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2005-01-06 08:45:00
Embassy Manila
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						C O N F I D E N T I A L SECTION 01 OF 02 MANILA 000084 



E.O. 12958: DECL: 01/06/2015


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

"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.)




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

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).