Dec 9, 2008

The International Treasure Hunt

http://www.time.com/time/magazine/article/0,9171,961170,00.html

By Richard Lacayo;Anne Constable/Washington and Michael Riley/ Los Angeles Monday, Apr. 21, 1986

One of Ferdinand Marcos' newest possessions is a hefty volume called The Litigation Book. He consults it frequently, for it contains materials on the many lawsuits in which the Philippines' ex-President is embroiled. Prepared by Anderson, Hibey, Nauheim & Blair, the Washington law firm that is directing Marcos' legal defense in the U.S., the book is very much a work in progress and is carefully updated every day. Last week's events should merit quite an entry.

In testimony before a House Asian and Pacific affairs subcommittee, two New York City real estate executives told how they helped Marcos and his wife Imelda secretly acquire New York real estate. Faced with prosecution for contempt of Congress if they kept silent, Joseph and Ralph Bernstein described the complicated dealings of the Philippine first family, who allegedly hold three office buildings and an enclosed, multistory shopping mall in Manhattan, estimated to be worth some $350 million. Joseph Bernstein even recalled joining Mrs. Marcos on a midnight drive to a Wall Street building, where she went to gaze in admiration at her possession. "She was kind of proud of it," he said.

Apparently not proud enough to sign her name to the deed, however, a fact that has been causing no end of difficulty for Philippine government lawyers. The Bernstein testimony, accompanied by a chart, was a major boost to the effort to trace ownership through the layers of dummy companies. Explaining a typical deal, Joseph Bernstein told how he helped create a holding company in the Netherlands Antilles that was itself held by three firms in Panama, the stock of which had no identified owner.

For the squads of Philippine lawyers preparing cases on three continents, stripping away the financial camouflage that disguises the Marcos empire is just one part of what international law scholars agree will be an extraordinarily complicated legal battle. Marcos' attorneys have counted 15 lawsuits in the U.S., most of them the result of a full-court press by Manila. In addition to the New York properties, the government of Corazon Aquino has laid claim to two residences in New Jersey and $50 million in Texas real estate. The Central Bank of the Philippines has sued to recover the crates of gold and $1.5 million in freshly minted pesos that Marcos took with him to Hawaii in February. In what is potentially the most lucrative development of all, Switzerland three weeks ago took the unprecedented step of putting a temporary freeze on bank accounts in which some Philippine officials believe Marcos stashed as much as $3 billion.

The Philippines "good government" commission has a basic strategy for trying to retrieve Marcos' wealth in the U.S.: get American courts to freeze the disputed assets, then adjudicate ownership in the Philippines to prove that they were improperly acquired. The judgments of the Philippine courts would then be presented to American courts, which would be asked to order the transfer of the property to the Philippine government. "It's traditional legal practice for foreign judgments to be given effect in this country," contends Severina Rivera, a Washington-based attorney for the commission.

But to be enforced by U.S. courts, foreign judgments must be shown to be the result of fair proceedings. One thing that means is giving the defendant a meaningful chance to be heard. With Marcos unlikely to return, says Harvard Law Professor Abram Chayes, the Aquino government must take care to "give him as much opportunity as possible to present his case." For instance, says Chayes, it might consider appointing a neutral tribunal of lawyers or judges to take testimony from Marcos in Hawaii. In Manila's favor is the fact that federal courts usually defer to presidential policy in cases touching upon foreign affairs. In the government papers thus far filed in Marcos legal matters, the White House has indicated a pro-Aquino tilt.

Marcos can be expected to claim immunity from lawsuits for acts undertaken in his executive capacity. Even if the courts reject his assertion that he is still the legal President of the Philippines, says Marcos' Washington lawyer Richard Hibey, "he should still enjoy absolute immunity for official acts." Aquino attorneys reply that Marcos did not act within the lawful powers of the presidency and that, in any case, immunity does not apply to commercial activities like real estate deals.

Whatever the outcome, the Marcos legal miasma may become the lead case in an emerging area of jurisprudence that might be called deposed-dictator law. Many of the same problems arose in the effort by Iran to regain the wealth of the exiled Shah, but the hostage seizure abruptly ended any American interest in recognizing Iranian claims. As for the Haitian government's effort to recover an estimated $400 million to $800 million in the overseas assets of ex-Dictator Jean-Claude Duvalier, the Reagan Administration two weeks ago promised its cooperation. But that legal effort has been moving slowly, and furthermore, there are no known documents in Washington's possession relating to Duvalier holdings.

Marcos may not relish his new legal status, but as a lawyer, he is interested. His chief Washington attorney, Stanton Anderson, describes him as "shocked by the cost of litigation" but also "fascinated by the legal issues." In his rented beachfront house in Honolulu, he told the New York Times last week that his days are now consumed by consultations with lawyers. "I intend to vindicate myself within my lifetime," he vowed. It remains to be seen whether a lifetime will be long enough.

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