Marcos Can Be Sued Under U.S. Law, Court Rules

A federal appeals court on Thursday upheld a freeze on the worldwide assets of Ferdinand E. and Imelda Marcos and ruled that the Philippine government may proceed with a suit alleging that the couple stole hundreds of millions of dollars from the country before they fled.

The U.S. 9th Circuit Court of Appeals, ruling in the principal civil action brought against the couple, rejected the contention that they could not be sued by the government of Corazon Aquino under U.S. anti-racketeering laws.

The criminal enterprise charged in the suit allegedly took place in the United States, the court said, and if the allegations are true, the couple will be liable under U.S. law.

The court also turned down the couple’s claim that Marcos’ previous governmental position protected him from judicial proceedings in this country because his actions were official acts of state.

‘Subject of Scrutiny’

“The classification of ‘act of state’ is not a promise to the ruler of any foreign country that his conduct, if challenged by his own country after his fall, may not become the subject of scrutiny in our courts,” Judge John T. Noonan Jr. wrote for the court.

The court rejected the contention the suit raised “political” questions that went beyond the rightful province of the courts.

“He was not the state, but the head of state, bound by the laws that applied to him,” Noonan said. “Our courts have had no difficulty in distinguishing the legal acts of a deposed ruler from his acts for personal profit that lack a basis in the law.”

The ruling was perhaps the most significant to date in the wide-ranging legal attack on the deposed foreign leader and his wife.

Ronald L. Olson of Los Angeles, one of the lawyers representing the Philippine government, said Thursday’s decision will clear the way for the proceeding to come to trial.

“This case focuses on the breadth of the Marcoses’ wrongdoing over a 20-year period in the Philippines,” Olson said. “The ruling was of critical importance.”

The couple, now living in Hawaii, also face federal criminal indictments in New York charging that they stole funds in the Philippines and sought to hide them in the United States. Mrs. Marcos pleaded not guilty to the charges in October and was released on $5-million bail.

The Philippine government’s civil suit, brought in federal district court in Los Angeles, contends that ex-President Marcos operated through the government to steal vast sums of money and then conceal it in the United States and Switzerland. At least $1.5 billion and perhaps as much as $20 billion may now be hidden in bank accounts, property and elsewhere, lawyers for the government said. The suit charges bribery, theft, extortion and conspiracy--as well as violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), alleging that the Marcoses engaged in mail fraud, wire fraud and transportation of stolen property in the foreign and interstate commerce of the United States. The action seeks $50 billion in damages.

Lawyers for the Marcoses argued that the lawsuit should have been pursued in the Philippine courts, rather than in this country.

In June, 1986, U.S. District Judge Mariana R. Pfaelzer entered a sweeping order freezing virtually all of the couple’s assets pending trial. A year later, a three-judge federal appeals court panel here overturned the freeze by a vote of 2 to 1, holding that the case raised political and foreign-policy questions that were beyond the jurisdiction of U.S. courts.

But then the full appeals court voted to reconsider the ruling and assigned the case to an 11-member panel that issued its ruling late Thursday.

The court was unanimous in its holding that the government’s suit could proceed under federal anti-racketeering laws and that the suit was not barred by the “act of state” doctrine protecting official actions of foreign leaders.

However, Judge Mary M. Schroeder, joined by Judge William C. Canby Jr., said it was improper for a U.S. court to retain the freeze on the couple’s property beyond the boundaries of the United States.

“This injunction is unprecedented in its breadth,” Schroeder wrote. “The district court would have to unravel all of the Marcoses’ financial transactions over a long period of time and over much of the globe. It would take corps of historians years to accomplish the task.”