Screw the Lapdogs and Out with the Big Fish|
19 January 2004
'A man's character is his fate.'
The Emperor's Club
'The character of the nation's leader is the fate of the nation.'
Dona Aurora would visit Dona Mary, crying at the gravity of the situation. It would be terribly humiliating for the Filipinos if an adequate face-saving alternative was not found. The Americans would not settle for some lowly scapegoat. He had to have stature to prove that the 'big fish' had been caught and that justice had prevailed. And so, in spite of Dona Mary's objections, Don Felipe took the fall and served his time at a US penitentiary. The least that the President could do was to use his influence to ensure that his friend, Don Felipe, served the minimum possible term.
As described by the Author's grandfather, who was a close associate of Don Felipe
Every Filipino today has a sense that he can get away with just about anything under the sun in his own Country. From petty infractions like littering and driving through a red traffic light to more serious violations like drug abuse, tax evasion, arson, murder and, yes, plunder. It appears that any illegal act committed in the Philippines can be sorted out one way or another through extra-legal measures. Everyone, it seems, can be made to cooperate either persuasively or coercively. Trading favors, bribing with hard cash and threatening life and limb have become the order of the day. Our institutions for justice seem helpless with a few genuine heroes overwhelmed by waves upon tidal waves of corruption, conspiracy and unscrupulous legal and political maneuvers. At best, we have evolved into a Society that has settled for 'lapdog justice'�where the real crooks are never held accountable for their crimes. Instead, we have been lulled into lower and lower thresholds of lackeys and small fries.
At the outset of our efforts at self-determination as a Nation, a grievous injustice was committed at the pinnacle of power, which, to this day, has not been rectified. It is no wonder that our Nation has fallen into a vicious and nagging cycle of injustice in ever so graver degrees�much like the psychological aberration of a wife beater is typically intensified from father to son and so on. However, our history as a sovereign Country is brief. We might still recover what we have lost not too long ago by reversing the trend of injustice of a few significant cases in our recent history.
* * *
Excerpts from United States v. Buckner et al. No. 166
Circuit Court of Appeals, Second Circuit
January 8, 1940
Clark, Circuit Judge
William P. Buckner, Jr., and William J Gillespie were convicted of using the mails to defraud. They, together with Felipe Buencamino, were also convicted of conspiring to use the mails to defraud.
The charges grow out of the activities of a bondholders' protective committee, headed by Buckner and Gillespie, for bonds of the Philippine Railway Company. They attempted to secure payment or redemption of the issue from the government of the Philippine Islands, where Buencamino was a member of the Assembly and a political leader.
Bonds of the Philippine Railway Company in the amount of $8,549,000 had been marketed in this country and abroad thirty years ago with the active assistance of the United States and Philippine governments. The insular government guaranteed the payment of interest until maturity, July 1, 1937. Success never attended the enterprise, and as the date of maturity approached it became apparent that payment of the principal would be defaulted.
Bankers' Trust Company, trustee under the mortgage indenture, called a meeting of bondholders for February 26, 1937. The defendants Buckner and Gillespie had attended the meeting on behalf of investment houses with which they were associated; together they represented just over 250 bonds of the 8,500 outstanding, and of which 1,800 were participating. Nevertheless, Buckner and Gillespie were both elected membes of the committee. Subsequently the committee designated Buckner its chairman, and Gillespie its vice-chairman, by a vote of three to two, after Buckner and Gillespie had met and persuaded the committee member Walden so to cast his decisive vote.
The public character of the original flotation of the bonds and the active encouragement lent to the enterprise by the Washington and Manila governments made the prospects favorable for some sort of legislation by which the public treasuries might come to the assistance of the bondholders. It was to this end that the committee directed its efforts. A law firm of high standing was retained as counsel, and ways and means were discussed for financing committee expenses, bound to be heavier than usual because of the contemplated lobbying activities. Members of the committee could not agree as to the restrictions under which a bank account was to be opened, and at least one member of the committee, Winkler, was persuaded by Buckner and Gillespie to sign a resolution opening an account only after insertion of a condition that all drafts be countersigned by counsel. This condition was then blotted out of the resolution without Winkler's knowledge, and the account was opened with Bank of The Manhattan Company by Buckner and Gillespie in the name of the committee, their joint signatures to be sufficient for all payments from it.
Letters signed by Buckner were then mailed to bondholders holding $10,000 or more of bonds, requesting donations for expenses. Though the solicitations were written on the committee letterhead, no committee meeting had ever approved their emission. The two members of the committee who had originally opposed the selection of Buckner and Gillespie as its officers, together with the counsel, resigned at early stages of this history�one member within a month of its organization, because of his dislike of what was going on, and the other Winkler, and the counsel, soon after the solicitations and immediately as a consequence of the ignoring of their objections thereto.
[Note: At this time, the stage was set for Buckner and Gillespie to receive funds from bondholders. Apart from the spurious circumstances of the solicitation of funds, which resulted in the resignation of two of the members of the committee, Buckner and Gillespie henceforth exercised carte blanche use of such funds.]
The first letter of solicitation was dated July 2, 1937. During July and August some $7,000 was received from bondholders. Buckner and Gillespie made frequent trips to Washington, and in the normal way secured the attention of a few members of Congress. Occasionally acquaintances of the Broadway night club area were brought to the Capitol, presumably to assist in entertaining the political luminaries upon whom the committee was working. These efforts were crowned with some success, for a senator introduced a resolution providing for an investigation by the Attorney General into the Government's moral obligation to alleviate the plight of the bondholders. Committee funds were used not only to finance these legislative expeditions, but also to pay for local entertainment enjoyed by Buckner and Gillespie alone. Numerous committee checks were introduced in evidence, endorsed by hotels and night club proprietors; several of those present at the frequent summer evening gatherings testified that none of the events which there transpired had anything to do with Philippine Railway Bonds.
By October, Buckner had planned to fly to the Philippines with $5,000 borrowed on the credit of the committee. Before he left he agreed to furnish a speculator, Breen, with inside information as soon as a favorable redemption agreement was reached in Manila. He and the speculator were to divide whatever profits could be made by trading in the bonds. Gillespie remained in New York, ready to receive messages from Buckner and offer information to other traders, again in exchange for a share of the profits.
In Manila, Buckner met the defendant Senator Buencamino, a powerful figure in island politics. Buencamino agreed to lend his assistance to redemption legislation, in return for a promise of $50,000, which the prosecution insists was a bribe, but which is defended as legitimate counsel fees and expenses. The prosecution also attempted to prove that Buencamino knew of Buckner's prospective market operations, and was to share in the profits which Buckner would receive for furnishing tips as to the possibilities for redemption of the bonds.
When Buckner returned to New York he found that his trading arrangements had never come to fruition. There was no money left, and Buencamino demanded payment before proceeding. Together with Gillespie and a man named Turner, Buckner peddled his proposition around the financial district, offering inside information in return for temporary financing and a share of the speculation profits. Almost immediately the market in the bonds jumped from 11� to 30�, but collapsed again when the president of the Philippine National Bank gave a newspaper interview denying the rumored redemption. The other members of the committee, including new members as well as new counsel, were exceedingly disturbed by this flurry and a subsequent investigation by the Securities and Exchange Commission. After several meetings they compelled Buckner to send out a report, dated April 5, 1938, to all bondholders on their progress to that time, and then, over the opposition of Buckner and Gillespie, voted to dissolve, so that a new committee might be selected by the bondholders. No new committee was ever formed, and Buckner and Gillespie continued to hold themselves forth as chairman and vice-chairman respectively.
Rebuffed in local financial quarters, Buckner and Gillespie sought backing in Hollywood and London. The Holly wood adventure, in which movie stars were approached through a man named Hyde, contributed little except to add to the glamour and publicity attendant upon the subsequent trial. In London they had better luck. A London financial house, after negotiations on both sides of the ocean, agreed to accumulate two million dollars' worth of the bonds as soon as it could be assured that the redemption legislation was reasonably certain of enactment. Profits were to be split with Buckner and Gillespie. To furnish the London house with the necessary assurance, Buckner tried to lure Buencamino from Manila to London. Buencamino held out for payment of $50,000 before sailing, remained untempted by $5,000 borrowed at Niagara Falls and deposited in Montreal to his credit, and finally refused to come at all. The London house withdrew, and Buckner, returning to New York, was arrested as he stepped off the ship.
The Grand Jury indicted Buckner, Gillespie, Buencamino, Turner, and Hyde. On their trial, Turner and Hyde were found not guilty by the jury; Buckner and Gillespie were found guilty on all counts, seven for misuse of the mails and the eighth for conspiracy; while Buencamino was found guilty on the eighth conspiracy count, and not guilty on the fifth count, the only other count upon which he was tried. All the defendants convicted were sentenced to imprisonment and fined on the conspiracy charge.
The proof against Buencamino. The defendant Buencamino contends that the counts against him should have been dismissed because of failure to connect him with the conspiracy. He was convicted of conspiracy only. One of the many letters to and from Buencamino introduced into evidence, that of July 30, 1938, from him to Buckner, was alone of sufficiently sinister import to justify the jury in concluding that Buencamino was connected with the scheme to defraud the bondholders. That letter was in response to Buckner's attempts to lure Buencamino to London. It reads in part:
'Agreeable to your request I am sending you this air mail letter with reference to your desire that I go to London to carry out our preliminary understandings. * * * I want to warn you that I will be unable to carry out our understanding unless at the time you desire me to proceed either to New York or to London you pay $50,000.00 here in Manila. * * * My friends here, whose cooperation I need to push through the program * * * will not do anything on a contingent basis. They feel that they have done enough in the past to show their willingness to cooperate and have an idea that you must have made a profit during the last flurry in New York. * * *'
There could have been only one reason for going to London; to assure the London house which was going to speculate in bonds on secret tips furnished by Buckner and split the profits with all the conspirators, that the redemption legislation would be passed. Buencamino must have known of the deal with the London house; that deal was the essence of the scheme to defraud; the quoted portions of the letter indicate that Buencamino knew of and assisted in the conspiracy. At any event, the jury was amply justified in so concluding. Other evidence, both oral and written, tended to the same conclusion. And when once a connection was shown between Buencamino and the conspiracy, evidence of the earlier activities of Buckner and Gillespie during the spring and summer of 1937, tending to prove the origin and existence of the conspiracy, was admissible against Buencamino.
* * *
To put the bribery figures in perspective, one would have to determine the purchasing power of the US dollar in 1938 today (2003). Based on the Consumer Price Indexes (CPI) of the US Department of Labor, Bureau of Labor Statistics, US$1.00 in 1938 would have about the same purchasing power as US$13.03 in 2003. As such, the first 'up-front' tranche of the bribe amounting to US$50,000 in 1938 would be equivalent to roughly US$650,000 today or nearly P36 million (at an exchange rate of P55.00 = US$1.00). Chum change under today's standards of bribery in the Philippines. However, let's not forget the second 'success' tranche of the bribe�the order of magnitude of which we can deduce from the secondary market pricing of the Philippine Railway Company (PRC) bonds at that time.
The PRC appears to have defaulted on the principal payment of its bonds upon maturity on July 1, 1937. As such, the PRC bonds were priced at roughly 12 cents to the dollar in 1938. Assuming Buckner et al were (a) successful in having an interim or 'bridge' financier purchase most all of the distressed PRC bonds at 12 cents to the dollar and (b) managed to impute a price of 30 cents to the dollar by way of the so-called 'redemption legislation' (not an unreasonable price assumption considering the comparable jump in the price of the PRC bonds based on a rumored redemption), then the profit would have been in the range of US$1,538,820 as follows:
A. Proceeds from Redemption Legislation at 30 Cents to the Dollar
US$8,549,000 x 0.30 = US$2,564,700
B. Purchase Cost of Distressed PRC Bonds at 12 Cents to the Dollar
US$8,549,000 x 0.12 = US$1,025,880
C. Profit of 'Bridge' Financier (A � B)
US$2,564,700 � US$1,025,880 = US$1,538,820
Assuming further that the profit was split in half between the funder and the 'arrangers,' then Buckner et al would have had roughly US$750,000 to divide among themselves. US$750,000 in 1938 would amount to roughly US$9.8 million or P500 million in 2003. Again, not exactly a compelling figure by today's standards but enough to bait. After all, life was much simpler in 1938.
More than the bribery scheme and the amounts involved, which seem all too commonplace in Philippine politics today, the long-standing significance of the Buckner-Buencamino case is two-fold.
First, while other anomalies in government were probably committed at that time, none were as grand in scale, as documented and as closely linked to the pinnacles of power. Thus, the Buckner-Buencamino case serves as the precedent to institutionalized corruption in Philippine government�the primordial 'slippery slope' which has regressively led to the rapacious and pervasive bureaucratic kleptocracy in our midst today.
Second, notwithstanding the existence of documents such as the one from which the above excerpts were taken to memorialize the exaction of justice on the conspirators, the Buckner-Buencamino case also serves as the prime example of justice denied to an entire fledgling Nation�when institutional integrity and reinforcement were most critical in molding the core and character of our Nation. The case represents the erosive underpinnings of our Country's foundation, establishing a sub-standard threshold of public accountability, which now appears increasingly beyond repair.
Whether or not the author's grandfather had anything to gain by privately discussing with family members the 'blessing' and involvement of President Quezon in this grand bribery scheme, the notion of exposing President Quezon did not appear to cross his mind. If Don Felipe, one of the closest personal friends of President Quezon, was willing to take the rap, then why should anyone get in the way of this discreet arrangement. It was a fact and he left it at that. Surely others knew. Their disposition on the matter was probably similar to the attitude of the author's grandfather. The political structure was inclined to be lenient to the Presidency. The overriding culture, however skewed and short-sighted, was to save the face of our People. It came to pass that one of the cornerstones of our Nation had been cemented in deceit. The Father of the Republic was a coward and an SOB of the first order, conveniently and shrewdly hiding behind the Nation's quest for self-determination. Yet, he stands today in Philippine history, glorified and honored, while another individual assumes an inordinate share of defamation�albeit tucked away under the footnotes of history. Hence, the insidious culture of the lapdog had become our Nation's standard of public accountability.
History Repeats Itself
The Case of the Dictator
Fast-forward Philippine history to its neo-dark age. Few rational individuals would argue that government corruption, cronyism and plunder were elevated to unprecedented heights during the Marcos Dictatorship. Yet, until today, nearly twenty years after the Dictator and his family were puked out of the Country, his wife and children are locally settled in luxury, callously maintaining the Dictator's innocence in plundering the coffers of the Country. Never mind the outlandish claims that the Dictator was a fantastic businessman who multiplied his net worth exponentially. Never mind the blatant lies that they live on the generosity of friends. Never mind the many cronies who have agreed to return and indeed have returned some portion of their stolen assets to the government. Never mind the tenacity in which the Dictator's heirs and their various fronts persist in obstructing the resolution of numerous cases of ill-gotten wealth. Never mind the power and wealth they continue to flaunt with impunity. Will these people ever be brought to justice . . . real justice or have we as a Nation become so desensitized to settle on $683 million of chum change?
The Philippine Government's retrieval of the Dictator's $683 million ill-gotten wealth, while indeed a welcome relief, should NOT constitute relief for the Dictator's heirs. The retrieval of this magnitude of stolen money only serves to prove the absolute guilt of the Dictator in ransacking the Country's resources and should therefore constitute the single most important step at righting a tremendous wrong. The recovery of $683 million from the Dictator represents only the conviction of Don Felipe. Like the Buckner-Buencamino case, which did NOT achieve full and proper closure (as it failed to mention, much less convict, President Quezon), the $683 million in the hands of government does NOT settle the matter with the Dictator or his heirs. If the Supreme Court could allow Banco Filipino to pursue the heirs of Jobo Fernandez for his alleged abuse of position as the former Governor of the Central Bank, then shouldn't the Philippine Government have the right to pursue the heirs of the Dictator, who has been deemed guilty of one of the grandest heists of Philippine history? Shouldn't the gravity of the Dictator's offenses against an entire Nation demand an extraordinary punishment upon his heirs? The intent is NOT to be vindictive or punitive per se upon the Dictator's heirs. These are mere casualties in the natural course of justice and are secondary to the more critical goal of revamping the character of our Nation. What was inextricably lost in the Buencamino-Buckner case over half a century ago (i.e., the priceless opportunity to establish the highest standard of public accountability) could be partially recaptured today. In so doing, we might begin to replace some of the defective building blocks of our Nation. It starts by bringing the Dictator's heirs to justice with utmost tenacity on the part of the Philippine Government.
The Case of Ninoy's Assassination
In the case of Ninoy Aquino's assassination, our Nation continues to flounder on the question of who was really behind this brazen plot. In a culture where secrets are virtually non-existent, it is NOT acceptable that we cannot identify and convict the masterminds of Ninoy's assassination. The men who pulled the trigger at the tarmac continue to languish in prison, silent or unheard. Surely, their families are cared for�probably better than these men could ever have provided as career policemen or military officers in government�in exchange for their loyalty. The Agrava Commission only went as far as General Fabian Ver, the quintessential lapdog who would budge under specific instructions from above. Like Don Felipe, General Ver was the convenient fall guy. Like the Buckner-Buencamino case, the conclusions of the investigations of Ninoy's assassination were NOT definitive.
Our failure to credibly resolve Ninoy's assassination by way of identifying and convicting the masterminds leaves a gaping void in the psyche of our Nation. The baggage appears to have been relegated to oblivion, yet it weighs us down like an extreme aberration within the depths of our subconscious. The disorder is simple enough but overpowering to the point of destroying our Nation's core. No matter how brazen the offense, no matter how grave the social cost, justice will not only be denied but will be twisted beyond recognition to exacerbate the torment. It is no wonder that when a high-profile crime is committed in the Country today, Filipinos appear content in wading through the cesspool of misinformation surrounding such crime without achieving closure by way of definitive convictions. We seem resigned to forget or perhaps to conveniently deposit such open issues to the same baggage compartment in which we had long ago stowed the case of Ninoy's assassination. Today, our Nation's psychological baggage has evolved into a cancerous tumor that threatens to engulf and mutate whatever good and decent is left. Unresolved, Ninoy's assassination remains a severe National trauma, which will continue to fester and regressively numb each and every Filipino into resignation and complacency. It is imperative that our justice system achieves truthful and complete closure through the conviction of the masterminds of Ninoy's assassination.
The Case of Erap's Plunder
In the words of Paul Bremer, US Administrator for Iraq, 'We got 'im.'
Have we really? It's been almost two years since Erap was ousted and there is no justice in sight. In fact, justice appears to be slipping right under our very noses with the very real prospect of Erap's best friend becoming the next president after May 2004. As such, we would be fortunate if a presidential pardon were granted to Erap. However, the shrewd learner of the Marcos misinformation era will instead insist on his innocence for the record. After all, a pardon, much like an amnesty, implies guilt.
For once in our history, we have the chance to convict NOT the lackey but the principal crook himself�no thanks to our illustrious Senate. Yet, our justice system has become so corroded that it appears destined to sink to depths never experienced by our Nation. In the past, we have settled for lapdogs or, in a sense, a partial or imperfect resolution of justice. Over time, we have been lulled into settling for lesser lapdogs. More and more, we face no resolution of justice at all. Tomorrow, we will be mocked with such convolutions that will spell the demise of justice altogether.
Thus, in the continuum of injustices in the scale of National proportions, the Buckner-Buencamino case started the ball rolling, which the Marcos Dictatorship elevated to unprecedented heights. However, our failure to convict and execute Erap will memorialize our Nation's greatest defeat . . . to date!
Depending on one's political persuasion, we can unearth a slew of other injustices in the scale of National proportions that have occurred during other administrations. However, it is not the intent of the author to alienate all politicians and leaders, who are necessary instruments in the resolution of the above incongruities. The author seeks a few meaningful victories that could be pivotal in transforming our Nation's character and destiny.
About the Author
The author is one of the countless disenfranchised intelligentsia of Philippine society. He is appalled at the blatant lack of accountability of Philippine public officials, past and present. He is frustrated at the state of the Philippine justice system, which is subject to manipulation and operates at a selective pace. He is helpless in facing the vindictive actions of powerful crooks, who have been placed in a negative but proper light in this article. He must therefore remain anonymous until he is no longer at risk of criminal reprisal.
Our Leaders (back)