CORRUPTION UPDATE: "JUETENG"; GARCIA; ESTRADA

C O N F I D E N T I A L SECTION 01 OF 03 MANILA 002578 SIPDIS DEPARTMENT FOR EAP/PMBS, INR/EAP, INR/B E.O. 12958: DECL: 06/02/2015 TAGS: PGOV PREL PINR KCOR ECON RP SUBJECT: CORRUPTION UPDATE: "JUETENG"; GARCIA; ESTRADA REF: A. MANILA 2475 ¶B. MANILA 2359 ¶C. MANILA 2142 ¶D. MANILA 1641 ¶E. MANILA 464 Classified By: Political Officer Andrew McClearn for Reasons 1.4 (b) and (d). ¶1. (C) Summary: Amid a recent swirl of allegations involving the first family, a witness at a May 30 Senate investigation of "jueteng" (illegal lottery games) accused the President's son, Congressman "Mikey" Arroyo, of receiving profits from the game. President Arroyo dismissed the accusations outright, but said she supported a full investigation. Meanwhile, a significant shift in the case against Carlos Garcia, a former general and military comptroller accused of corruption, occurred when authorities moved him from a military to a civilian jail. In other corruption-related news, witnesses in former president Joseph Estrada's defense case tried to cast doubt on the validity of the central charge that Estrada was involved in jueteng profiteering. The allegations against Arroyo family members remain sketchy, but they are politically problematic for the President and her Administration. End Summary. -------------- Jueteng Allegations -------------- ¶2. (SBU) Amid a recent swirl of allegations involving the first family (see Reftels),a witness at a May 30 Senate investigation of jueteng accused the President's son, Congressman Juan Miguel "Mikey" Arroyo, of receiving profits from the game. Before a joint Senate committee hearing, a self-confessed "jueteng operator" claimed that Mikey Arroyo had received large payoffs of protection money during his (Mikey's) tenure as vice governor of Pampanga Province from 2001 to 2004 (Pampanga is located northwest of Manila). Wilfredo "Boy" Mayor, a low-level politician brought before the committee on the recommendation of Archbishop Oscar Cruz, a Roman Catholic prelate who has publicly made charges about jueteng (Ref C),testified that he gave over 10,000 USD each month in 2001 and 2002 as protection money to close associates of Arroyo. He alleged that these "bagmen" in turn paid off Mikey Arroyo in order to secure Mayor's ability to run the numbers game in Pampanga and neighboring provinces. (Note: Pampanga and the area near it is known as the center of jueteng operations in the Philippines. It is also President Arroyo's home province.) Mayor admitted that he never personally met Arroyo. Mayor also averred that Philippine National Police (PNP) Director General Arturo Lomibao and Rep. Jose "Joey" Salceda were involved in related illegal activities. ¶3. (SBU) Mayor was the first of eight witnesses recommended by Archbishop Cruz and scheduled to testify before the just-commenced joint Senate committee hearing (Ref C). A counterpart House committee (Public Order and Security), headed by Rep. Amado Espino, began hearings earlier this year and is scheduled to re-commence hearings next week. ¶4. (SBU) President Arroyo dismissed Mayor's accusations outright, as well as previous accusations that her husband, Mike Arroyo, was involved in jueteng. She noted, however, that she supported a full investigation of the charges, announcing on May 30: "I am taking the allegations seriously and have asked for an intense investigation and will let the chips fall where they may." Presidential Spokesman Ignacio Bunye criticized what he said was hearsay evidence in Mayor's testimony and reiterated that Malacanang supported a national crackdown on jueteng (Ref B). Secretary of Justice Raul Gonzalez publicly reminded jueteng "whistleblowers" that they may face criminal charges if their claims prove unfounded. In addition, several of Mikey Arroyo's associates, who were implicated by Mayor, promptly filed libel charges against him for slander. Mikey Arroyo also canceled a planned trip to the U.S. reportedly in order to refute the charges against him in person. The PNP's Lomibao and Rep. Salceda also publicly denied accusations of involvement in jueteng. (Note: For further details on jueteng, please see Ref B, which reviews how the game operates, and Ref A, which reviews economic aspects of the game, including the legalization debate.) -------------- Garcia Now Under Civil Detention -------------- ¶5. (SBU) Meanwhile, a significant shift in the corruption case against former Armed Forces of the Philippines (AFP) Major General Carlos Garcia occurred when authorities moved him from a military to a civilian jail in late May. For months observers had speculated that the AFP might be shielding Garcia from more difficult jail and trial conditions in the civilian system. Rep. Roilo Golez, a high-level congressman involved in the jueteng hearings, had publicly urged the AFP to yield Garcia, arguing April 7 that the civilian court "should have jurisdiction and custody" of him. Finally on May 31, AFP officials at the Camp Aguinaldo facility where Garcia had been detained turned him over to the Sandiganbayan (the Philippine graft court) Sheriff's Office. The transfer occurred without incident. Garcia is now being held without bail at the PNP Camp Crame detention center while the civilian court processes multiple cases against him, including for perjury, forfeiture, and plunder -- the latter a capital offense. Last May 25, the Sandiganbayan denied Garcia's petition to consolidate the forfeiture and plunder cases against him, declaring that this would lead to unnecessary delays. The military court-martial against Garcia for conduct unbecoming an officer and other charges is slated to continue (Ref D). ¶6. (C) Ombudsman-AFP Coordination: The Ombudsman's Office continues to play a key role in making the legal case against Garcia and it is working with the military to develop additional corruption cases. Deputy Ombudsman for Military and Other Law Enforcement Agencies (OMB-MOLEO) Orlando Casimiro told poloff May 13 that officials in his unit conduct fact-finding and preliminary investigations regarding accusations of corruption in the AFP, as well as the PNP and other law enforcement agencies. Most of his office's investigations involve PNP personnel, although he said that investigations involving the military seem to get most of the publicity. To begin an investigation, his office often relies on recommendations from internal auditors in the military and law enforcement agencies. Corruption complaints regarding the AFP are often referred to OMB-MOLEO by the AFP's Office of Ethical Standards and Public Accountability (OESPA),for example. Casimiro said relations between OESPA and OMB-MOLEO were cordial. Casimiro cited successful examples of civil-military coordination and team-building, including a program sponsored by the Ombudsman's Office that sends key officials to study at the National Defense College of the Philippines. Although Casimiro painted a positive portrait of his office's activities, many observers believe that OMB-MOLEO needs to improve cooperation and collaboration with the AFP and PNP in order to be more effective. -------------- Latest on Estrada's Trial -------------- ¶7. (SBU) In other corruption-related news, witnesses in former president Joseph Estrada's defense case tried to cast doubt on the validity of the central charge that Estrada was involved in jueteng profiteering. Former Supreme Court Chief Justice Andres Narvasa (1991-1998) testified that President Arroyo offered Estrada several exile options during a series of meetings immediately following her assumption of the presidency on Jan. 20, 2001. Estrada's defense lawyers argued that these purported offers prior to the filing of criminal charges proved that the plunder charges were "concocted" and were "political" in nature. Senate Minority Leader Aquilino Pimentel testified on May 30 that Estrada was not linked to a bank account into which jueteng proceeds allegedly flowed despite prosecution claims to the contrary. Senator Edgardo Angara testified June 1 that he had advised Estrada in 2000 that jueteng involvement was grounds for impeachment, but that Estrada had fiercely denied his involvement in the game. Prosecutors asserted that the witnesses were all biased towards Estrada and denied that the testimony disproved any earlier evidence accumulated against the ex-president. Independent observers commented that the defense's efforts were not very convincing. Estrada's defense team is reportedly in the process of calling many more witnesses. -------------- Comment -------------- ¶8. (C) The allegations against Arroyo family members remain sketchy, but they are politically problematic for the President and her Administration. Already, the allegations -- thanks to the high-level of publicity that they have generated -- are the talk of the town. Moreover, given the rank cynicism that Philippine politics breeds, the accusations are believed by many in the public. Any imminent risk of impeachment for the president is low for now, but this could change if substantive evidence emerges that family members -- or the president herself -- are raking in jueteng profits. The positive aspect of the Estrada and Garcia cases is that they are moving forward. The Estrada case, in particular, has now gone on for over four years, trying the public's attention span as well as patience for the painfully slow Filipino judicial system. Visit Embassy Manila's Classified SIPRNET website: http://www.state.sgov.gov/p/eap/manila/index. cfm You can also access this site through the State Department's Classified SIPRNET website: http://www.state.sgov.gov/ MUSSOMELI