A ‘Personal Piggy Bank’ : N.Y. Branch Helped Fund Marcos Spending Sprees

Former President Ferdinand E. Marcos and his wife, Imelda, used the New York City branch of the government-owned Philippine National Bank as a sort of personal piggy bank, withdrawing tens of millions of dollars in government funds to finance shopping sprees and lavish parties and even their daughter’s college education at Princeton University, according to documents obtained by The Times.

Between 1975 and 1983--a period in which court records show that Imelda Marcos bought millions of dollars worth of jewelry and real estate in New York--her personal secretary withdrew at least $20 million from the bank branch’s general reserves and deposited much of it in private accounts she held in other banks for Imelda Marcos, the documents show.

The government bank’s New York branch was also used to pay Imelda Marcos’ hotel bills (nearly $1 million at the Waldorf Astoria), $370,000 in limousine rentals, $92,000 in food bills at a New York restaurant, and more than $2,000 in tips to bellboys over the eight-year period, according to the records, which were discovered recently by Philippine government investigators at the bank’s offices in the World Trade Center and forwarded to Manila.

Other documents, which Marcos took with him to Hawaii when he fled on Feb. 25, indicate that Marcos, by presidential order, reimbursed the New York City branch for his wife’s trips abroad with government funds earmarked for “confidential intelligence purposes.”

Most of the money withdrawn by the Marcoses from the New York branch was spent after 1972, when Marcos declared martial law and placed severe restrictions on the amount of money Filipinos traveling abroad could take with them.

“What it means is that, while ordinary Filipinos were limited in the amounts they could spend under a measure Marcos took to help conserve the nation’s foreign exchange, the favored people could just go into the Philippine National Bank in New York and get cash advances of tens of thousands of dollars,” said Eduardo Sanchez, an investment banker working as a voluntary investigator for the new government of President Corazon Aquino.

“There’s no question; these documents show that the New York branch was nothing but a great big personal piggy bank for Marcos and the First Lady.”

According to Sanchez and government auditors who are reviewing millions of pages of once-confidential financial documents from Marcos’ two decades in power, the operation of the government’s Philippine National Bank--the assets of which are counted among those of the National Treasury--is just one example of how the Marcoses used public assets to build their vast personal fortune.

‘Reckless With Funds’

“It was a general, pervasive attitude on their part to be careless and reckless with public funds, to regard public funds as their own private money,” Teofisto Guingona, chairman of the government’s Commission on Audit, said in an interview.

While hundreds of investigators here and throughout the United States have been poring over documents and records in an effort to unearth the hidden wealth of Marcos and his family and friends, it is Guingona’s commission that has been working overtime to learn how the Marcoses acquired the cash they used to amass their financial empire.

The task is a crucial one for Aquino’s new government. Beset by a financial crisis that has left the Philippines $26 billion in debt to foreign banks after Marcos’ 20 years in power, Aquino has said she intends to identify and return the Marcos wealth to the Philippine government and its people. Per capita income declined steadily under Marcos, to $625 a year.

In order to seize the Marcos assets legally, the Aquino government must provide documentary evidence that Marcos diverted public money for his private use--a charge Marcos himself has denied vehemently in the weeks since he was driven from the country.

Needed for Swiss Move

Aquino also needs such documentation to support criminal and civil charges her investigators say they plan to file “very shortly” against the former president. Such legal charges, which are likely to include extortion and misuse of public office, are essential under Swiss law before the Philippine government can recover any of the more than $1 billion the Aquino government says the Marcoses deposited over the years in numbered Swiss bank accounts.

In an effort to make the government’s case against Marcos, the commission’s 14,000 auditors and clerical personnel have spent the past seven weeks examining the books of every government ministry and corporation. Already, they say, they have documented the diversion to Marcos from various ministries of about $158 million in government funds, excluding the $20 million in withdrawals from the Philippine National Bank in New York.

Guingona said the process will take months to complete. But he said that in the few cases his auditors have “fully documented” so far, it is clear that the accounting system Marcos created to keep track of the country’s multibillion-dollar budgets lent itself to abuse.

Marcos Forbade Audits

“President Marcos had personally ordered that the subsidiaries of some of the largest government corporations never be audited,” Guingona said. “It’s a simple question of accountability. A public official handling public funds should handle those funds in trust, and that simply did not happen under the system Marcos created.”

Guingona cited as an example the Philippine National Oil Corp., which handles, through its subsidiaries, hundreds of millions of dollars worth of business every year. Government auditors did go over the books of the government-owned oil company, but Marcos had directed that none of its 28 government-owned subsidiaries were subject to audit. Commission sources say they have already uncovered evidence of overcharging and possible kickbacks to top officials of the Marcos government in the operation of those subsidiaries.

More specifically, Guingona cited the recent case involving 93.5 million pesos (about $5 million) in government funds earmarked for village development to illustrate how Marcos converted public money into private cash.

The money was budgeted to build educational audio-visual systems in rural villages. But last Dec. 21, Marcos sent a personal memo to his minister of local governments, Jose Runo, ordering that the money set aside for the educational systems “be transferred into the office of the president as intelligence funds,” according to documents given to The Times by the audit commission.

Delivered to Marcos

Six days later, Runo withdrew the money and, as he said in an affidavit, delivered the money personally to Marcos in cash. Runo said he has no way of knowing how Marcos spent it. But several former officials in Marcos’ government said that this money and other funds were spent by Marcos on his presidential reelection campaign.

Investigator Sanchez and several other former Marcos supporters said the former president frequently used his confidential intelligence account for personal use. According to Aquino’s budget minister, Alberto Romulo, tens of millions of dollars in government funds were diverted into the intelligence fund, “and then, it seemed, . . . simply vanished without any accounting at all.”

What happened to the “intelligence fund” money in the case of the Philippine National Bank branch in New York is somewhat clearer, according to the documents recovered from the branch by Aquino’s financial investigators.

Those records, combined with documents confiscated from Marcos in Hawaii and turned over to Aquino’s chief hidden-wealth investigator, Jovito R. Salonga, by a New York court last month, provide a detailed picture of how Marcos and his wife used a complex system of money transfers that spanned many years to spend government funds on themselves.

Imelda Marcos’ Shopping

The system outlined in the documents began in 1975 and covered the years through 1983, a period when Imelda Marcos made several trips--some of them official visits, others private trips--to the United States. After each trip, she returned to the Philippines with dozens of suitcases filled with antiques, clothing, jewelry and art, according to aides who were present at the time.

Most of the items were paid for with personal checks drawn on several New York accounts maintained by Imelda Marcos’ private secretary, Fe Roa Gimenez, and Vilma Bautista, an aide to Imelda Marcos in the Philippine Consulate in New York, according to dozens of canceled checks signed by the two aides and recovered among the documents turned over to Salonga.

The aides were reimbursed with transfers from the general cash reserves of the government bank’s New York branch, which was then reimbursed on Marcos’ personal orders from government funds in his presidential intelligence account in Manila, the bank records show.

Although some of the expenditures listed in the bank documents appear to be legitimate expenses associated with Imelda Marcos’ visits as the president’s wife, others clearly were not, according to investigator Sanchez and other government auditors who have examined the documents.

Bought Out Auction

In 1981, for example, court records show that Imelda Marcos bought the entire stock at a multimillion-dollar antique auction at Sotheby Parke Bernet. Much of it was paid for by Gimenez, according to canceled checks. And in three installments beginning on Sept. 23 of that year, the New York branch of the Philippine National Bank reimbursed Gimenez for a total of $1.3 million out of the bank’s general reserves.

All three reimbursements were listed in bank records as going to Gimenez through bank transfers or in cash “as authorized by the Waldorf Towers party.” A bank official said this referred to Imelda Marcos and her entourage, who routinely stayed at the Waldorf during their New York trips. In the column adjacent to the amount of reimbursement, the records state, “To cover expenses and disbursements during last visit of Waldorf Towers party.”

On a subsequent trip to New York in 1983, the records show that Imelda Marcos spent more than $2 million at jewelry shops and an additional $1.5 million on books, silver services, clothing and linens. The records, handwritten notes made by Gimenez, were given to The Times by lawyers for the Philippine government last month.

Bank records covering the same period indicate that more than $4 million in government funds had been transferred from the New York branch of the Philippine National Bank into personal accounts of Gimenez.

Daughter at Princeton

The documents show that the New York branch also sent, on the orders of Gimenez, more than $12,000 to Princeton University in the years when Marcos’ daughter, Imee Manotoc, was a student there.

Finally, among the personal documents seized from Marcos when he arrived in Honolulu are several official memoranda signed by Marcos ordering the transfer of millions of dollars in government funds from the presidential intelligence accounts to the New York branch “to effect payment for expenses incurred in connection with the official trip of the First Lady.”

Neither Gimenez nor Bautista have been available for comment on the transactions. Philippine government investigators who have been trying to subpoena the two women say they do not know where they are.

Defense Minister Juan Ponce Enrile, a former Marcos loyalist who served for 12 years as the Marcos-appointed chairman of the Philippine National Bank, said that for the most part, he was unaware of the operations of the New York branch.

Enrile, who has become something of a national hero since he helped lead the military rebellion that drove Marcos from power in February, was the bank’s Manila-based chairman until 1978, but he said the New York branch “was run almost as a completely autonomous entity.”

But there were rumors, Enrile said, and added, “The talk at the time was that the New York branch was Imelda’s personal milking cow.”