COLUMN ONE : An Asian Drug War Backfires : A DEA-run heroin sting in the Philippines went sour, and now the U.S. agents are gone. The narcotics trade and local corruption flourish.

After 4 1/2 years as U.S. Drug Enforcement Administration chief here, Andy Fenrich figured that Operation King Cobra was bound to be a classic.

Two Philippine businessmen wanted to sell 22 pounds of high-grade heroin. Unknown to them, the buyer was an undercover DEA agent backed by elite Philippine police. As hidden video cameras rolled and tape recorders whirred, the date and price was set for one of the biggest Philippine drug stings--called a “buy-and-bust” here--ever.

“There’s never been a case that’s gone more by the book,” Fenrich told friends. “Absolutely by the book.”

Some book. When the smoke cleared last July 10, the “businessmen” turned out to be highly decorated military officers. They also turned up dead, shot in the head. Fenrich and two other DEA agents fled the country, facing death threats and reported murder charges. And DEA operations have collapsed in a country that transships increasing amounts of Southeast Asian heroin, marijuana and methamphetamines to the United States, mostly through Los Angeles.

“With the DEA gone, it’s wide open here,” said an Asian diplomat. “Now, there are no controls.”

Nor are conditions likely to improve. The head of the nation’s chief drug-fighting agency admits that his men have funneled tons of confiscated drugs back onto the street. Customs officials concede widespread corruption at the nation’s harbors and airports. Only one in 10 drug arrests ends in conviction. And the chairman of the Senate narcotics committee estimates that up to 40% of Manila’s police are involved in the illegal drug trade.

“Let’s be frank,” said Sen. Ernesto Herrera. “We live in a country where law enforcers can be bribed, court cases fixed, and protection from the law can be had for a monthly retainer.”

This is the war on drugs, Philippine-style. According to police records, DEA reports, and interviews, it is increasingly a shooting war between corrupt police and rogue military men over control of the spoils of a drug trade worth hundreds of millions of dollars a year. It is a war with few heroes and many bodies.

In Senate speeches last fall, for example, Herrera charged that at least 17 ranking police and military officers were running drugs or protecting drug lords. Using information supplied by the DEA, he also identified more than 100 alleged drug dealers. Scores were arrested. Others weren’t so lucky.

“So far, 31 have been killed by law enforcement,” the senator said in an interview. “My list was like a death warrant.”

In many cases, National Bureau of Investigation (NBI) agents, the nation’s FBI, used “summary executions” and simply reported that the dealers were killed in shoot-outs, Herrera said. “The NBI’s reputation is they have a license to kill,” he said.

The most notorious drug kingpin, Jose (Don Pepe) Oyson, who openly kept soldiers and police as bodyguards, was shot twice in the head inside a closed NBI van last March 17. The NBI had picked him up to question him about 44 pounds of heroin in two golf bags at Manila airport two days earlier. Diplomats suspect that Oyson was silenced to keep him from naming names before Herrera’s committee.

Not so, says the NBI chief, Gen. Alfredo S. Lim, a gray-haired, taciturn man who keeps assault rifles stacked by his office door. He says Oyson was shot “trying to grab” a gun.

Lim, a former Manila police chief, drew more headlines last week when he won the $200,000 grand prize in a national lottery he was investigating for rigging.

“I got lucky,” he said.

Luck isn’t the problem in “Narcom,” the nation’s lead drug agency. The 1,000-man narcotics command is part of the national police, itself an arm of the military. The last two Narcom chiefs were transferred for alleged drug trafficking. The current head, Brig. Gen. Virgilio M. David, says he has relieved more than 70 men this year “because they are corrupt.”

But Narcom remains “beyond hope,” complains a diplomat who studies the drug trade. “No matter where the seizure is, it’s not uncommon to have the drug suddenly shrink in half between the seizure and when it’s officially weighed. It’s amazing.”

DEA agent Fenrich, 46, clearly agreed. He simply refused to deal with Narcom. He had good reasons.

In 1986, the DEA provided $24,000 for a drug sting with Narcom. The money and the drugs disappeared.

In 1988, a 33-page DEA intelligence report given to Narcom suddenly appeared in newspapers. So did the DEA’s “suspect vessel list,” based on classified reports from U.S., Australian and Asian police forces.

“So every dope peddler with a boat knew if we were looking for him or not,” a DEA agent said in disgust. “We didn’t have a single successful prosecution with Narcom.”

That was why Fenrich called the NBI, rather than Narcom, when an informant walked into his office on June 15 and said two friends wanted to sell 10 kilograms of 84% pure heroin for shipment to the United States.

Heroin is not produced here. Instead, Hong Kong syndicates such as the 14-K and Bamboo Gang use Manila as a way station for smuggling dope from Myanmar, Laos and Thailand. In October, U.S. officials seized two tons of Philippine-grown marijuana as it arrived in Los Angeles. And highly addictive, smokable Philippine methamphetamine hydrochloride is increasingly sold as “ice” in Hawaii.

Fenrich figured that the heroin was part of a haul seized in January, 1989, in a dingy hotel in Angeles City, outside the giant U.S.-run Clark Air Base. DEA intelligence said the local military had confiscated 20 kilograms of heroin and $200,000. Only 2 kilograms of dope was turned in, however; the other 18 kilograms and the money disappeared.

The officer in charge was Col. Rolando de Guzman, deputy chief of the 40,000-strong northern Luzon command of the Philippine armed forces. A senior intelligence officer, De Guzman had a record that also included charges of kidnaping, extortion and smuggling.

“His trusted men were known hoodlums/killers,” who carried out holdups and murder, according to an NBI report.

At dusk on July 5 this year, a heavyset man with thick eyebrows walked into the Rotisserie Restaurant at the Manila Pavilion Hotel. He said he was Rolly, a businessman from central Luzon. An intermediary, 50-year-old Estrella Arrastia, introduced him to Philip Needham. The tall American didn’t say he was a DEA agent from Bangkok, Thailand.

Running surveillance from a car outside, Andy Fenrich recognized Rolly as De Guzman, whom he had met twice before. Later, reliable sources said, the local DEA chief would warn U.S. Ambassador Nicholas Platt and his chief deputy that a senior officer in the Philippine military was selling heroin. They told him to make sure the NBI knew.

“Andy claims he told the NBI who De Guzman was,” says one frustrated U.S. official. “The NBI says Andy did not tell them.”

Over the next few days, agent Needham met repeatedly with Arrastia in his eighth-floor hotel room to discuss the price. As DEA cameras watched, Maj. Franco Calanog, an intelligence officer with two dozen medals and awards, arrived July 8. He offered the heroin for $400,000. The deal was set.

When night fell two days later, a dozen NBI agents carefully tailed Needham and Arrastia to a parking lot in Manila’s Makati district. After chatting with De Guzman, Needham went to a blue Volkswagen and inspected a black briefcase stuffed with 19 bags of light brown powder. Then he took out a handkerchief, and pretended to sneeze.

NBI Capt. Reynaldo Jaylo quickly moved toward De Guzman, 52. Other agents surrounded Calanog, 39, and his driver, police investigator Avelino Manguera, 26. Needham jumped in a car and raced off with Fenrich and a third DEA agent, Jake Fernandez, to recover the “buy” money from a hotel safety deposit box.

What happened next is in considerable dispute.

According to Jaylo, a car full of De Guzman’s bodyguards suddenly sped by, shooting. De Guzman, he said, quickly grabbed a 9-millimeter pistol inside his Saab. Jaylo pulled his .45.

“I’m virtually next to him,” Jaylo recalled, re-enacting the event in his office. “We shoot at the same time. Bang, bang! Bang, bang! I fire two shots. He fires two shots. He hits the window. I hit him in the left eye and the chest.”

Other NBI agents said Calanog also began to shoot, forcing them to open fire. Later, paraffin tests for gunpowder would indicate that Calanog, shot between the eyes, didn’t fire a gun. The driver, Manguera, was shot point-blank in the forehead; he was unarmed. Both were hit four times. None of the NBI agents were hurt.

Two witnesses later told a presidential commission investigating the case that they saw a man kicked and shot while belly-down, arms outstretched, on the ground. Businessman Ramon Zuniga Jr. said he, his wife and child also saw someone “place a gun in the hands of the dead man in the driver’s seat of the Saab and fire the gun twice.”

The commission accepted the NBI version of how Calanog and De Guzman died. A day after the shooting, President Corazon Aquino decorated Jaylo as one of the nation’s “outstanding policemen.” But military leaders were furious. De Guzman was a 1961 classmate of many top generals. He was buried with full military honors, and most of the top command attended.

“It was cold-blooded murder,” charged Brig. Gen. David, head of Narcom. “It was a deliberate, planned murder.”

An air force general agreed. “It was a rub-out, plain and simple,” he said angrily. An army general called it “revolting to the military.”

“People are very bitter, very angry,” he said. “What makes it so bad is the arrogance, the arrogance of shooting them like dogs. . . . To the military it was a humiliation.”

At first, a showdown appeared imminent. Jeeploads of heavily armed soldiers sullenly circled the NBI headquarters, demanding to see Jaylo. Ten days later, NBI agents with Uzi submachine guns shot and killed two Narcom men and wounded five. Fenrich and the two other agents fled, effectively closing the DEA office here. NBI chief Lim took an unscheduled trip abroad. The military ordered twice-daily head counts to prevent unauthorized movements by angry troops.

On Aug. 1, the military announced that it had charged the three DEA agents, plus 10 NBI and police officers, with murder. Despite international headlines, the Americans were never indicted. And Jaylo, barricaded in his NBI office, a grenade at his side and a dozen nervous bodyguards outside, says he’s “heard we have been charged but haven’t seen any papers.”

“Anyway, what is my motive for killing them?” Jaylo asked. “I do not even know they are military! This is a cover-up for the embarrassment that two senior officers were involved in drug peddling.”

The DEA hopes to move a new agent back to the Philippines this fall.

“We’ll have to redefine the rules of engagement, and who they cooperate with,” said one DEA official. “Unfortunately, it means probably the military again.”

A final irony is that De Guzman was apparently planning a sting of his own. The heroin was 2 1/2 pounds short, and hardly high quality. Chemical analysis showed 15 of the 19 bags contained less than 1% heroin. Only one bag was more than 10% pure.

Narcom chief David laughed when asked about the apparent attempt to swindle the buyers.

“You know, this is how dirty the Philippines is,” he said. “Very dirty.”