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.

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Jueteng Allegations
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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 <

br>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.)

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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.

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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.

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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.

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