ANTI-CORRUPTION DRIVE PICKS UP STEAM

C O N F I D E N T I A L SECTION 01 OF 03 MANILA 000464

SIPDIS

DEPT FOR EAP, EAP/PMBS, EB, INR/EAP, INR/B
NSC FOR GREEN

E.O. 12958: DECL: 01/28/2015
TAGS: PGOV KCOR PREL MARR ECON PINR RP
SUBJECT: ANTI-CORRUPTION DRIVE PICKS UP STEAM

REF: A. MANILA 0084

B. MANILA 0042

C. 04 MANILA 05834

D. 04 MANILA 5262

E. 04 MANILA 5549

Classified By: Political Officer Andrew McClearn for
Reasons 1.4 (b) and (d)


1. (C) Summary: Mission is actively working with GRP
counterparts to help them develop legal cases against
Philippine officials who have allegedly been engaged in graft
and other forms of corruption. GRP officials have recently
advanced numerous new corruption-related cases against
prominent military and civilian officials. The proliferation
of cases is a clear sign that the Philippine government is
ramping up its anti-corruption drive. The Ombudsman and his
office, in particular, deserve commendation for their
professionalism and energy in moving forward on so many
fronts, despite serious resource constraints. End Summary.

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Mission Assistance to GRP
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2. (C) Mission is working with GRP counterparts to develop
legal cases against Philippine officials who have allegedly
been engaged in graft and other forms of corruption. On
January 20, Emboffs from DOJ, LEGATT, and DHS met with GRP
Ombudsman Simeon Marcelo and Director Victor Aquino from the
Anti-Money Laundering Council (AMLC) to discuss in detail
several of the anti-corruption cases currently underway in
the anti-graft court, the Sandiganbayan. GRP officials
agreed in principle to continue regular meetings of this
first joint US-RP anti-corruption working group in order to
exchange detailed information on pending anti-graft cases
involving citizens of both countries and their possible
ill-gotten assets. DHS, LEGATT, and JUSMAG officials have
also stepped up coordination with GRP officials in the
investigation of five open cases involving prominent GRP
officials accused of corruption, and development work is
underway on several other cases. As a result of this
cooperation, GRP officials have been able to strengthen
several high-visibility cases with access to the ownership
records of US assets by GRP officials who are under scrutiny.



3. (C) In addition, LEGATT is assisting the Office of the
Ombudsman as it develops a personnel management system
constructed to manage more effectively the burgeoning number
of Ombudsman officials (now over 200) involved in an
increasing array of investigations. Emboffs also met
recently with Secretary-designate of Finance Cesar Purisima,
who strongly supported continued DHS assistance to ongoing
investigations conducted by the Department of Finance's (DOF)
Revenue Integrity Protection unit. (Note: DOF's internal
audit and investigative arm also has regulatory
responsibility over the Bureau of Customs and the Bureau of
Internal Revenue. end note) Separately, a joint USG-GRP
initiative, led by DHS/TSA, at Manila's International Airport
recently resulted in the placement of visible signs at both
arrival and departure terminals notifying passengers of the
Philippine legal requirement to declare possession of cash
amounts greater than USD 10,000. TSA, US Treasury
contractors, and GRP officials are working on a related
initiative that would insert similar language on customs
declaration forms submitted by arriving passengers. Mission
is also pursuing DOJ-sponsored training for GRP counterparts
that would build capacity in the judicial system to deal with
an expected spike this year in the number of money laundering
cases moving through the court system.

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AFP Cases
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4. (C) Investigators continued to advance cases against
prominent AFP officers allegedly involved in graft. On
January 25, the Supreme Court dismissed a petition by Major
General Carlos Garcia that had questioned the Sandiganbayan's
jurisdiction over the perjury charges filed against him.
(Note: Garcia faces prosecution in both the Sandiganbayan
and in a military court martial -- reftels. end note)
Separately, Special Prosecutor Dennis Villa Ignacio told
Emboffs that the Ombudsman's Office was compiling additional
evidence against Garcia that could result in the filing of
additional, more serious charges (i.e., "plunder") against
him in the Sandiganbayan. In the ongoing court martial, the
finance officer of the Armed Forces Police Savings and Loans
Association (AFPSLAI) recently testified that an account at
AFPSLAI owned by Garcia had earned over USD 100,000 in
dividends alone from June 2000 to December 2003.


5. (U) Additional developments involving other AFP officers
include:

-- In a January 26 hearing, retired Lt. General Jacinto Ligot
faced questions before the House Committee on National
Defense. Ligot, who was Garcia's predecessor as AFP
Comptroller from 1999 to 2001, featured prominently in a
December 2004 article in "Newsbreak," a local magazine, that
questioned Ligot's ownership of assets worth over USD 1
million, including two homes in California. Representatives
conducting the hearings were reportedly exasperated with
Ligot, who claimed his "right against self-incrimination" at
least 21 times. The Chair of the Committee, Rep. Roilo
Golez, told reporters that Ligot's case was similar to that
of Garcia; "One is the immediate successor or predecessor of
the other. It's like the technology was transferred," he
said;

-- On January 20, the Office of the Deputy Ombudsman for
Military and other Law Enforcement Offices (OMB-MOLEO) filed
charges in the Quezon City Regional Trial Court against Lt.
Col. George Rabusa for allegedly unlawfully acquiring
properties worth nearly USD 800,000. Rabusa worked for
Garcia when the latter was AFP Comptroller from 2001 to 2004.
OMB-MOLEO filed three counts of perjury against Rabusa for
failing to explain adequately his accumulation of assets,
which, according to the OMB-MOLEO's investigation, were
"grossly disproportionate to his and his wife's income."
Rabusa's wife and father-in-law were also charged with
conspiracy in the corruption charges.

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New Cases Proliferate
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6. (U) The volume of anti-corruption cases involving
civilian officials has mushroomed in recent weeks. A list of
investigations and charges involving several agencies
follows:

-- On January 17, the Office of the Ombudsman dismissed from
service Manila's Port District Manager Leopoldo Bungubung
after an investigation showed that he routinely demanded
bribes as he managed contracting processes at the Port. The
Ombudsman approved the filing of charges in the Sandiganbayan
against Bungubung for violating the Anti-Graft and Corrupt
Practices Act;

-- On January 24, the Office of the Ombudsman ordered
presidential adviser and former foreign secretary Roberto
Romulo to submit a counter-affidavit in order to refute a
complaint filed earlier by former Solicitor General Francisco
Chavez. Chavez accused Romulo of several conflicts of
interest arising from Romulo's executive role at multiple
private sector positions which, Chavez alleged, presented
serious conflicts with his current public position as Senior
Adviser on International Competitiveness to President Arroyo;


-- On January 24, Ombudsman Simeon Marcelo ordered the firing
of two officials at the Bureau of Customs. Division Chief
Flor Aguilar and Operations Officer Honore Hernandez were
removed after investigations revealed that both officials
possessed multiple automobiles and properties for which they
were unable to account. Marcelo publicly commented that the
investigations had showed that both officials "manifestly
violated the law and flagrantly disregarded established
rules;"

-- In the aftermath of the December 2004 typhoon disaster in
eastern Luzon, a NGO has filed a complaint with the Ombudsman
accusing 22 current and former public officials, including
Congressman Junie Cua and former Budget Secretary Salvador
Enriquez, with graft associated with illegal logging
activities in Quirino province northeast of Manila. The
complaint, made public for the first time January 27, alleged
that the 22 officials conspired to pocket nearly USD 3
million of mining and forestry tax collection funds in 1995,
and that extensive illegal logging operations in the
mountains of Quirino and Aurora contributed to the severity
of the recent disaster. Congressman Cua has asserted that
the accusations were politically-motivated. No formal
charges have been filed;

-- On January 24, the Philippine National Police (PNP) began
an investigation into allegations that two PNP officers in
the province of Aklan purportedly attempted to bribe fellow
officer Jonathan Moreno to recant his earlier testimony in a
case against a narcotics trafficking suspect. The PNP
officers also allegedly tried to place other forms of
pressure on Moreno. On January 26 during a local festival,
Moreno -- who apparently had become mentally unhinged,
perhaps due to this pressure -- went on a shooting rampage
that killed eight people, including five PNP officials;

-- On January 25, Pampanga province Vice Governor Joseller
Guiao made public an appeal to President Arroyo to begin an
investigation into corrupt practices allegedly committed by
Governor Mark Lapid, and his father, Senator Manuel "Lito"
Lapid. Guiao accused the Lapids of illegally skimming
revenues from the local government-owned Natural Resources
Development Corporation, a lucrative local quarry in
Pampanga, President Arroyo's home province just north of
Metro Manila. GRP officials are investigating the charges.

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Comment
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7. (C) The proliferation of cases involving graft and other
forms of corruption is a clear sign that the GRP is further
ramping up its anti-corruption drive. The Ombudsman and his
office, in particular, deserve commendation for their
professionalism and energy in moving forward on so many
fronts, despite serious resource constraints. The Arroyo
administration also deserves commendation in this effort, as
it continues to highlight in public the importance to the
country's political system and economy of combating
corruption to the full extent possible. Mission -- which is
working closely with the GRP -- will continue to support the
GRP's anti-corruption effort in every way possible.



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