Imelda Marcos: Lady Bountiful

Ferdinand Marcos Family — Ferdinand Marcos

Lady Bountiful

UPON BECOMING FIRST LADY, Imelda Marcos did something no other Filipino First Lady had ever done — she became actively involved in national affairs. With what seemed to be a free hand from Ferdinand, she embarked upon a visionary building program of Olympic proportions. She began restoring Manila’s old walled city of Intramuros as a tourist attraction, and started filling in waterfront on Manila Bay to build a sprawling Cultural Center that would be the Acropolis of a new Athens in the Pacific. This was followed by a film center modeled on the Parthenon, where she could stage film festivals, Miss Universe contests, and professional boxing matches between such reigning champions as Joe Frazier and Mohammed Ali.

READ ALAN NAFZGER'S TEXAS VERSION OF DON QUIXOTE (FREE DOWNLOAD)

“She would sow beauty where she could,” said one of her official biographers, Kerima Polotan. At Luneta Park and around historic cemeteries, she sponsored tree planting, and beautification and cleanliness drives. She held a yearly nationwide contest for the most beautiful town, barrio, and schoolhouse. If Filipinos could have order and cleanliness around them, she believed, they would be clean and orderly.

“Yes,” Imelda said, “the Filipinos are living in slums and hovels. But what counts is the human spirit, and the Filipinos are smiling. They smile because they are a little healthy, a little educated, and a little loved. And for me the real index of this country is the smiles of the people, not the economic index.” Another time she remarked, “It is to the psychology of poverty that our education must address itself. But it is not merely material poverty that we speak of. We must begin with spiritual and moral poverty. We gain nothing if in the achievement of material goals, we sacrifice the integrity of our heritage, our minds and the nobility of our spirit.”

Her social welfare program included Christmas bags, home gardens, disaster relief, and a project called Save-a-Life-in-Every-Barrio. “Culture and art and a taste for the beautiful,” she lectured, “must lead to goodness.”

There were moments when people wondered if such noble sentiments were entirely sincere. In an interview, Jaime Ferrer confirmed that evidence of corruption came in the very first year under the Marcoses. “Imelda had a Christmas drive for the poor, which was the traditional job for the First Lady. But all the checks were made out to her, and were deposited in her name. They were not used for the poor. Word got around. What I remember is that the following year, San Miguel Corporation did not send checks again. They sent goods.” When there were calamities, earthquakes, typhoons, and eruptions of volcanoes, foreign embassies donated emergency food. A U.S. Embassy official recalled, “We naturally checked to see if Imelda’s people were following through, and discovered that she was withholding our food bags for a day or two till they could each be tagged ‘A Gift from the First Lady.’”

The Philippine-American Cultural Foundation had raised 90,000 pesos to build a modest Cultural Center, and Imelda adopted both the fund and the project. “She was familiar with the pain of abortive talent,” wrote Polotan, “and knew that many a Filipino artist died unheard because he had none to hear him, and nowhere to be heard.” Imelda declared that it was all to be done without government involvement. However, Ferdinand contributed a stretch of government-owned waterfront on Roxas Boulevard, a dramatic site looking across the water to the mountains of Bataan. Imelda commissioned a land reclamation project to expand the waterfront site far out into the bay (the idea had originated with Harry Stonehill). In a matter of months she had raised 35 million pesos. Some came from a benefit show of the musical Flower Drum Song — one night for the wealthy Chinese community, another night for non-Chinese. Caltex and San Miguel beer underwrote the production. Other contributions were collected by personal letter, a call, or supper at the palace. The Liberal opposition called her style “indirect coercion, indirect bribery, sophisticated extortion.”

“I’m like Robin Hood,” Imelda would say, with a twinkle in her eye, “I rob the rich … it’s done with a smile. It’s the rich you can terrorize. The poor have nothing to lose.” On her birthday and Ferdinand’s, or their wedding anniversary, Imelda asked the rich to give donations to the Center. When wealthy foreigners arrived, she met them at the airport, to lunch with them and get donations. In exchange for cutting ribbons and attending inaugurations, she demanded donations in kind: cement, tiles, fixtures, drapery, and carpets. The Eltra Corporation of New York donated a printing press; the Rockefeller Foundation gave fellowships; a New York businessman gave a Steinway concert grand.

“My projects run into the billions,” Imelda said, referring to pesos. “But many of these projects are built with money from the private sector, from friends here and abroad. It’s so funny. I just invite them to a fund-raising lunch and in one hour I get twelve million or thirteen million pesos. That’s why they kid that there are two bureaus of internal revenue here. The official one and Mrs. Marcos.” San Miguel Corporation chairman Andres Soriano, Jr., said, “We don’t say ‘no.’ But we’re free to discuss the amount.”

The Cultural Center was planned in four parts — a library, a museum, an amphitheater, and a theater seating seven thousand. The centerpiece and first to be built was the theater, a monumental white slab set off by wide reflecting pools, containing a large auditorium for performances of opera, ballet, and symphony. Imelda was determined to have perfect acoustics, and a stage deep enough for grand opera, broad enough for a troop of horses. It was originally planned to cost 15 million pesos, and to be finished in two years. Polotan wrote that “by Christmas of 1968, it had run through 48 million pesos with but three fourths of the work done. The principal cause was the variable cost of material … In just two years, prices rose by 30 to 40 percent, and these included elevators, escalators, lighting, and other electronic equipment.” While Polotan said costs had gone up 40 percent, expenditures were in fact 300 percent more than first estimated.

After a year, the Center was broke. Imelda seemed stymied by the continual escalation in costs, but it was a problem of her own making. Around her had begun to gather like schools of shrimp a great following of lickspittles, votaries, intriguers, and opportunists. Everybody got a piece of the action. A Manila architect described how it happened: “Several key men in the construction industry decided, just for fun, to work out the percentage of project cost that went to kickbacks. The process started at the top when a senior official demands 20 percent … As the inflated bid works its way down the system from general contractor, to subcontractor, to supplier — each adding … 10 percent for himself — the total for kickbacks grows as high as 80 percent of overall contract costs.” The people Imelda liked most were put in charge of her projects and became instant millionaires. In the Philippines, in polite company they are called tutas (lapdogs), in not-so-polite company sip-sips (cocksuckers). They provided her with the beginnings of her own espionage network; what the husbands told Ferdinand, the wives and their lovers told Imelda. These courtiers and courtesans needed nourishment. Culture had become Imelda’s own personal pork barrel, as patron of the arts.

In a sense the Cultural Center was a monument to Lyndon Johnson, a Texas-sized white elephant. For it was Johnson’s generosity that helped to make Imelda independently wealthy, and caused this first display of what Filipinos called her “edifice complex.” Imelda had received a direct infusion from Johnson, a $3.5 million slice from the Philippine veterans’ “special” educational funds. When Johnson first learned during their Washington trip that Imelda wanted to build a Cultural Center, he proposed that she use part of the new package of veterans’ benefits he was wrapping up at Congress as a $50 million cadeau for President Marcos. However, this was Ferdinand’s personal preserve, so Imelda wisely demurred. Johnson then came up with a Philippine claim that nobody had heard of in years, a claim for veterans’ educational benefits of $28 million that Congress had not acted upon before. Johnson said he would approve the bill and see it through Congress if Imelda promised to use a big piece of it for her Cultural Center. After discussing LBJ’s proposition with her husband, she agreed, but insisted that she would take only $3.5 million of it for the Center, instead of the whole $28 million. Johnson asked Montana’s Senator Mike Mansfield for a helping hand and Mansfield graciously saw Imelda’s bill through. (Her $3.5 million slice supposedly was set aside as a trust fund to maintain the project. But within months, the Center was flat broke and unfinished.)

As Finance Secretary Romualdez calculated, the public proceeds from the Marcos state visit to Washington came to $125 million counting only grants from the U.S. Congress, State Department, and Pentagon. The Romualdez total is the sum of the following amounts: U.S. Congress $50 million in increased vet benefits, State Department general civic aid programs at $45 million plus $10 million for surveys and research, and from the Pentagon $20 million to create a new construction battalion to replace the group sent to Vietnam.

In addition to this, however, LBJ personally authorized $38.8 million in secret Pentagon military funds, with no insistence on accountability, over and above the regular $61.6 million given to the Philippines as normal military aid during the period from 1966 to 1971. Because of its secret nature, this $38.8 million was in effect a gift to Ferdinand for him to use as he wished. Adding on the $28 million in “special” educational funds for veterans’ dependents and the $3.6 million paid to the Marcoses from AID unvouchered funds bumped the grand total to $195.4 million. (This does not include the open-ended new credits from the IMF and World Bank that became ongoing programs, and eventually ran into the billions.)

What happened to all this money when it got to Manila? Little of it seems to have reached its intended destination. Eventually, enough questions were raised about Johnson’s grants that a secret investigation was conducted by the U.S. Government Accounting Office and a congressional committee, producing some surprising details.

The cash grant of $3.6 million in unvouchered funds supposedly was made to help pay the expenses of the Philippine Civic Action Group (PHILCAG) sent to Vietnam. This money was delivered by State Department courier to Manila in quarterly installments between October 1966 and October 1969, in the form of U.S. Treasury checks of approximately $500,000 each. The Johnson administration did not impose any conditions on the use of the funds. The checks were endorsed and cashed by Defense Secretary Ernesto Mata and were deposited in the Philippine Veterans Bank in an account set aside as a “special intelligence fund” for the personal use of Ferdinand Marcos. The Philippine Military and Veterans Bank had been set up in 1963 with a U.S. grant of $25 million. Ferdinand held in trust over half of its shares, so the bank was entirely under his control. (By 1984, the bank was saddled with $64.9 million in bad debts in the form of loans made to Marcos cronies during the time that secret police chief Fabian Ver was the bank’s chairman.)

Although the United States had already paid secretly to have the PHILCAG unit sent to Vietnam, and to cover its expenses in the field, Ferdinand proceeded to move a bill in his own Congress to pay for the mission again, in effect double billing, to the tune of 35 million pesos. This would have been blatantly obvious to those at the U.S. Embassy, the State Department, the Pentagon, and the White House, who were aware that PHILCAG had already been paid for, but their lips were sealed.

Some Filipino legislators, not realizing that they were being asked to pay a double bill, fought its passage on the basis that the Philippines should not be participating in the Vietnam War to begin with. Later, when the U.S. Congress began investigating the PHILCAG payments, the implication was that the Philippine government as a whole had misappropriated the funds. “Unfortunately for the Philippines,” said a columnist in the Manila Evening News, “the implication of the rhubarb is that the Philippine government was paid a ‘handsome fee’ for sending a contingent to South Vietnam and that this country misused that money. Either the Americans are telling a lie or there is too much corruption in the government.” In Washington, Senator Stuart Symington said, “It is a pretty shoddy story.” He then explained that the Nixon administration insisted on keeping the matter secret, so he could not discuss it further. (Today, the investigation is still secret.)

The Marcoses were able to be poor in Manila and rich overseas by salting — stashing all their hard currency in secret bank accounts in Europe, North America, and the Caribbean. The Marcos income tax returns declared a gross income of only $17,000 in 1960, rising to $60,000 in 1961, and to $69,300 in 1966, when he ran for president. In that same year, Ferdinand listed his total assets at only $30,000. Such modesty was becoming for a presidential candidate running on a law-and-order, anti-corruption platform. In truth, Ferdinand was already a millionaire many times over, with safe-deposit drawers crammed with dollars, offshore corporations all over the world, and large bags of money arriving at their home so frequently that Imelda had given up counting the contents. Such modesty might be necessary in Manila, but the Marcos family could afford to be more extravagant on foreign trips where nobody was watching. When Imelda took her eldest daughter Imee on a shopping spree to the United States in June 1968, when the Cultural Center was still broke, the two ladies spent a total of $3.3 million in only eight weeks, or just under $100,000 each shopping day, in fashionable boutiques from coast to coast. This was nearly the amount LBJ had given her from the vets’ special educational fund — $3.5 million — which shows that he was an uncanny judge of what a First Lady needed for pocket money.

In March 1968, Imelda and Ferdinand opened their first separate numbered accounts at Credit Suisse in Zurich, providing the bank managers with their real names and the aliases William Saunders and Jane Ryan. In all, documents reveal that they eventually opened more than half a dozen secret accounts in Switzerland alone, mostly in Credit Suisse and the Swiss Bank Corporation, and deposited in them over the years more than $1.5 billion, some think as much as $5 billion. In addition to using aliases, the Marcoses gave their Swiss bankers an elaborate code to authenticate all messages they sent from Manila, a code that varied according to the month of the year. Ferdinand’s magic “7” appeared repeatedly in his account numbers.

Other large sums were salted in offshore accounts through corporations based in Hong Kong, the Netherlands Antilles, the Bahamas, and the Cayman Islands, set up by Jose Campos and managed by cronies Roberto Benedicto and Antonio Floirendo, a Filipino businessman who was especially close to Imelda and often fronted for her overseas.

Aside from putting more than $1 billion in their secret Swiss accounts, documents also show that the Marcoses salted more than $200 million in banks in other countries, including Chase Manhattan Bank and First National City Bank (Citibank) in New York. They also set up a Liechtenstein account, called the Sandy Foundation, and instructed its trustee Markus Geel in Zurich that when either Imelda or Ferdinand wanted to withdraw cash, they would send him a cable wishing him “Happy Birthday.” When he received the cable, Geel was to contact his associate in Hong Kong, Ralph Klein, who would then fly to Manila to get their instructions personally. This was only one of eighteen overseas foundations the Marcoses set up whose assets eventually totaled at least $183 million.

If Ferdinand and Imelda declared a net worth of only $30,000 in 1966, where did all these hundreds of millions come from — besides that given them by President Johnson? The evidence indicates that a lot of the money came from war reparations paid to the Philippines by the United States and Japan, from the Philippine Treasury, from veterans’ benefits and other grants deposited in the Marcos “special intelligence fund,” from credits given to the Philippines under various World Bank projects, and from the seizure of more than 215 Philippine firms belonging to other people. (In 1986, for example, the U.S. government reported that over $226 million in Economic Support Funds provided to the Marcos administration could not be accounted for.) These diversions of money by Ferdinand and Imelda have since been labeled racketeering, mail fraud, wire fraud, extortion, embezzlement, theft, transportation of stolen property, and illegal laundering of funds.

Some U.S. government officials were aware of what the Marcoses were doing at the time. This is apparent from various clues. An undersecretary of state cautioned Ferdinand in March 1968 (three months after the sour LBJ confrontation in Australia) that he should not request any more American aid “when so many wealthy Filipinos were not keeping their money in the country.” The following year, 1969, a secret CIA report on Ferdinand stated that he had already stolen at least several hundred million dollars. Naturally this report was top secret, only for circulation within a small circle in Washington, but this circle included top officials of the White House, the State Department, and the intelligence community. One of those who read it was an officer of the Intelligence & Research Bureau at the State Department, named John Marks. His boss at I&R (or INR, as it is sometimes called) was Ray Cline, previously CIA station chief in Taiwan from 1958 to 1962, who had been such a great success in East Asia that he had become the CIA’s deputy director for intelligence, before moving to the State Department. Marks later left the government and collaborated with former CIA official Joseph Marchetti on the book The CIA and the Cult of Intelligence. On May 11, 1975, Marks astonished an audience of scholars attending a seminar at Chicago’s Lutheran School of Theology with the revelation that the CIA knew as far back as 1969 that Ferdinand and Imelda had already “stolen funds ranging from not lower than several hundred million U.S. dollars to two billion U.S. dollars.” The CIA was in a position to know. Over the years, CIA agents actively helped Marcos salt money in America, especially in Hawaii. This became abundantly clear during the fraud trial of Ronald Rewald in Hawaii in 1983-85 when it came out that Rewald’s investment firm, Bishop, Baldwin, Rewald, Dillingham & Wong, had been set up as a conduit for CIA funds, and as a way of helping Ferdinand Marcos and a variety of Filipino oligarchs to salt black money in America. The CIA had also been funneling Marcos black money out via Australia and Hong Kong through the Nugan-Hand Bank in Australia, which had branches in Manila, Hong Kong, Singapore, and elsewhere till it collapsed in scandal in 1980. (Both the Rewald and Nugan-Hand affairs are dealt with in a later chapter.)

Ferdinand had been playing games with black money ever since he became a congressman in 1949. But high finance and international intrigue were new to Imelda as an impoverished provincial girl from Leyte, and must have required a period of adjustment. Once she got the hang of it, though, Imelda cut out middlemen and sent couriers with suitcases of money directly to her numbered account at Credit Suisse in Zurich — so many suitcases that, according to international banking sources, “the bank managers eventually had to ask her to stop.”

Imelda wanted to set some money aside for her own use while shopping, so she kept petty cash accounts in America and Europe, and funneled hundreds of thousands of dollars to them. This enabled her to make purchases and investments without having people associate her name with them. At the time she went on her $3.3 million shopping spree with Imee in 1968, she opened an account at Citibank through two close friends, Dr. Daniel Vazquez and his wife, Maria Lusia. Dr. Vazquez ran a clinic in Manila, and Maria Luisa, the daughter of the wealthy Madrigal family, was one of Imelda’s Blue Ladies. She often accompanied the First Lady on overseas trips. In the beginning, Mrs. Vazquez personally paid Imelda’s bills, apparently with funds provided beforehand by Malacanang Palace. During the June 1968 spree with Imee, Mrs. Vazquez paid for purchases at exclusive boutiques such as Giorgio’s in Beverly Hills, using checks drawn on Citibank account number 05069031, which she held jointly with her husband. This was a clumsy arrangement unless Mrs. Vazquez was to accompany Imelda overseas all the time. So in November 1968, the month before the Cultural Center went belly up, Citibank was asked by Dr. and Mrs. Vazquez to add the name “Fernanda Vazquez” to their joint savings account; this was accompanied by a deposit of just under a quarter of a million dollars. Subsequently, all but Fernanda’s name were removed from the account and it became hers alone. Fernanda Vazquez and Imelda Marcos were, of course, one and the same. In addition to other evidence, there are pieces of stationery from Malacanang Palace that bear notations in Imelda’s handwriting about the balances in the Citibank account of Fernanda Vazquez.

With so much on her mind, Imelda could be forgiven for letting the Cultural Center get a bit out of hand. True, she could easily have paid for the Center any time out of her own purse, but it was a matter of some pride to her that it be built by, as she said, “robbing from the rich.”

In February 1969, as a new presidential election campaign got under way, the opposition Liberals tried to discredit her by mounting a concerted attack on her spending. To complete the Center, Imelda had obtained a 20-million-peso foreign loan and had the loan guaranteed by the government’s National Investment Development Corporation (NIDC). Since the Cultural Center was Imelda’s private pet project, the Liberals wanted to know how a government agency could properly guarantee such a loan. From Imelda’s viewpoint, the gadfly in her soup was young Senator Benigno “Ninoy” Aquino. Ninoy was the heir to the vast Aquino holdings in Tarlac, with a family tradition of involvement in politics at the highest level. His father had headed the wartime pro-Japanese Kalibapi party. As a youth, Ninoy had been one of the wealthy playboys who ebbed and flowed around Imelda when she first came to Manila. Their dislike of each other is said to have originated in those days. Apparently he took an interest in her at first, then snubbed her. People said Imelda fixed upon Aquino as a personification of the elite that had always rejected her, and Ninoy had continually aggravated matters by being abrasive and cutting whenever they came into each other’s orbits. In his youth, Aquino was also ostentatiously self-centered, a flamboyant young political showman, and he attacked Imelda not only to get under her skin but to get at Ferdinand. In due course, the Marcoses would take their revenge in a variety of ways, putting Aquino through a crucible that matured him into a far more noble figure. But at the time, he was their brashest critic, the sharpest tongue, and their most dangerous rival for the presidency. To make matters worse, Aquino was clean, which made it difficult for them to retaliate with ordinary mud slinging.

In the Senate, where Aquino was doing some empire building of his own, he condemned Imelda’s handling of the Center, and asked why it had been undertaken at a time when so many Filipinos were starving or barely subsisting in squalid poverty, tens of thousands in Manila alone living in packing crates and garbage dumps. Imelda’s projects, he declared, were necessary only for her vanity. For example, Imelda was ordering statues of the president and herself to be put in the Center. He pointed out that the administration was suddenly full not only of Ilocanos related to Ferdinand, but of people named Romualdez. He said Imelda reminded him of Eva Peron.

When she heard all this, Imelda dissolved in tears of rage, and Ferdinand issued an angry statement: “Those who want to destroy me should fight like men and leave the women and children out of it.” On this signal from “the boss” (as he was known within his own circle), Ferdinand’s supporters everywhere chivalrously protested that it was unmanly to drag a woman into the political mud. The Cultural Center’s wealthy donors threatened to withdraw. Imelda spent a week begging them not to. When the controversy subsided, biographer Polotan wrote, “There was still the Center to finish, and the Liberals still had offered not one helpful suggestion. Instead, they continued to harp on the Center. As for the charge of nepotism, Imelda herself would gladly step aside, but she wished to make certain that politics would not kill the Center, as it had killed a lot of other things in the country.” This was the beginning of an intense public rivalry between Imelda and Ninoy, which would lead ultimately to his undoing — and to hers.

When the Cultural Center was finished at last, Imelda wanted the hall inaugurated in a manner emphasizing Philippine roots. The result was a pageant-drama involving an orchestra of native instruments, dance, solo and choral singing, pantomime, to a story in an ancient form of Tagalog, which not even the Tagalog speakers in the audience could understand. The Golden Salakot was based on a Philippine legend of the hero Puti, who sets sail with his followers from Borneo, lands on the island of Panay, and cons the local ruler out of his property by giving him a golden salakot, a traditional piece of Filipino headgear. Roughly equivalent to pulling the wool over everybody’s eyes.

The Marcoses attempted to get President Richard Nixon to attend the gala opening, or at least Julie and David Eisenhower, but Nixon sent California’s Governor Ronald Reagan. The gala was an opportunity to show Manila that Imelda and Ferdinand had international celebrities on their side. When she learned that Reagan was coming on Air Force One, Imelda tried to get free seats on the plane for a mob of Hollywood friends; the White House firmly refused.

No detail of protocol was overlooked. Governor Reagan’s office in Sacramento was informed that he would be in Manila on the fifty-second birthday of President Marcos. He took a gift, and Nancy Reagan thoughtfully brought a gift for Imelda as well, a jade tree she herself had designed. Reagan was advised by the Department of State that he had to be prepared to wear a formal barong buttoned at the neck without a tie (the Spaniards did not permit Filipinos to wear ties), tuxedo trousers to be worn with a belt, not suspenders, and a white, round-neck T-shirt under the barong. The Reagans were perfect guests of Malacanang, and Embassy Manila soberly advised Washington that everyone was impressed by “the Governor’s good-humored and effective performance.” It was the beginning of a warm and lasting friendship between the Reagans and the Marcoses.

Not all celebrities were so eager to get an invitation to Malacanang. When they came to Manila to do a show in the course of a world tour, the Beatles received an invitation to perform in private for Ferdinand and Imelda before they left. It was hot and they were tired, so the Beatles gave it a miss. Imelda was sorely miffed. Security was withdrawn from the Beatles’ entourage, private exits at Manila International Airport were blocked, the escalator was shut off, and a 100,000-peso tax assessment was slapped on the Beatles’ manager. As the group tried to board their plane, a mob surged forward, shoved the singers, kicked and slugged a member of their party, and shouted unprintables. The Beatles vowed never to return to Manila without an H-bomb. Said son Bong-Bong irritably: “I prefer the Rolling Stones anyway.”

While Imelda was busy with the Cultural Center, Ferdinand was using his new presidential powers to shut down the private armies, smuggling strongholds, and warlord sanctuaries of all his rivals. During his first month in office he sent paratroopers jumping into the smugglers’ island of Semirara, between Mindoro and Panay, and sent marines wading ashore at the village of Capipisa on Luzon’s south coast. A private aviation company was shut down for the same reason. He reshuffled the Constabulary to bring it entirely under his control, putting his own men in command, appointed a new chief of customs, and replaced the director of prisons. (The man he put in charge of the prison system was Vicente “Banjo” Raval, the friend who had accompanied him to Mindanao to see Wendell Fertig during World War II. Raval was eventually promoted to brigadier general and became chief of the Constabulary.)

To casual onlookers this appeared to be a new broom sweeping clean, a serious law-and-order administration taking a firm grip on corruption. But before long, the real purpose began to dawn. The price of a pack of smuggled U.S. cigarettes jumped in one month by 30 percent. While most people thought this was because Ferdinand had blocked the pipeline, others guessed that the new president was taking an extra cut off the top to pay his bills. They pointed out that while Marcos was cracking down on some smugglers, he was helping others. When Macapagal had tried to expose Ferdinand’s involvement in the Bocalan ring smuggling U.S. cigarettes into the islands, by getting at him through Fabian Ver, Marcos simply had Ver transferred to his personal staff and sent to America for special police training. Lino Bocalan had been denounced and arrested, but now that Ferdinand was president, Bocalan was liberated and permitted to go off for a world tour. On his return, Ferdinand helped get him elected governor of Cavite, where he was able to resume smuggling without further interference. If Bocalan now felt like charging 30 percent more per pack, there was not much doubt where the extra revenue was going.

Similar strange things were happening in the tobacco bloc. After Stonehill, Brooks, and Lim were all expelled or barred from the Philippines, their tobacco interests were turned over to Congressman Floro Crisologo. Peasant growers got their credit from the Crisologo bank, cured their leaves in Crisologo sheds, and sold their leaf to Crisologo. When farmers attempted to get around him, Crisologo created a tobacco blockade. On the only highway to Manila, his troopers set up a roadblock and collected $500 on every truckload of tobacco leaving the province. According to Primitivo Mijares, a palace insider who later defected, Ferdinand ran “a triangular tobacco monopoly” in which Crisologo looked after day-by-day operations, secret policeman Fabian Ver oversaw Bocalan’s smuggling of foreign brands into Cavite, and Ferdinand served as their mastermind. Crisologo was not happy. “Floro berated both Marcos and Ver for grabbing the lion’s share of the proceeds of the tobacco monopoly,” Mijares said. “Crisologo even threatened to expose the entire operation.” Apparently he also had learned that Stonehill cronies Brooks and Lim were coming back to Manila, and this threatened his part in the monopoly. He did not have to wait long for an answer. While kneeling in prayer at Sunday Mass, two assassins stepped out of a confessional booth and shot him in the head. His murder remained unsolved, although locals maintained that the murderers were felons facing capital punishment who agreed to do the job in return for knowing that their families would never want for anything again. Mijares discussed the killing with members of Ver’s presidential security command at Malacanang Palace and was told that the killers were “‘silenced’ while trying to collect [the] fee.”

After ten months of “all-out war” on smuggling, not one boss or financier of a smuggling syndicate had been prosecuted or imprisoned. The biggest protection racket of all was being run by Marcos himself. He put on the squeeze by sending in the marines, then let the culprits go free, in a variation of carrot-and-stick. In this version, Marcos hit them with a stick till they gave him their carrots.

His “crackdown” had impact as far away as Zamboanga. Traditionally, smuggling in the Sulu Sea was portrayed as a Muslim enterprise, with Moro smugglers owing their loyalty to the sultans. In reality, most Moro smugglers were fronting for Chinese financiers in Zamboanga; since World War II, these Chinese owed their fealty to the KMT in Taiwan, through the Federation of Chinese Chambers in Manila. In what was portrayed as an attempt to control Muslim smuggling, Ferdinand introduced a barter trade market for the Sulu Sea, to cut off the flow of pesos used to purchase smuggled goods. Its real purpose was to bring pressure on the existing Chinese syndicates until they manifested a new loyalty directly to Ferdinand and then to Taiwan. Once they met his requirements, he returned the favor by having Constabulary soldiers escort smugglers to provide safe conduct. The navy thereafter was regarded as the main supplier of diesel fuel and protection for Sulu smugglers, while Ferdinand’s army controlled the biggest marijuana plantations in the Sulu archipelago.

Another type of smuggling also took up much of Ferdinand’s time — technical smuggling. Unlike the kind of smuggling Bocalan was doing in fast boats at night, technical smuggling went on in broad daylight on Manila’s docks. Cargo was unloaded in the normal manner, but documents were falsified — either by undervaluing the cost of the goods being imported and thus paying a fraction of actual duties, or by misdeclaring the contents of shipments altogether and importing goods that competed with struggling native industry — through the connivance of importers, customs officers, and President Marcos himself. The scam worked because customs officials earned only 360 pesos (about $93) a month. Industrial losses due to technical smuggling were estimated at $350 million a year, plus $85 million in lost tax revenue. By allowing foreign goods to be smuggled in this way, infant local industries had their tariff protection undercut. So while one part of the government was attempting to build up local industry by providing loans for new equipment and expanded facilities, another part of the government was sabotaging the effort by permitting technical smuggling in return for kickbacks. This was essentially what Ferdinand had arranged with Harry Stonehill fifteen years earlier when he pushed through legislation to build up the bright-leaf tobacco industry with one hand while enabling Stonehill to rip off the infant industry with the other. Ferdinand got kickbacks building the industry, and more kickbacks tearing it down.

Hardest hit were embroidery processors. The Philippines is a world center for embroidery, supplying a major share of the market in fine lingerie for Europe and North America. Because of the detailed needlework involved, the world’s leading brassiere manufacturers are based in Manila. In a typical scam, a firm posing as an embroidery factory, but with capitalization of only $2,000, was able to bring in tax-free fabrics worth over $1 million. These textiles were supposed to be under consignment from famous labels in the United States and Japan, to be embroidered and then re-exported. But no major brand in New York or Tokyo would trust valuable materials to a firm with such measly capitalization.

An embittered ex-crony whose properties were given to a Marcos military ally in the 1970s put it this way: “As far back as the 1960s, when Marcos was a congressman, he was known as a 10 percenter. Business people wanting favors turned over 10 percent of their shares to him — and they got their favors.”

Ferdinand took a special interest in customs procedures on the humblest transactions, even taking a percentage off the top of shipments of canned sardines. Documents found in Malacanang Palace show that importers routinely paid him a “donation” of 15 pesos for every carton of canned fish brought into the country, in one instance paying him 4.5 million pesos to import three hundred thousand cartons. Another importer offered to make a special deal if Ferdinand would allow 15 million cartons of canned sardines from Japan to be “transshipped” through Manila supposedly on their way to the Middle East. Philippine laws permitted foreign goods to be transshipped so long as none were diverted into the local economy — a restriction easily bypassed. In this case, the Japanese sardines were obtained at a “special” price (possibly because they were contaminated or past their shelf life), brought to Manila for transshipment, and ended up in Philippine food markets. The difference between the “special” price and the market value enriched everyone from Ferdinand on down. As World Health Organization investigators discovered, similar deals were struck for foreign drugs past their shelf life. These were dumped in the Philippines, and ended up on shelves in sari-sari stores.

One of the best examples of Ferdinand’s stick-and-carrot game at work was his appointment of Colonel Jacinto Gavino, a retired army officer, as customs commissioner. Gavino had an unparalleled reputation for honesty and efficiency, the perfect appointee to convince people that the Marcos administration was serious about ending corruption. To put a stop to technical smuggling, Gavino invited trade groups such as the Textile Mills Association, the Pulp and Paper Manufacturers, and the Association of Drug Manufacturers to provide advisers at the docks to see that competing importers paid full duty. They also kept a sharp eye on customs officials. Gavino awarded new contracts to supervise the unloading of cargoes and the collection of fees. Manila was infamous for pilferage and diversion; cargo bound for the port carried the world’s highest insurance rates. Thanks to Gavino, customs collections rose dramatically, and Ferdinand was able to claim after only a few months that he had cut smuggling there by 40 percent.

But before the end of 1966, Gavino had been fired. As the editor of Manila’s magazine Graphic put it back in 1967 before Ferdinand closed the publication down, “Because of such splendid work, and for stepping on the toes of big shots who have had to reduce their ‘business’ at customs, Gavino found himself out … by presidential edict. Without much ado and … [not] a single sentence of explanation to the public … Gavino was relieved of his duties as customs boss.” He was replaced by Ferdinand’s lawyer, Juan Ponce Enrile. Ferdinand regularly used Enrile as a surgical glove. As customs boss, undersecretary of finance, and insurance commissioner, Enrile was able to “speed up” paperwork from customs to finance and back. “This saves a lot of time and effort,” the editors of Graphic commented sarcastically.

The moment he took over from Gavino, Enrile announced that he would never be able to bring smuggling and corruption under control, and that it would be best if Congress spent a few years studying the issue. The fact that Gavino had already solved the problem was conveniently forgotten. He had done his job too well.

What he was doing to the economy, Ferdinand was also doing to public security and law enforcement — turning them into his own fiefdom. In the old system, municipal police forces came under the authority of mayors; provincial Constabulary were controlled by governors and congressmen. This made regional warlords possible, but in an archipelago bosses or warlords on each island are inevitable. To “reform” this system, Ferdinand rammed through legislation to put all local police under a central administration; because he himself appointed the central administration, this put all police under his direct command.

What Filipinos were witnessing was a consolidation of power in the hands of one man — the creation of a police state and the birth of a dictatorship. President Johnson secretly authorized a multi-million-dollar plan to reorganize, retrain, and re-equip the entire Philippine police establishment from top to bottom as a computerized paramilitary force under the control of President Marcos, to suppress any form of protest against his continued rule. It was an extraordinary gift.

The second step was to change the armed forces into a super-police force, by turning its mission from external defense to internal population control. The Philippines had no external enemies, and in any case its defense was guaranteed by the United States. The remodeling of the police and army was directed toward one end: suppressing internal dissent, including whatever Ferdinand chose to identify as subversive. Peculiar to the Philippine constitution was the power granted the president to make a personal determination of “imminent” subversion, to suspend the writ of habeas corpus, and to declare martial law whenever he personally determined that there was a danger of “imminent” subversion.

Ferdinand intended to suppress any and all resistance to his personal rule, whether it arose from political activity by rivals, criticism by journalists, protests by students, demonstrations by labor, or armed resistance by farmers. He understood that American officials were impatient with complex ideas, preferring labels, so the most powerful and flexible word in Washington’s vocabulary was “subversive.” Ferdinand held long talks with the U.S. Embassy in which he pushed the idea that his dearest purpose in life was to suppress Communists and other subversives. On December 15, 1966, three months after he returned from his state visit to President Johnson, a “Survey of Philippine Law Enforcement” was begun under the USAID Office of Public Safety (AID/OPS). Heading the survey was Frank Walton. Between them, Marcos and Walton instituted radical and ominous changes in the training, organization, and management of the Philippine police and armed forces.

Walton had just reorganized the police of South Vietnam into a paramilitary force for counterinsurgency and urban population control. After he was finished in Manila, Walton would move on to Iran, where he reorganized the Shah’s police into a paramilitary force and remodeled the secret police, SAVAK, into the terror organization the world has since come to know and love. In all three cases, the excesses made possible by Walton’s extreme security systems eventually contributed to the downfall of the regimes in question.

Under Walton’s guidance, America provided counterinsurgency training for hundreds of Filipino police and army officers at military schools like Fort Bragg and Fort Benning, the U.S. Army Intelligence School, the International Police Academy in Washington, the FBI National Academy, and the Border Patrol training center in Los Fresnos, Texas. In the Philippines, academies were established at Baguio, Fort Bonifacio, Legaspi City, Bacolod City, Cebu, Tacloban, Cagayan de Oro, Zamboanga, and at the Constabulary’s Special Warfare Training Center at Laur, Nueva Escija. These centers later were turned into detention camps for political prisoners.

Mobile U.S. training teams directed by the CIA, the FBI, the Secret Service, and the Border Patrol came to the Philippines to teach army and police agents the latest techniques of torture, surveillance, explosives, and terrorism. The Agency for International Development’s Office of Public Safety (OPS) had parallel programs under way in South Vietnam and the Philippines, designed, as Filipino sociologist Walden Bello put it, “to institutionalize the most advanced techniques of information and confession-extraction from psychological torture, and selective beatings — methods remarkably similar to those employed in Brazil, Korea, Vietnam, Iran and Uruguay, all of which have received significant amounts of OPS assistance and training.” OPS eventually became so notorious that the U.S. Congress phased out the program. The 1974 Foreign Assistance Act prohibited further use of foreign aid funds for the training and financial support of foreign police forces. This was intended to bring USAID’s involvement in these programs to an end. But the White House got around this by continuing police training under the International Narcotics Control Program run jointly by USAID and the Drug Enforcement Agency.

U.S. investigators, including former Attorney General Ramsey Clark, found a Filipino officer commanding a compound of tortured political prisoners who had received his training at Fort Bragg and Fort Benning. One of Clark’s aides stated that “we found … evidence of torture, approximately eight 14-inch reinforcing rods next to a single-burner electric plate.” Also in a small back room were a number of auto batteries attached to a recharging device.

Some men were trained in Taiwan at a special school Ray Cline had set up with the agreement of Chiang Ching-kuo. The Political Warfare Cadres Academy is at Peitou, outside Taipei. Since 1959, the Academy has offered two-month training courses in “psychological warfare and techniques of interrogation.” Graduates are very circumspect but admit: “We were taught that to defeat communism, we had to be cruel; you have to be as cruel as the enemy.” Cline arranged for American military personnel, drawn from the Military Assistance Advisory Group stationed on Taiwan, to conduct the classes. In twenty-eight years, the Academy has graduated thousands of Taiwanese, Filipinos, and leaders of death squads in El Salvador, Paraguay, Argentina, Guatemala, and Honduras. The Academy often recruits its students during meetings of the Asian People’s Anti-Communist League and the World Anti-Communist League. Taiwan customarily offered to pay all the “students’” expenses.

Walton had the enthusiastic help of Filipino intelligence officers who had been trained by Lansdale and the CIA under President Magsaysay, and who had then moved on with Napoleon Valeriano to become advisers in Indochina. As many as ten thousand counterinsurgency jobs in Indochina were filled by Filipinos, in CIA-financed fronts such as Operation Brotherhood, Eastern Construction, Vinnel Corporation, International Volunteer Services, Air America, and Bird & Sons. They brought these skills back to Manila and applied them on their own countrymen under Walton’s guidance. Methods first tested on the Viet Cong and Pathet Lao in a state of war were turned on Filipinos in a state of peace.

Walton expanded and modernized police communication networks, improved record systems and internal security. For the first time, tight coordination was introduced between the national police, municipal police, and Constabulary, locking their command structure to that of the National Bureau of Investigation (NBI) and the Armed Forces of the Philippines, all under the personal control of President Marcos.

By the middle of 1970, more than 10,500 policemen had been trained, more than 2,000 specialists in police communications, and 50 senior police officials had attended the Police Academy in Washington. The greatest emphasis was placed on the control of urban protest, which at this time consisted of student demonstrations against further rule by Ferdinand and Imelda.

One result was the creation of the Metropolitan Command (METROCOM) in July 1967, with jurisdiction over all riot control and internal security operations for Greater Manila. To make its job easier, USAID supplied METROCOM with computerized identification systems.

The whole idea, as U.S. Ambassador Henry Byroade put it, in a masterpiece of doublespeak, was to make the police under Marcos more efficient “so that the safety of the public can be improved and maintained.” This included giving the NBI a computerized intelligence network and data-processing system at Camp Aguinaldo, hooked to an Inter-Police Coordinating Center in Camp Crame in Manila containing lists of thousands of Filipino citizens considered “political activists” to be arrested during any police sweep. This marvel of American security technology was vested in the new secret police chief of the Philippines, Ferdinand’s most loyal follower, Fabian Ver. At this point Ver became one of the most dangerous men in the archipelago.

Fabian Ver was born in Sarrat on January 20, 1920, and used his mother’s maiden name. He was said to be an illegitimate half brother of Ferdinand Marcos, having the same father, which could be taken various ways. Imelda had the original Ver home in Sarrat rebuilt and turned into a museum, giving the impression that he came from landed gentry. Aided by a benefactor, Ver became a pre-law student at the University of the Philippines and joined the Constabulary. He spent the war in Ilocos Norte, apparently working with the Japanese in Sarrat, and was listed as a member of the Maharlika.

Ver was a policeman all his life. He served in the PC’s criminal records service and its intelligence branch and did a stretch as a prison warden. A colorless man, devoid of humor, he won promotions very slowly; second lieutenant in 1946, first lieutenant in 1953, captain in 1955. In the late 1950s, he was the commander of the Constabulary at Cavite on Manila Bay. During the same period, he was linked to Marcos, Crisologo, and Stonehill in the complicated workings of their tobacco scam. When the Bocalan smuggling scandal burst in 1963, Ver was rescued by Ferdinand and sent to America for training at the Police Chiefs Academy in Washington, at the VIP Protection School run by the U.S. Secret Service, a drug enforcement program at the Treasury Department, and the Police Administration School at the University of Louisville. He also received police training in Hawaii and Los Angeles. (The Secret Service insists it has “no record” of training Ver.)

When Ferdinand became president, Ver was promoted to colonel, chief of the Presidential Guard Battalion, and chief of the civilian Presidential Security Unit, or secret service. During Walton’s reorganization of the police establishment, Ver was given a new Presidential Security Agency, with twelve hundred men, computers, telecommunications with scramblers, armored cars, helicopters, and navy patrol vessels. He was also charged with the use of the “black room” at Malacanang Palace where special political prisoners were entertained, and never came out.

Ver apparently enriched himself by kickbacks on the sale of espionage and internal security equipment through the Amworld Corporation, and other kickbacks on high-tech telecommunication systems. In 1984, an American grand jury began probing U.S. defense contracts in the Philippines. Defense Department auditors examined three California companies that won contracts to supply communications equipment to the Philippine armed forces, contracts financed by the Pentagon’s foreign military sales program. The companies — Amworld, Telecom Satellites of America, and Digital Contractors — were all set up in 1981 by Ver’s friend Raymond Moreno. Amworld purchased $17 million worth of U.S. military communications equipment for the Philippines as part of a $100 million U.S. aid package in 1983. Payments to the company were halted by the Pentagon when evidence surfaced that some of the money may have been diverted to Ver through overpricing.

Ver also apparently received hefty commissions from contracts with local weapons firms that short-changed or overbilled the Philippine military. On behalf of U.S.-based arms traders, Ver awarded secret contracts to companies in the Philippines to produce the weapons. Among the firms was Avacorp, partly owned by Edna Camcam. Ver was married to Aida Petel, with five children, but for many years his mistress and business partner was Edna Camcam. These firms delivered only a fraction of the arms paid for by the armed forces. The rest were diverted to Iran and sold at inflated prices.

As the recipient of these kickbacks, Ver probably had as much on the U.S. agencies and individuals involved as they had on him, which could explain why he was always able to travel freely in and out of the United States. Ver was given so much latitude by Washington that he could support both his wife and his mistress in lavish style, maintaining two families openly, one in the Philippines and one in America.

The development of a police state under Marcos and Ver was recognized as an ominous development from the beginning. As early as 1968, Ninoy Aquino denounced the “menace of militarism,” and Manila periodicals drew attention to the way security operations in urban and rural areas were being integrated under a unified command. But few grasped its full significance.

While Fabian Ver served as secret police chief, the top civilian intelligence officials in the Marcos regime were Rafael Salas and Ernesto Maceda. Salas and Maceda handled political espionage through the early years of the Marcos regime. Salas once said of Ferdinand, “He knows the average Filipino: to what degree [he] can be scared, what are the limits before he becomes violent. Within these limits, he will apply any sort of artifice.” The way they worked is revealed by a story of how Ferdinand tried to bully Salvador “Doy” Laurel out of running for the Senate in 1967. A few weeks before the Nacionalista nominating convention, Ferdinand ordered Maceda and Salas to do a head-count of delegates. This showed that Laurel would get a place on the Senate ticket, knocking out a Marcos man. Doy’s older brothers, called “Pito” (Jose S.) and “Pepito” (Jose B.), were already major figures in the Nacionalista party — Pepito as speaker of the House and Pito as a leading senator. Doy was a dove on the Vietnam issue, and Ferdinand was determined to keep him out of the Senate. The night before the convention, the Laurels threw a house party for the delegates. Ferdinand heard about it, and swung into action.

He arrived at the party with Maceda and Salas. With false conviviality, he said to Doy, “Oh, brod, you’re the one I have to talk to.” (As old fraternity brothers, they still used this form of address.) They went into the library.

“Brod,” said Ferdinand, “I’d like to ask you to withdraw … I’d like to appoint you secretary of justice tonight. Instead of running this year, I’d like you to run for the Senate in 1969.”

Doy said he knew he would lose if Ferdinand did not support him, but he would rather lose than withdraw. Ferdinand looked stunned. “Where’s Pepito?” he asked. Doy took him to his brother. In private, Ferdinand repeated his offer. Pepito said, “I’m afraid that’s completely up to Doy. He makes his own decisions.”

Ferdinand looked grim, then smiled and put his arms around Doy like a Mafia don. “In that case, brod, forget that I ever asked you to withdraw.” And left.

Only then did Doy discover what had happened. While Ferdinand had the Laurels secluded, Salas and Maceda had moved like eels through the partying delegates and told them that the president had convinced Doy to withdraw from the Senate race in return for a cabinet post. Astounded at this apparent sellout, most of the delegates left. The few that remained told Doy that Salas and Maceda had given each delegate a typed list of the eight candidates Marcos wanted. Doy’s name was not on it.

The Laurels struck back. Using a similar typewriter, they prepared a new “Marcos list” of candidates with Doy’s name included. Calling in a hundred campaign workers, they stayed up all night and by six o’clock the next morning all delegates had the doctored lists. Each was convinced that the new list was genuine, because he was dragged out of bed to get it. At the convention that day, Doy won his nomination, and went on to win the Senate race.

It was rare that anyone succeeded in outmaneuvering Ferdinand, but his first use of the reorganized police apparatus made 1967 the bloodiest election in Philippine history. There were at least 117 politically motivated killings, most attributed to his U.S.-trained paramilitary and police agents. In the last thirty-six hours, thirty-seven people were killed.

Imelda was also cracking a whip and settling old scores. As the election approached, she invited her cousins, the sisters of Norberto Romualdez, Jr., to lunch at Malacanang. There she let them know that her brother Kokoy was going to run for governor of Leyte, on the Nacionalista ticket, so it would be necessary for Norberto, the Liberal incumbent of twenty years standing, to step down. It was Norberto who had inherited the Romualdez villa in Tacloban and moved into it in 1946 so that he could run for governor of Leyte — obliging Imelda and her family to move back into their shack. The time had come for revenge.

“It will be useless for him to fight Kokoy,” Imelda said. “He will have the money and the entire machinery of the party in power. How can Norberto fight that? Fetch him. Tomorrow I’ll dispatch a plane for your use just to fetch him.”

On the plane coming back to Manila, Norberto told his sisters that he refused to go to Malacanang to see Imelda. If she wanted to persuade him not to run, let her come see him. Imelda arrived with an entourage of security men and screaming sirens.

“She talked tough,” cousin Loreto recalled. “Imelda said in no uncertain terms that if Norberto Junior ran for re-election, he would suffer a devastating defeat.” According to Loreto, Imelda threatened him: ‘I’ll use every available means to ensure Kokoy’s victory. The whole weight of Malacanang will bear down on your shoulders.”

Norberto replied, “I will still run.” Imelda left in a huff. The following week, she changed her approach. This time she went to Norberto with tears in her eyes. “I come not as First Lady,” she said, “but as a humble cousin. Please try to understand why I am doing this.” Norberto capitulated. Kokoy became governor of Leyte, and began seizing Norberto’s properties.

Deprived of the governorship, and soon divested by Imelda’s brothers of most of his real estate, Norberto took refuge in Manila where he found employment as a clerk, and then fell ill with a brain tumor. He died impoverished in 1972, requesting only that he be buried back in Tacloban. His widow could not pay his medical bills, so she went to the First Lady to ask for money, and for help getting the body to Leyte. Imelda turned her down. Ninoy Aquino paid the bills and took the body on his private plane. In Tacloban, Governor Kokoy had false timetables broadcast for the funeral. Norberto’s branch of the clan, he said, “must suffer the way we suffered.”