Defense Says Marcos Heeded Bush’s Advice

The late Philippine dictator Ferdinand E. Marcos stashed millions of dollars in overseas banks and secretly invested in New York real estate to accumulate a “defense fund” to finance recovery of his country if communist insurgents took over, an attorney for his widow said Tuesday.

He did it to be able to buy guns and whatever else would be required to “take back his country,” said attorney Gerry Spence. And he did it because that is “what the CIA told him to do.”

Spence, representing Imelda Marcos in her fraud, racketeering and conspiracy trial, also said that four prime Manhattan properties were purchased at the urging of then-Vice President George Bush, who Spence said he would try to call as a witness. Bush met with the Marcoses in Manila in June, 1981, and was concerned about the possibility of Philippine investments going to Libya, the attorney said.

“He (Bush) said he didn’t want the Marcoses to deal with (Moammar) Kadafi. He said to them, ‘why don’t you invest in American real estate?’ ” Spence said.

“So the Marcoses, in an attempt to keep the goodwill of the United States, abandoned their idea of investing in Libya and began to buy real estate in Manhattan.”

White House spokesman Stephen Hart said there would be no comment about allegations in a continuing criminal trial.

The surprising assertions came in opening statements in federal court where Mrs. Marcos went on trial Tuesday along with Saudi Arabian financier Adnan Khashoggi. The trial is expected to last three to four months.

To federal prosecutors, armed with hundreds of thousands of financial documents--much of it obtained from former Marcos associates, international banks and the Philippine government--the case is “about theft, fraud and deceit on an incredible scale.”

Assistant U.S. Atty. Debra Livingston said Mrs. Marcos used the Philippine treasury as her “own personal piggy bank” and plundered her impoverished nation.

“The money that flooded into New York was stolen money,” the prosecutor said.

The indictment charges that she and her husband embezzled and diverted funds from the Philippine treasury. More than $300 million was invested in the United States with the help of Khashoggi and covered up through the use of forged documents, the government contends.

Mrs. Marcos appeared troubled and occasionally tearful as Livingston accused her of being “partners in crime” with her dead husband.

But the most dramatic arguments came when Spence rose to weave a tale of international intrigue, the communist menace and a mysterious gold treasure--at times taking little care to deal with historical inconsistencies.

For example, Spence said that when Marcos seized dictatorial control of the Philippines in 1972 it was to protect the nation from 25,000 to 30,000 armed communists.

In fact, CIA estimates at the time indicated that the communist New People’s Army had only about 100 armed men. And the first 50 people arrested as subversives under martial law were not communists, but Marcos’ political foes (including the late opposition leader Benigno Aquino, the assassinated husband of current President Corazon Aquino), priests and journalists.

Amid repeated objections by the prosecution--and increasingly stern warnings from U.S. District Judge John Keenan--Spence tried to characterize Marcos as “a loyal supporter of America” and a close friend of American presidents, especially Ronald Reagan.

The attorney said the Marcoses moved millions of dollars out of the Philippines in the 1970s and 1980s because they feared a communist takeover.

“Armed communists were about to take over the country (in 1972). You don’t protect funds from a communist takeover unless you hide them,” Spence said, conceding a prosecution claim that the former president and his wife had secret bank accounts in such places as Los Angeles, Hong Kong and Switzerland.

“The CIA knew all about it. It was an open secret between the CIA and the Marcoses.”

Spence said the CIA “was aware of every transaction that took place in this case.” And he said that U.S. leaders “knew every step of the way what (Marcos) was doing.”

Spence also argued that much of the money Marcos transferred to foreign bank accounts was his own.

“He was a very wealthy man” even before he became president, the attorney said.

The sources of the Marcos wealth, Spence said, were investments in Philippine industry and discovery of a gold cache abandoned during World War II by the Japanese: “Yamashita’s treasure.”

According to Spence, an old man he identified only as “Rubio” will testify that he helped Marcos take the gold left behind by the Japanese general who commanded the occupying forces.

“Rubio says that about twice a week (he and Marcos) would make the trip into the northern Philippines by car and fill it full of gold,” Spence told jurors.

Spence also repeated his claim that the Marcoses did not intend to go to Hawaii when they fled the presidential palace at Malacanang in the face of a popular revolt in February, 1986. He said they expected to be taken to the Marcos family home in Ilocos Norte, a northern province of the Philippines, but were taken to Guam instead.

Judge Keenan sharply rebuked Spence in front of the jurors for making that claim. Earlier, in pretrial proceedings, the judge had ruled against a defense argument that the Marcoses were kidnaped by federal authorities, citing a letter from Imelda Marcos to then-First Lady Nancy Reagan thanking her and President Reagan for their help and hospitality.

“You’re skating very close to where you’d better not skate, sir,” Keenan said.

Keenan raised his voice on a number of occasions--once interrupting Spence as he started to tell jurors they did not represent a jury of Mrs. Marcos’ peers.

“It’s like Mrs. (George) Bush being tried by a Philippine jury,” Spence said to a stern rebuke from Keenan.

Spence said that while prosecutors have depicted Mrs. Marcos as “this obscene, ugly spender,” she was once a barefoot, impoverished child who came to own a vast shoe collection only because she was showered with ill-fitting gifts by Philippine shoe companies.

From its outset the prosecution’s case as outlined in Livingston’s 90-minute statement seemed designed to focus on the widow and not the dead dictator.

“She wasn’t just his wife,” Livingston said, noting that Mrs. Marcos was mayor of Manila and a Cabinet minister responsible for a government agency the prosecutor compared to the U.S. Department of Housing and Urban Development.

Together, she said, the Marcoses earned about $20,000 a year. The rest, she said, came from bribes, kickbacks, embezzlement, theft and fraud.

Livingston said a “spider’s web” of deceit stretched from Manila to New York and included Swiss bank accounts, offshore corporations, shell companies and “bundles and bundles” of cash delivered to Marcos at her Waldorf-Astoria Hotel suite here.