The Philippines Charging the Unindicted Guest

By John Greenwald

When Ferdinand Marcos fled the Philippines more than two years ago, a U.S. Air Force plane flew him into comfortable exile in Honolulu. But last week American hospitality came to an abrupt end for the ousted President. In New York City a federal grand jury indicted Marcos, 71, and his wife Imelda, 59, on six counts of racketeering and diverting more than $100 million taken from the Philippine treasury into artworks and real estate in Manhattan. As sweeping as the indictment was, it covered only a fraction of the billions of dollars that Marcos is thought to have stashed away during his 20 years in power.

The charges painted a portrait of greed and corruption that began in Manila and continued in Honolulu. U.S. Attorney Rudolph Giuliani said Marcos funneled the stolen money through secret bank accounts and then used it to buy four Manhattan buildings. The indictment accused Marcos of having defrauded U.S. lenders of more than $165 million that was borrowed to finance the properties. Co-defendants include Adnan Khashoggi, the Saudi Arabian financier, arms dealer and middleman in the Iran-contra scandal, who allegedly posed as the owner of the properties to protect the Marcos interests. "This case amounted to the Marcoses and their co-defendants using their position of trust to turn the Philippines' treasury into their own treasury," said James Fox, head of the FBI office in New York City.

John Tigue, an attorney for the Marcoses, said the couple would obey orders to appear in federal court in New York by next week and would plead not guilty and vigorously contest the charges. Tigue said the Marcoses were "deeply disappointed at President Reagan's failure to prevent this treatment of a long-standing ally." The main count carries a sentence of up to 20 years in prison.

Marcos did not help his case by refusing to respond to grand jury subpoenas in recent months. That led a federal appeals court last week to uphold a contempt ruling against him and his wife for failing to provide fingerprints and other requested items. Even so, the grand jury acted only after a proposed deal between the Justice Department and Marcos unraveled late Thursday. The agreement called for Marcos to forfeit real estate, art and jewelry in exchange for having the Justice Department drop plans for the indictment. In Honolulu, however, a Marcos attorney said the Marcoses were given only a "drop-dead deal" that would have required them to plead guilty to racketeering.

When Marcos failed to respond by a 5 p.m. deadline, prosecutors decided to proceed with the case. Reagan then met with senior White House advisers and was informed that an indictment would not affect U.S. foreign policy interests. Though Reagan was reportedly worried that Marcos might have to go to jail, the President said the case "may not come to my desk at all." The remark was telling: to the Administration, the once powerful Marcos had become a pesky legal problem, and no more.

With reporting by Ricardo Chavira/Washington and Raji Samghabadi/New York