Millionaire’s Empire Under Siege : Marcos Ally--Plunderer or Scapegoat for Aquino?

Philippine multimillionaire Lucio Tan was sitting in the posh conference room of the huge Manila bank he owns, stabbing the air with his finger and speaking in rapid bursts about everything from extortion under Ferdinand E. Marcos to “psychological torture” under Marcos’ successor, President Corazon Aquino.

Tan was outraged, he told two American reporters. The assets of the 52-year-old, Chinese-born businessman--reportedly worth hundreds of millions of dollars--are frozen, and his financial empire is under siege by a new government that believes he stole much of it.

Tan had called in the reporters to tell his side of the story--a story about one of the handful of men known as Marcos’ cronies, men who made tens of millions of dollars and who are now the targets of a worldwide hunt for what the Aquino government believes are billions of dollars in assets plundered during Marcos’ two decades as president.

Depending upon whom one chooses to believe, Lucio Tan is either a thief trying to buy off the Aquino government to stay in business or a victim of a government-sanctioned “psychological torture” campaign that will destroy the already battered Philippine economy.

One thing is clear: In the legal actions that he has brought against the Aquino government, and in his public relations campaign for sympathy, Lucio Tan has set himself up as a symbol of one of the deepest controversies in the Philippines today--whether the government should continue to pursue the “economic criminals” of the Marcos regime at the risk of further alienating businessmen to whom Aquino has appealed for help in the nation’s economic recovery.

It is also clear that Tan accumulated much of his wealth at a time when he was handing over to Marcos tens of millions of dollars in cash.

According to documents on file in the Philippine Supreme Court, Tan used his connections with the Marcos regime to build a financial empire that includes the nation’s largest cigarette-manufacturing companies, one of its largest banks, its second-largest brewery, the largest pig farm in Asia and real estate holdings that include several hotels.

And that is only what Tan admits he owns.

Hidden Riches Alleged

Investigators for the Aquino government’s Presidential Commission on Good Government, which is spearheading the inquiry into hidden wealth, say Tan has lied to them about 26 more companies that he is alleged to have acquired secretly over the last two decades. They say these include banks in California and Canada, a bakery in Guam, tobacco conglomerates in Papua New Guinea, Malaysian textile mills and one of Canada’s largest carpet manufacturers.

Asked about his net worth, Tan laughed and dodged the question.

“Life’s real assets (are) not visible,” he said. “The invisible are real assets. Real assets are friends, ideas, knowledge.”

The same question was put to Ramon Diaz, a member of the Commission on Good Government who is in charge of proving that it was Tan’s friendship with the former president that brought him his vast assets. Diaz threw his hands into the air and exclaimed, “My God, we still are not able to ascertain that.”

Immunity Offer Floated

Diaz said he and his fellow commissioners have spent dozens of hours with Tan over the last several months trying to negotiate a settlement with him.

They have asked Tan to divulge all his assets and speak frankly about how he did business during the Marcos years. In exchange, they have hinted at an immunity arrangement that would include a cash payment to the government, which would then permit Tan to continue operating.

In October, the negotiations broke off. Diaz said he is furious with Tan now, and his commission has since voted to freeze Tan’s known assets in the country and to bar him from leaving the country.

“He just wastes my time,” Diaz said. “He keeps telling me lies. We’re already fed up with all the propaganda he is coming out with now.”

Asked whether Tan was among the worst of the Marcos cronies, Diaz replied: “Oh yes. The way he abused his privileges was fantastic. . . . He took advantage, so now he must give that advantage back to the people.”

Tax Evasion Charged

The government has yet to file an official case against Tan. However, Diaz’s commission has charged, in response to his legal effort to halt the government’s seizure of his properties, that in his cigarette manufacturing operation alone, Tan evaded more than 1 billion pesos ($50 million) a year in taxes through concessions from Marcos.

The government also alleges that Tan accepted Marcos as a hidden owner of his family-owned Allied Bank, which was once the second-largest banking institution in the country, and of many of his other holdings, as well.

Documents obtained by The Times indicate that in just the years after 1980, Tan gave Marcos $11 million in cash, much of it apparently in illegal campaign contributions, and was given favored treatment in the operation of his brewery, his pig farm, his bank and hotels.

“I grant him, he’s a very good businessman,” Diaz said of Tan. “But he cuts a lot of corners, and that’s how he makes his money.”

Illegality Denied

Confronted with the government’s allegations, Tan, flanked by his attorney and business partners, denied any wrongdoing. But he conceded that he handed hundreds of millions of pesos over to Marcos and that he and Marcos were close friends.

Asked whether the figure of $11 million in payoffs was accurate, Tan said, “Add one zero, maybe two. President Marcos will not ask directly. Maybe indirectly. Maybe a project, disaster, earthquake. Always asking for money for projects. So many projects, too many projects. Always projects, projects, more projects.

“But when I give a check, I cannot know what portfolio, what folder, what pocket it goes into. They ask, and I just give the money.”

Tan said he had no idea how the former president used the millions of dollars in cash he gave him.

“I am not his treasurer,” he said.

Characterization Sidestepped

Does Tan actually own all the companies, here and abroad, that the government says he owns?

“I really hope it is true,” he said, laughing. “I pray that it is true.”

Making it clear that he had no intention of answering the question directly, Tan added that many of those companies are owned by friends and that he is “an adviser, consultant, conductor.”

On the subject of back taxes, Tan and his partners insisted that the Aquino government’s method of computing the billion-pesos-a-year figure was simply wrong. They said they paid more than their fair share of taxes, more than 2 billion pesos a year.

Tan denied that Marcos had any ownership interest in any of his companies. But as to his friendship with Marcos, Tan said: “Is that bad if you are a friend of Marcos? I do not believe it is bad to be a friend of Marcos. So, he used his powers to steal the people’s money. . . . At least, you stop and say hello.”

Not on Those Terms

As to the allegations that he is fighting the government and lying to its investigators, Tan said, “I never fight anybody on terms of money.”

Tan insisted that his financial empire was built on his own hard work and that his friendship with Marcos was coincidental.

He arrived in the Philippines at age 9, the son of an impoverished Chinese immigrant, Tan said, and his first job was as a low-paid chemist in a tobacco factory. For the next 34 years, he said, he used only his business acumen--”my reputation, my hard work, my knowledge, my friends”--to amass wealth.

The main point of the meeting with the reporters, he said, was not to defend himself but to warn the Aquino government that its hidden-wealth inquiry is dangerous to the nation’s economic future.

Rather than prosecuting Marcos’ wealthy friends, he said, the government should seek reconciliation with them and encourage them to invest in a country desperately in need of capital.

Odd Investment Climate

Recalling the appeal that President Aquino made repeatedly on her recent tour of the United States, Tan said: “She says, ‘Come here and invest in the Philippines,’ and after that--slaughter.”

Tan was echoing a complaint voiced privately by many Philippine businessmen and openly by attorneys for several other former Marcos cronies. They have also filed suits with the Supreme Court to block orders from the Commission on Good Government, orders that froze the assets of more than 100 corporations suspected of being secretly owned, controlled or influenced by Marcos.

Tan, though, has also offered the government cash. Diaz said Tan offered to pay the Aquino government $5 million to forget the whole thing, adding that he rejected the offer as “laughable.” Tan said that Diaz told him he could settle the case by paying the government $25 million and fully disclosing his assets. Diaz denied it.

“We are ready to support Cory,” Tan said, referring to the president by her nickname. “But they do not agree. They want an initiation first--torture, psychological torture, before you come in. Even now, we want to support Cory, but the door is closed.”

Concerned for Employees

Tan was in the United States last February when a military-civilian rebellion drove Marcos out. He says he returned voluntarily because he was concerned about his 20,000 employees and the 450,000 tobacco farmers who depend on him.

“I thought it would be OK for us (under the new government),” he said, “maybe even more relaxed. Instead, they want to torture us.”

In a speech in October, Aquino defended the activities of the Good Government Commission.

“This is not a vendetta but plain and simple justice,” she said. “The country must make up its mind whether to continue to go against the people who looted our country.”

Diaz said the commission is going after just 28 key businessmen who thrived under Marcos, and he added that they are among the richest men in the Philippines.

Will Intensify Campaign

The Tan case is deadlocked, Diaz said, but the commission is about to intensify its campaign against him.

“We’re going to keep sequestering more and more companies,” Diaz said. “As (Commission Chairman Jovito) Salonga said to me, our big advantage is that everyone knows that Lucio Tan is a crook.”

Bristling at the accusation, Tan laid out his own strategy for the future.

“I will try the best, the most I can stand,” he said, “and then I will just leave.”

But he said he will not be silent, adding, “I cannot keep quiet because to keep quiet is to say I’m wrong.”

Then Tan recounted what he termed an old Chinese business tactic: “I will just wait. When you cannot break the door down, you just wait outside for a while.”