Hunt for Arroyos' alleged ill-gotten wealth starts

By Booma Cruz, Probe Productions

Posted at Aug 20 2010 01:00 PM | Updated as of Aug 22 2010 12:49 AM

MANILA, Philippines - Plagued by scams and other allegations of graft, the 9-year reign of President Gloria Macapagal-Arroyo is perceived to be worse than the 20-year rule of dictator Ferdinand Marcos in terms of corruption.

The global corruption watchdog Transparency International once ranked the Philippines as the most corrupt country in Asia, an infamous tag that belonged to Indonesia during the time of Marcos.

The perception of “most corrupt” has rubbed off on Mrs. Arroyo, whose declared wealth and alleged undeclared assets have been the subject of past impeachment complaints.

These properties included 5 real estates: 3 were commercial buildings in California while the 2 were a condominium unit and residence in San Francisco.

"The magnitude of some of those scandals was really off the border of Marcosian level. Five to 10 billion [dollars] yung kay Marcos, so, if she's worse than that, then we're talking, at least in excess of $5 billion if we take a lower estimate. There was an unexplained increase in her wealth and then there were assets reportedly attributed to them which are not on the SALN (Statement of Assets, Liabilities, and Net Worth)," Vince Lazatin of Transparency and Accountability Network (TAN) shared.

The remarkable growth in the assets of the Arroyos, particularly during the incumbency of the president, and the scant details about these, have fueled further speculations about the First Family’s alleged unexplained wealth.

"Given the very limited resources that were open to her as a public servant, how could she afford it, this much property?" International Humanitarian lawyer Harry Roque said.

Undeclared assets

Former President Gloria Arroyo and First Gentleman Jose Miguel Arroyo are descendants of well-to-do families. This, however, does not explain the exponential growth of the president’s personal assets, from P6.7 million in 1991 to P142.3 million in June 30, 2010, as declared in her latest SALN.

"If they enter public office wealthy, there is no problem with that. What is important is to see how that wealth changes over time during the time that they're public officials. You have to have extraordinary acumen to be able to make your assets increase 20 times or whatever it is. It, naturally... it leads to suspicions that the sources of this income may not be all legitimate," Lazatin explained.

Lawyers of the Arroyos traced their clients’ increased assets to the sale of a real estate property and investments in the stock market. Watchdog group TAN, however, sees a breach in ethics with the Arroyos’ business dealings.

"The president should not be investing in stock market because there will arise a conflict of interest between the company you're investing at and your functions as president. If we look at the stock market, especially the last three years, most markets have been down, so if they are heavily invested in the stock market, then their assets should decline commensurately, di ba? Unless, they are so brilliant they sold it," Lazatin said.

Charges of unexplained, hidden and ill-gotten wealth have hounded President Arroyo since she was a senator.

In 1997, two pieces of prime property in the San Francisco Bay area worth $4.6 million were traced to the Arroyo couple. Bought in 1992 and 1993, the properties were not reflected in the SALN of Sen. Arroyo.

The president’s husband denied ownership of the San Francisco properties, saying his brother, Iggy, bought the real estate, and he only acted as his lawyer and trustee.

But Roque says that under the law, then Senator arroyo was still duty bound to declare all their properties, whether or not, her husband held these in trust.

Secret accounts

Six years later, the First Gentleman played the same card after he was accused by Sen. Panfilo Lacson of laundering P321 million in campaign contributions through a secret bank account in the name of Jose Pidal.

In his privilege speech, Lacson disputed the alleged cover-up by citing the income tax payments of Iggy Arroyo: P11,205.00 in 1996; P11,205.00 in 1997; P13,446.00 in 1998; and P8,500.00 in 1999.

"We were validating this information... A witness in Negros, where Congressman Arroyo comes from, could not believe that Congressman Arroyo could acquire this much property. Given that he has very modest means prior to becoming a congressman so many of the people that we talk to in Negros could not believe that the brother could own this much property," Roque said. "Now, take note, they never denied the existence of the property."

Now a member of the Congress and on his third and last term, the younger Arroyo is the 15th richest legislator in the current Congress. No one has even bothered to file a case against the younger Arroyo for not paying the correct taxes.

In his investigation as a public interest lawyer and counsel of the complainants in the impeachment case against President Arroyo, Roque says he discovered that the family of the First Gentleman has lost numerous cases in court, which have dissipated much of his assets.

This led him to conclude that the 5 real estate properties in San Francisco and the companies supposedly owned by the former First Couple may have been ill-gotten. All the properties acquired when Mrs. Arroyo joined the government were never declared in the former president’s SALN.

"What was mentioned, in fact, in the impeachment complaint are substantial assets, which, we believe, were concealed. And in my mind, this is only what has been made available to us. We believe there are more... there are now some leads coming in, and at some point in time, the Philippines will have to come up with a definite policy on how it would want to recover and to act on these leads," Roque explained.

Following leads

The Aquino administration has started to do the ground work for tracing the alleged Arroyo hidden assets. Justice Secretary Leila de Lima says they are following up the leads.

However, the lack of legal personality to request cooperation from the United States government prevented Roque’s group from pursuing the information they had on the hidden wealth of the Arroyo family.

The group then decided to work with non-government organizations (NGOs) abroad that specialized in tracking down ill-gotten wealth, a move that is being supported by the current administration.

"We are already gearing up for the evidence gathering in time for the commencement of the formal work of the Truth Commission. The DOJ (Department of Justice) will be assisting the latter in its fact finding mission," de Lima says.

Roque notes that there have been very few instances where the anti-money laundering council acted on suspicious accounts

"Although it was created by legislation to be independent from the Central Bank, they simply happen to be based at the Central Bank. The reality is, together with the Ombudsman, we still have not changed the leadership in the AMLA (Anti-Money Laundering Act). It seems to me that if we want to fully tap the potentials of the AMLA, we have to re-examine whether or not we have political appointees in that office or professionals," he says.

International support

Efforts to trace the alleged ill-gotten wealth of the Arroyos have begun with the changing of the guards in Malacañang. Initial information pointed to alleged undeclared assets abroad. De Lima says there are leads on the Arroyo money abroad.

The justice secretary, however, refuses to name the countries where reports of alleged ill-gotten wealth have been traced. But Roque says research their group conducted points to the United States and Europe.

"There are efforts, and I will confirm this much, of some quarters to identify where this ill-gotten wealth could be, and there are some very good leads already, which would prompt them to immediately or sooner than later, they would prompt them to request the Philippine government now to take actual and positive steps to require the cooperation of its foreign jurisdictions. I can also confirm that there are some quarters that are focusing also on jurisdiction such as Latin America," Roque claims.

The United States and the European Union are party to an international convention against corruption that provides a legal infrastructure by which cases of suspected ill-gotten wealth would be investigated.

At the forefront of a global anti-corruption campaign, both are expected to fully cooperate with Philippine authorities insofar as sharing information and gathering evidence on ill-gotten wealth. The full cooperation of countries where ill-gotten monies are hidden is the key to asset recovery, among others.

"During her incumbency, I had the occasion to talk to no less than the head of anti-money laundering office of the European Union," Roque says. "Unfortunately, we had a handicap because the EU (European Union) would only entertain request of cooperation from state parties, and, of course, it was inconceivable that the Department of Justice then, when Arroyo was in power, will make the request."

De Lima says initial steps have been taken to ensure government-to-government cooperation in pursuing information and the recovery of alleged ill-gotten wealth of the former First Family. She said foreign governments have even offered to help the Aquino government on this mission.

Sources in the justice department say the World Bank has offered to train government investigators on how to track down and access the paper trail of ill-gotten wealth.

"It's easier now to pry into bank accounts because it's become an electronic world. You may not know exactly who owns or who is the beneficial owner of the account. But you can confirm the movement of funds. And that's the beauty of modern technology. You can always have an electronic paper trail," Roque says.

No pending charges

A member of the opposition, then Taguig Representative Allan Peter Cayetano tried to bait first gentleman Mike Arroyo into discussing the first couple’s assets during a congressional inquiry.

He accused Arroyo of stashing millions of dollars in overseas banks, gave the account number, and named the bank: the Hypovereins Bank in Munich, Germany. The lawmaker was even willing to resign just to prove his claim.

Cayetano also challenged Arroyo to sign a waiver of the bank secrecy on all their accounts, a challenge that the First Gentleman ignored. But the latter went to Germany to secure a certification from the Munich bank that disproved Cayetano’s allegations.

Four years later and now a senator, Cayetano refused our request for an interview about the Arroyos’ alleged ill-gotten wealth. Likewise, at the last minute, the lawyers of the Arroyos decided to cancel an interview with ANC, saying “the cases are all filed in different venues.”

As of press time, except for the case filed by Bayan Muna representatives against the former president on the NBN-ZTE deal, there are no pending charges against Mrs. Arroyo.

Uphill battle

De Lima promises to leave no stone unturned in the investigation of all questionable deals entered into by the Arroyo administration and its money trail. She said the government needs to come up with air-tight cases that will support any asset recovery efforts in the future.

The government expects an uphill battle in its quest to uncover questionable deals and suspected hidden assets of the Arroyos and their cronies. But Roque says the government needs to do more to be able to recover any ill-gotten wealth.

"Those (elaborate layerings) are not real problems. The problems that I see is because our law makes it more difficult compared to other jurisdictions to pry into suspected bank accounts. It's always the requirement that there must be probable cause and that you must, in fact, go to court, which is also found in other jurisdictions, with the difference being their construction of probable cause is perhaps as lot higher than what was contemplated by the law," Roque says.

Easier to search

Accused and convicted of plunder by the Sandiganbayan, ousted president Joseph Estrada was able to keep all his assets intact. He has denied stealing from government coffers.

Roque says the search for ill-gotten assets of the Arroyos should be easier today.

"It is now incumbent upon the AMLA just to show probable cause, so that an order could be given, in fact, to open bank accounts for examinations. The [UN] international Convention Against Corruption requires state parties to cooperate with states who are conducting investigation on possible ill-gotten wealth," Roque says.

The unexplained wealth act also puts the burden of proof on the accused. Under the law, properties acquired by a public officer in excess of what he earns is presumed ill-gotten and should be forfeited in favor of the government.

Move fast

TAN's Lazatin is more optimistic of a conviction of another president if the government is able to build a strong case against Mrs. Arroyo, and if Ombudsman Merceditas Gutierrez is out of office. The former president is now a member of the Congress as representative of the 2nd district of Pampanga.

"Don't forget si President Arroyo is still a public official... that prescription period is not prescribed. It doesn't start unless the clock starts ticking. As far as the assets are concerned, that becomes a bit tricky. That goes to a very long court process... The track record of the government to recover the so-called assets is very important," he said.

The Aquino government needs to move fast if it is to recover the alleged fruits of corruption supposedly stashed by the Arroyos in secret accounts here and abroad.

"I'd really like to see more drastic steps beyond the Truth Commission. 'Cause quite frankly, there's much of the truth that we already know. But what we need to do now is take steps to actually prove that these are ill-gotten wealth. And number 2, take steps to recover them," Roque says.

Roque notes that the Truth Commission is a mere fact-finding body, unlike the Presidential Commission on Good Government (PCGG) that was created by former President Cory Aquino, the chief executive’s mother, to go after the ill-gotten wealth of the Marcoses and their cronies.

Under a revolutionary government, Mrs. Aquino issued Executive Order no. 1, which created the PCGG right after the Marcoses fled Malacañang.

"Without a doubt, Cory Aquino exercised a lot more resolve and powers in not only identifying the ill-gotten wealth of the Marcos but in recovering it on behalf of the Filipino people," he commented.

Despite its sequestration powers, the PCGG failed to fully recover the alleged $5 to $10 billion ill-gotten wealth of the Marcoses and their cronies. The commission has turned over P85.6 billion to the national treasury in the last 24 years, but more hidden assets are still waiting to be recovered in several countries throughout the world.

The Philippine government’s experience with Estrada, who was convicted of plunder by the Sandiganbayan and later pardoned by President Arroyo, was even worse. He was able to keep all his assets intact.

Important last 4 years

Despite the government’s bad track record on recovery of ill-gotten wealth, de Lima remains optimistic. De Lima notes the Anti-Money Laundering Law and the UN Convention Against Corruption as formidable tools to help the government deal with asset recovery.

But Roque says a final conviction or forfeiture may be necessary for the full recovery of suspected ill-gotten wealth. "There would have to be proceedings instituted and there would have to be judgments made by domestic courts saying that certain assets are, in fact, ill-gotten," he says.

The final conviction was a precondition of the Swiss court for the release of $365-million frozen accounts in Swiss banks both claimed by the Philippine government and the Marcoses. Facing charges of corruption left and right, not one of the Marcoses have been convicted in court since 1986.

"It's precisely the experience like that of the Philippine government in recovering the Marcos wealth that has prompted the international community to adopt these remedial treaties and even the media legislation," says Roque.

The requirement of final conviction appears to be the biggest hurdle in any recovery effort by the government insofar as the alleged ill-gotten assets of the Arroyos. "This all goes back to the Ombudsman, and eventually, the Sandiganbayan and the Supreme Court, for a conviction of some sort," he adds.

A staunch ally of the Arroyos, Ombudsman Gutierrez is believed to be protecting the First Family. She has 2 more years in office, which is completely under her control. Gutierrez can only be removed by impeachment.

Furthermore, de Lima looks at the issue in a different light as the Truth Commission can "outlive" Gutierrez's term in the Office of the Ombudsman.

The crime of plunder law prescribes in 20 years, but there is no prescription to the recovery, by the state, of properties illegally acquired by public officials.

With only 6 years in Malacañang and an expected long-drawn battle in court with the Arroyos, the task of recovering the alleged ill-gotten wealth accumulated in the last 9 years of the previous administration is a tall order.

De Lima says the current administration has no choice but to observe due process. All that the government can do is to hasten the process, establish probable cause, and move for the freezing of suspected ill-gotten wealth.

"We'll try their best na me makuha kahit paano sa huling 4 years ni [Pres.] Noynoy," De Lima says.

(Correction: Booma Cruz of Probe Productions is the author of this article, not Lynda Jumilla of ABS-CBN News as initially uploaded. Ms. Jumilla was the host of the show, The Arroyo Years, where this script was used.  - Eds.)