LATEST PROGRESS ON ANTI-CORRUPTION

C O N F I D E N T I A L SECTION 01 OF 02 MANILA 000084 SIPDIS DEPT FOR EAP/PMBS, INR/EAP, INR/B NSC FOR GREEN E.O. 12958: DECL: 01/06/2015 TAGS: PGOV KCOR PREL MARR ECON PINR RP SUBJECT: LATEST PROGRESS ON ANTI-CORRUPTION REF: A. MANILA 0042 ¶B. 04 MANILA 05834 ¶C. 04 MANILA 5262 ¶D. 04 MANILA 5549 Classified By: Political Officer Andrew McClearn for reasons 1.4 (b) and (d) ¶1. (C) SUMMARY: The President's new anti-corruption czar has requested Embassy's cooperation, which Embassy officers will provide in addition to ongoing coordination with the Office of the Ombudsman. The GRP is making progress on some new high profile corruption cases, most recently charging an Air Force brigadier general with graft in a case involving the alleged fraudulent sale of military equipment. The criminal case involving former military comptroller General Garcia is again moving forward after a break for the holidays; his court martial is scheduled to resume shortly. A Philippine court finally ruled against Ferdinand Marcos crony Eduardo "Danding" Cojuangco's efforts to recover coconut industry funds he once controlled. In addition, a U.S. Federal Appeals Court ruled against GRP efforts to control the distribution of USD 150 million in funds awarded to victims of the Marcos regime. END SUMMARY. -------------- New czar -------------- ¶2. (C) As President Arroyo informed Ambassador on January 3 (ref A),Malacanang has now designated former justice secretary (current Presidential Legal Counsel) Mercedes SIPDIS "Mercy" Gutierrez to head a task force on corruption. In a lunch with Legatt and DOJ attache on January 6, Gutierrez asked the Embassy to assist the task force. Emboffs agreed to do so, while encouraging the task force to focus on some high profile agencies to investigate (notably Customs and Immigration) and then turn over the cases to the Ombudsmen to prosecute. Embassy continues its own close cooperation with the Ombudsman and his staff. (DCM will host a breakfast with Ombudsman and Staffdel Hawkins on January 7.) -------------- GROUNDED -------------- ¶3. (SBU) On January 4, GRP Ombudsman Simeon Marcelo filed "malversation and graft" charges against Air Force Brigadier General Vladimir de los Trino before the civilian anti-corruption court, the Sandiganbayan. According to the charge sheet, de los Trino, commander of the Air Force's 2nd Tactical Operations Wing, ordered the May 2000 sale of four power generators at a base in Cebu in the central Philippines without authorization or proper use of established public bidding processes. Two mid-level air force officers, Major Antonio Garcia and Engineer Nelmida Senen, as well as businessman Antonio Ularte were also charged in the case. De los Trino and the other officers allegedly received USD 16,000 (which they divided among themselves) from businessman Ularte for the assets, bypassing a prior public bid of USD 24,000. According to media, the Office of the Ombudsman acted upon information provided by the Office of the Inspector General of the Armed Forces of the Philippines (AFP) in filing the charges. If convicted, de los Trinos and his accomplices could face jail terms in excess of 20 years. -------------- AFP cases resume -------------- ¶4. (SBU) The criminal case involving corruption and perjury charges filed against former AFP comptroller Major General Carlos Garcia is again moving forward after a break for the holidays. (Note: See Refs b-d for additional background.) Preliminary hearings in the Sandiganbayan have now resumed. However, the Landbank, a Filipino financial institution, refused an order of garnishment issued by the Sandiganbayan on five U.S. dollar-denominated accounts held under the names of Garcia and family. The Landbank froze Garcia's two peso-denominated accounts, worth nearly USD 120,000. Landbank Vice-President Rosemarie Osoteo, defending her company's decision, publicly stated that the Sandiganbayan's freeze order did not apply to the dollar accounts, which, she said, were "confidential" and could only be opened in cases of violation of the Anti-Money Laundering Act. (Note: The bank secrecy laws in the Philippines are among the strictest in the world. end note) The Sandiganbayan plans to challenge Landbank's decision. Garcia's court martial is scheduled to resume hearings on January 11. He remains in military custody. ¶5. (SBU) Separately, the trial of former AFP Chief of Staff and comptroller Lisandro Abadia on corruption charges is also scheduled to resume shortly. Abadia has also been accused of perjury and engaging in illegal financial transactions. -------------- Marcos-Era Cases Move Forward -------------- ¶6. (SBU) Representing long-standing GRP efforts to retrieve Marcos-era plunder, the GRP won a major victory when the Sandiganbayan on December 28 rejected motions for reconsideration of earlier decisions that awarded the GRP ownership of stock worth millions of dollars in San Miguel Corporation and the United Coconut Planters Bank (UCPB). According to Chairman Haydee Yorac of the Presidential Commission on Good Government (set up to recover the Marcos loot),this case was one of the top priorities undertaken by PCGG since 1986. Eduardo "Danding" Cojuangco, a close ally of Ferdinand and Imelda Marcos, and his co-defendants had appealed the earlier decisions, claiming that they were the rightful owners of the stock. The Sandiganbayan ruled that the defendants had bought the stock using funds derived from the "Coconut Consumers Stabilization Fund levy" -- known popularly as the "coco-levy" -- imposed during the Marcos regime and thus, the stock was owned by the public, in particular, coconut farmers. The court also ruled that Cojuangco, who had large-scale control of the coconut industry during the Marcos years, had improperly administered the fund to his own advantage and did not have a legitimate right to own the stock. Cojuangco and his co-defendants are expected to appeal to the Supreme Court. ¶7. (SBU) Separately, the U.S. Federal Court of Appeals for the 9th Circuit based in San Francisco on December 28 turned down a GRP motion that it be allowed to distribute USD 150 million in funds seized for eventual disbursement to human rights victims of the Marcos regime. The court upheld a 1999 agreement between the Marcos estate and claimants meant to settle all outstanding claims by victims. The court dismissed the GRP's claim to distribution rights, stating that the GRP was not a party to the 1999 settlement. However, most of the funds remain deposited in a special GRP account in the Philippines designated for agrarian reform. Presidential Press Secretary Ignacio Bunye on December 30 called the ruling "academic, because we are already holding the funds," while promising to earmark them for compensation for human rights victims as well as for land reform (pending enabling legislation). Ricciardone