Judge Says Marcos Has No Deal to Settle Suit by Philippines : Courts: Lawyers for former dictator’s widow claimed they had an agreement to turn over funds in five banks. Negotiations in fraud case are continuing.

A Los Angeles federal court judge Friday rejected Imelda Marcos’ contention that she had negotiated an agreement to end a multibillion-dollar fraud suit lodged against her and her late husband, former Philippine dictator Ferdinand Marcos.

Marcos and her lawyers asserted that Philippine government officials had agreed to end the suit in exchange for 60% of the remaining Marcos funds in five Hong Kong banks.

“Our position is that we have an agreement and that the court should enforce it,” said James P. Linn of Oklahoma City, one of her attorneys.

But Los Angeles lawyer Ronald L. Olson, representing the Philippines, vigorously denied that there was a deal. He said it was “absurd” to think the Philippines would settle the case on the terms alleged by Marcos because no one knew how much money was in the Hong Kong accounts. He said that so far there have only been discussions.

U.S. District Judge Mariana R. Pfaelzer said that, based on documents she reviewed, there was no settlement. Pfaelzer said, however, that she would give Marcos’ attorneys an opportunity to prove their assertions by calling witnesses at a Dec. 10 hearing.

The judge later asked both sides to come into her chambers and see if any progress toward a settlement could be reached. The parties, including Marcos, met on and off for four hours before adjourning without an agreement.

Marcos said she hoped a settlement eventually would be reached, paving the way for her to return the Philippines and bury her husband’s remains there.

She said that although the suit was not resolved Friday, the day’s events represented “a major stride. It was the first time the Marcos group has sat down with an official of the Republic of the Philippines.” Marcos met with David Castro, the chairman of the Philippine Commission on Good Government, an agency created by President Corazon Aquino in an attempt to recover billions of dollars allegedly looted from the Filipino people by the Marcoses.

“We’ll continue to talk,” said Castro as he left the courthouse.

The Los Angeles suit, filed in 1986, seeks more than $5 billion in damages. The theory of the case is that the Marcoses ran the Philippines as a racketeering enterprise.

In 1988, the Marcoses were indicted in federal district court in New York based on a similar set of allegations. Ferdinand Marcos died before the trial, and last June Imelda Marcos was acquitted. The Philippine government has, however, recovered a number of Marcos-linked assets as a result of the Los Angeles case, including a bank and a Beverly Hills mansion once owned by actor George Hamilton.

The Aquino government still seeks other assets allegedly looted by the Marcoses and held elsewhere. They include a reported $400 million in Swiss banks.

Marcos and her lawyers contended Friday that evidence of a deal to end the suit was contained in an Oct. 15 letter signed by her and Castro. The letter authorized Manila-based publisher Alejandro Roces to act as an intermediary for the two sides. Roces also was authorized to take control of the Hong Kong funds and hold them in trust until “the American cases are dismissed.”

Papers filed by Olson and Alan Bersin said that putting the Hong Kong funds in trust “was merely the first step in negotiations leading to an overall settlement agreement.” Their papers stressed that none of the documents filed by Marcos’ lawyers “even resembles a settlement agreement.”