 1983 On this day, 247 400-ounce gold bars were flown from Manila to London via Amsterdam on KLM flight 864. According to the waybill the gold was shipped in 62 crates and weighed 3.02 metric tons. Also this month, KAL scheduled flight from Manila to Zurich via Bahrain failed to achieve lift-off and ran off the runway. It could not lift off because of the weight of gold. October 14, 1983 Laya and Virata flew to New York to meet with ten of the country's international lenders and told them the Philippines could no longer service its foreign debt which was - what?$18.1 billion? No? $19.1 billion? No? More like $24.6 billion. International reserves were not $1.43 billion as reported - they were down to $430 million. They asked for a moratorium and a rescheduling of their payments. The bankers knew Marcos considered the Central Bank his private preserve. $400 million had been lost because of capital flight. The Central Bank was now not only window-dressing but also outright creating phony figures on paper. A confidential World Bank report stated that foreign loans contracted for between 1978 and 1982 had failed to reach their beneficiaries. The money had disappeared. On Marcos' instructions, Laya ordered the falsification of documents regarding a loan of $30 million to Razon, the illegal purchase of $8 million in foreign exchange to CDCP, and the diversion of $70 million by PNOC - all in direct violation of Central Bank regulations. November 1983 As the economy crumbled after the assassination of Ninoy, capital flight averaged about $5 million a day. Marcos called Velasco at PNOC and asked him to draw $200 million against its short-term credits and deposit them in the Central Bank. Laya asked corporate heads to make private placement loans to ease the difficulty but Laya had lost all credibility and Imelda's spending habits were front page news all over the world. Marcos had to do something like use his "own" money. At this time Marcos had $115.5 million at the Avertina Foundation accounts in Credit Suisse Bank, just two of the dozens he maintained. Seventy-five million dollars worth of the Treasury Notes was bought by the Avertina Foundation in the names of three Swiss banks: Bank Hoffman - $50 million; Swiss Bank Corporation - $10 million; and Paribas - $15 million. Three Manila Banks purchased $41.4 million: Security Bank - $14 million; UCPB - $26.4 million; and Philippine Bank of Communication - $1 million. The ever-loyal Antonio Floirendo purchased $2 million. And the Central Bank announced it was selling more gold - 1,577,000 ounces - to alleviate the desperate liquidity situation. November 1983 At the Elks Club in Makati (which implied a social gathering), Fabian Ver invited the heads of eight money changing syndicates - names that were no big secret: Jimmy Chua, Raffy Chua, Benito Penalosa, Go Pok, Catalino Coo/Lito Lliege, Peter Uy, Sio Lim, and Wilson Chua. When they showed up they were arrested. While incarcerated the problem was explained - the peso had to be controlled. Thus was born the Binondo Central Bank. Created by E.O.934, the Presidential Anti-Dollar Salting Task Force was set up and run by Bobby Ongpin and code-named Luntian. The syndicates continued their operations and expanded them and kept their profits but they had to cooperate with the government by buying and selling at government-dictated rates. November 16, 1983 Closing of purchase of the property at 200 Madison Avenue - for $50.5 million. The corporation used was named Glockhurst Corporation which purchased the property from Harry Helmsley. Rico Tantoco held the bearer shares of this company which later the Tantocos made appear as owned by Khashoggi. November 18, 1983 When dollars were sorely needed by a country now famous for being so desperately poor, Imelda became even more famous (notorious) for being a "one-woman balance-of-payment problem", a psychopathic buyer who squandered her country's treasury on everything from Bulgari baubles to macadamia nuts. For starters, she purchased four New York properties, paying out a total of $181.5 million. On this day when the Central Bank admitted it could not pay its foreign debt obligations Imelda made a down payment of $50.5 million for the property at 200 Madison Avenue in Manhattan. She paid $200,000 for a diamond bracelet, $360,000 for antique jewelry, $19,400 for towels, bed sheets, nightgowns, and tablecloths at Bloomingdales, and ran up an $18,400 bill at the Waldorf Astoria. The Philippine National Bank and the Central Bank provided the dollars. At home, manufacturers whose very existence depended on raw materials from abroad could no longer obtain them. Factories began to close. Unemployment rate skyrocketed. Public furor increased. |