Covered Up Huge Deals for Marcoses, N.Y. Agents Say
Two New York real estate agents told a House subcommittee on Wednesday that they arranged hundreds of millions of dollars in real estate deals for former Philippine President Ferdinand E. Marcos and his wife, Imelda, then set up Byzantine corporate structures to mask the true ownership and help the Marcoses avoid taxes.
The admission by Joseph and Ralph Bernstein, brothers previously cited by the House for contempt after they refused to talk about the transactions, marked the first time that Marcos has been linked to ownership of four swank Manhattan high-rise buildings by individuals claiming to have direct knowledge of his involvement.
Testifying before the House Foreign Affairs subcommittee on Asia and the Pacific, the Bernstein brothers described several meetings in the Philippines and New York with Marcos or his wife in which the Marcoses acted as if they owned the properties.
Joseph Bernstein, who is also a lawyer, said that at one 1982 session during a party at a seaside resort south of Manila, Marcos took him out to a veranda overlooking the ocean to “discuss more or less the (New York state) tax implications” of a complex arrangement to obtain the Crown Building in Manhattan, recently appraised at $101 million.
He also described a session in New York in which Imelda Marcos waved a paper that she said was a statement from her $120-million Swiss bank account, and another meeting during which she described her Manhattan landholdings as “diversified East Side, West Side, downtown, uptown.”
Marcos, who has been living in exile in Hawaii since fleeing his country in late February, repeatedly has denied ownership of the buildings. But Rep. Stephen J. Solarz (D-N.Y.), chairman of the subcommittee, insisted that the Bernsteins’ testimony “removed whatever lingering doubts remain that the Marcoses own some of the most prestigious property in Manhattan.”
The new and financially strapped Philippine government of President Corazon Aquino is trying to recover billions of dollars in property and cash that it claims the Marcoses pilfered during their 20-year rule over the island nation.
Solarz insisted that the new information would help the recovery process, but he acknowledged that the Aquino government still faces several thorny and time-consuming legal hurdles in Philippine and U.S. courts before it can acquire the New York properties.
With Joseph Bernstein doing most of the talking, the brothers described real estate transactions over the last four years hidden behind a maze of foreign holding companies located in Panama, the Netherlands Antilles and the British Virgin Islands. The deals were generally structured in such a way as to minimize taxes that Marcos might face in New York, he explained.
In addition to the Crown Building, the Bernsteins linked the Marcoses to ownership of the multistory Herald shopping center as well as office buildings located at 40 Wall St. and 200 Madison Ave. The structures were appraised last year at a combined value of more than $300 million.
The two said they could not firmly connect the Marcoses to ownership of a multimillion-dollar estate on Long Island and they denied involvement in rumored Marcos investments in California, Texas and other states. However, they did acknowledge arranging for a $6-million purchase of antiques by Imelda Marcos.
Met Marcos in Manila
Joseph Bernstein said that he and his brother first were approached about doing business with the Marcoses in November, 1981, by Glyceria Tantoco, a socialite friend of Imelda Marcos who ran Manila’s fanciest department store.
The following March, he said, the brothers traveled to Manila and met three times with Marcos, including the encounter at the resort and another business chat in the doorway of a Philippine Air Lines jet just minutes before they ended their monthlong visit.
Over the next few years, Joseph Bernstein said, he and his brother met two or three times a year with Imelda Marcos during her frequent trips to New York, usually at a Philippine government town house. Property development or acquisitions were discussed at several of the meetings, Bernstein said.
Once, Bernstein said, he accompanied Imelda Marcos on a midnight foray to the 40 Wall St. structure, the second highest building in lower Manhattan after the twin towers of the World Trade Center. She stared up at the top of the skyscraper for 15 to 20 minutes before turning to others in her party and declaring that “it was a nice building and she was kind of proud of it,” Bernstein said.
The House cited the brothers for contempt in January after they claimed lawyer-client privilege and refused to answer questions from the Solarz panel. However, last month the Bernsteins told Solarz that they were ready to talk after the subcommittee released more than 2,000 pages of documents that Marcos had carried with him from Manila. Those papers included a copy of a 1982 agreement signed by Joseph Bernstein in which he agreed to represent Marcos in dealings linked to one of the buildings.
A federal grand jury is considering whether to press criminal charges against the brothers because of the contempt citation, but Solarz predicted that the action probably would be quashed because of the Bernsteins’ decision to testify.