U.S. Debates Plea Bargain for Marcos : State Dept. Cable Hints He Would Lose Alleged Loot Over Fraud Case

Times Staff Writers

The State Department is pressuring federal prosecutors to allow former Philippine President Ferdinand E. Marcos to negotiate a plea agreement before a possible indictment on multimillion-dollar fraud charges in the United States, according to an internal department cable obtained by The Times.

The document, however, indicates that any plea agreement acceptable to U.S. authorities would require the deposed dictator to forfeit hundreds of millions of dollars in assets allegedly looted from the Philippine Treasury before he was driven into exile in Hawaii in 1986. Such an agreement could allow Marcos and his wife Imelda to avoid any possibility of terms in U.S. federal prisons.

‘Seek to Embarrass’

The cable also expresses concern that an indictment may prompt a vindictive Marcos to “seek to involve and embarrass” U.S. and Philippine officials by making allegations of improper or illegal conduct, “however unfounded,” in an attempt to adversely affect relations with the current Philippine government. It did not elaborate.


The lengthy and detailed message was relayed from the State Department’s chief legal counsel, Abraham D. Sofaer, to other top department officials, including U.S. Ambassador Nicholas Platt in Manila, in a classified cable. The document reflects some of the difficult internal Administration debate over legal and political conflicts that have marked the criminal investigation of the former Philippine leader and his wife, Imelda.

Indictment Arguments

For example, the State Department had argued to limit the indictment to alleged criminal acts that occurred after Marcos fled to Honolulu in February, 1986. But prosecutors on the staff of U.S. Atty. Rudolph Giuliani in New York insisted that the only way to recover an allegedly ill-gotten fortune in Manhattan real estate and fine art is to charge Marcos with acts of fraud that began during his tenure as president of the Philippines and continued after he came to Hawaii.

State Department officials finally accepted the prosecutors’ argument on condition that the indictment be carefully drawn to emphasize post-revolution conduct and that public statements by Justice Department officials, including Atty. Gen. Dick Thornburgh, would “make clear that Marcos was being prosecuted because of his illegal conduct after he came to the U.S. ,” according to the cable.


Also, prosecutors and diplomatic advisers disagree over when to initiate plea bargaining. The State Department wants to give Marcos “a last chance, prior to indictment,” to reach a settlement. But federal prosecutors prefer to indict first to gain added leverage in negotiations with the ousted Philippine president.

‘Stand Firm’

“Justice has presented no good reason why we should not continue to insist on offering Mr. Marcos a chance to reach a voluntary plea agreement prior to indictment,” the cable said. “Sofaer strongly believes that if we stand firm, we can work out a way of doing this with Giuliani which would not harm Justice’s prosecution interests and would give President (Reagan) a substantial degree of protection from being criticized for allowing Marcos to be prosecuted for prior activities.”

In one of several recommendations outlined in the cable, the State Department said: “President Reagan should be advised of the decision to indict (if one is made) and the charges, and thereby afforded an opportunity to exercise his executive authority.” This was apparently intended to leave the White House with the option of vetoing an indictment.

Sources familiar with the investigation in New York have said U.S. officials are concerned that Marcos may threaten to disclose politically damaging information about his dealings with the federal government to pressure the White House to block prosecution.

‘Thoroughly Discredited’

But Filipino Ambassador Emmanuel Pelaez said: “In the Philippines, Mr. Marcos is so thoroughly discredited that he has no credibility whatsoever. I do not know about the American government, but the Philippine government has nothing to fear about anything Mr. Marcos could say. I don’t see how anything he says could harm U.S.-Philippine relations.”

The cable also reveals that the State Department is concerned that Marcos may be attempting to destabilize the current government of the Philippines. It did not provide any details about such activities, but The Times has reported that a separate federal grand jury in Hawaii is investigating allegations that Marcos has attempted to aid anti-government forces in the Philippines in violation of U.S. neutrality laws.


Investigative Reporters

The text of the document was made available to The Times on Monday by Washington-based investigative reporters Scott Malone and Mark Perry, who said that they received it anonymously in the mail. Malone has reported extensively on Marcos for television and magazines. The authenticity of the cable was confirmed independently by The Times.

The cable makes a number of other significant findings about the State Department’s position on the Marcos case:

-- That the White House offer of safe haven in Hawaii did not include any immunity in regard to U.S. laws and that “he should be subject to prosecution for such violations.”

-- That, before any indictment is issued, the government of the Philippines must agree to a formal waiver of head-of-state immunity for Marcos and his wife.

-- That it is important to make the offer to plea bargain even if Marcos does not accept it, indicating that the government is concerned about setting a proper precedent on U.S. dealings with such dictators.

“Prosecution of Mr. Marcos . . . could set a precedent (that) would have a negative impact on our ability to influence other heads of state who may be similarly situated to leave power,” the cable said.

State Department officials initially opposed including in a Marcos indictment charges based on actions he took while in office. The opposition was based on grounds that he was invited to the United States and that prosecuting him for such acts would undercut U.S. ability to pressure other “similarly situated” heads of state to leave power.


Prosecutors argued that limiting the charges to alleged obstruction of justice since entering the United States would bar indictment of Marcos under the federal Racketeer Influenced and Corrupt Organizations (RICO) statute. The charges under that statute would carry with them authority to seek forfeiture of Marcos’ New York real estate and other assets.

Justice Department officials agree that prosecuting Marcos solely for activities before he arrived in the United States would be improper, the cable said.

Outlines of Compromise

As a result, outlines of a compromise appeared in the cable. The Justice Department would make clearer in the indictment that Marcos is not being charged solely for actions he took while still president. Thornburgh “is also willing to make a public commitment to use his authority under the RICO statute to compensate the victims (including principally the government of the Philippines and U.S. mortgagors) out of any assets recovered,” it said.

“We should accept Justice’s conclusions on the question of limiting the indictment,” the State Department document said. “Based on their assessment of the proposed prosecution and forfeiture possibilities, it appears that limiting the indictment would eliminate the chief benefit of prosecution--forfeiture of assets--but would do little to avoid our other concerns.”

The Justice Department’s “willingness to cast the indictment and any public statements as resulting from Mr. Marcos’ continuing wrongful activity while in the U.S.” clearly alleviates, but does not eliminate, a significant concern of diplomatic officials.

The cable notes that the department’s concern is offset by assurances from the attorney general that such prosecution is necessary to attempt “recovery of wrongfully obtained assets.”

‘Exceeds the Mortgages’

The cable said that Giuliani told Sofaer he had rechecked the value of two of the four Marcos properties involved and that their value “far exceeds the mortgages.” Other Marcos properties and bank accounts that prosecutors would seek to forfeit adds up to “a large surplus” that could be recovered for the Philippine government.

While citing the risk that prosecution could fail, the cable reported that Justice Department officials have concluded “after extensive review that the evidence is sufficient to prevail. (Giuliani has ‘guaranteed’ success.) We have no way of independently assessing this question.”

Petition Rejected

In a related development, a Philippine court in Manila rejected Monday a petition by Marcos to return home and answer corruption charges. The court ruled that Marcos’ return was a political question beyond the reach of the court and should be resolved by President Corazon Aquino.

Justice Romeo Escareal issued the ruling a month before the court begins a pretrial hearing on allegations that Marcos received millions of dollars in kickbacks from Japanese companies during his 20-year rule. Marcos could challenge the ruling in the Philippine Supreme Court.

Aquino has barred Marcos’ return from exile in Hawaii, calling him a threat to national security.

Also Monday, an army spokesman denied newspaper reports that army dissidents backed by politicians loyal to Marcos planned to launch a coup attempt in November.