PNoy seems uninformed of new anticorruption weapons

Frankly Speaking
By Frank Wenceslao

Since I’m emailing President Aquino or furnishing him copy of my emails regarding the OMB-PCGG-PAMUSA, now PCGG-PAMUSA Cooperative Framework (“coop”), I was taken aback when he said, reported in the Inquirer.net, that he’s asked the Inter-Agency Anti-Graft Coordinating Council (IAAGCC) to convict Janet Lim Napoles hopefully before his term ends. The question that crossed my mind was who could’ve ever resurrected that dinosaur and gave it a new name? Inter-agency councils, committees or task forces against
corruption failed before and the IAAGCC will be the same.

The coop can do what the President wishes, or convince Napoles to opt for plea bargain. The coop is narrowed between PCGG and Pamusa to simplify their interaction, more so in funding its operation knowing full well the Office of the Ombudsman (OMB) is short of funds with the number of corruption cases brought to it and those it must act on motu proprio. Besides, the Ombudsman is doing quite well on its own, e.g. nailing ex-CJ Renato Corona and indicting Roberto Ongpin both of whom when sued by the coop in the US would probably be convicted based on owning assets the US Department of Justice defines as coming from “a process or series of actions through which income of illegal origin is concealed, disguised or made to appear legitimate (main objective); and to evade detection, seizure and taxation.” So, what’s the need for the IAAGCC which isn’t different from the Presidential Anti-Graft Commission and others like it in the past that invariably failed to convict anybody guilty of corruption, let alone a big-fish like Napoles.

I firmly believe Napoles and other “big fishes” will be convicted if the President would see to it that the PCGG-PAMUSA coop is activated and put into operation soon. This only requires PCGG’s corporate act that can be done any day of the week. At the risk of repeating myself several more times, the recovery of Marcos’ and cronies’ remaining ill-gotten wealth and the retribution of perpetrators of acquiring illicit assets from corruption after the Marcos regime can be hastened, some perhaps concluded before the President leaves office by resorting to the “US National Strategy to Internationalize Efforts Against Kleptocracy” (“US strategy” in short) that gives “teeth” to the UN Convention Against Corruption (UNCAC) and other international cooperation agreements against corruption (ICAACs).

Napoles et al. like Imelda Marcos, Gloria Macapagal Arroyo and others are hoping to be free after the President leaves office but would be greatly disappointed. Under the said US strategy they could be sued in the US like former Ukrainian PM Pavlo Lazarenko who fled to the US to escape the ire of his people but was arrested in San Francisco, tried for violation of US laws, e.g. embezzlement of public funds and money laundering, and now serving a 9-year jail sentence in a federal prison. Former Peru’s President Alberto Fujimori who escaped to Japan but made a mistake to visit Chile that agreed to extradite him back to Peru. Fujimori was tried for human rights violation, corruption, embezzlement of public funds, etc. and sentenced to over 30 years in jail despite the fact that his daughter is a leading member of Peru’s Congress and the losing candidate for president in the last Peruvian elections.

Alfonso Portillo, ex-Guatamala’s president, escaped to Mexico and fought his extradition to the US for several years until finally extradited last June to face charges in New York for corruption and money laundering and may follow the footsteps of Ukraine’s Lazarenko to a federal prison. There’re several other examples including multinational banks and corporations that opted to be fined billions of dollars to stop US investigation of violation of the Foreign Corrupt Practices Act (FCPA) and related laws such as anti-money laundering, conspiracy, obstruction of justice, etc. Only Filipino kleptocrats are able to run for office and be accepted by
Philippine society as though they were only cited for traffic violation.

The FCPA punishes a foreigner whose illicit income from the proceeds of corruption in the Philippines is used to acquire US real estate and other properties. FG Mike Arroyo’s and GMA’s acquisition of the now famous 5-story San Francisco commercial building when there’s no way they could afford it with legitimate income; Mr. and Mrs. Mikey Arroyo’s Foster City, CA mansion; Mr. and Mrs. Dado Arroyo’s upscale condo at Gramercy Towers are incontrovertible evidence of violating the FCPA and related laws. Regardless of having been sold to other parties the fact that US crimes have been committed depends on whether or not the statutes of limitation apply; however, under RA 1379 the properties that were unlawfully acquired are
subject to forfeiture to the state which is not subject to any statute of limitation.

The Arroyos must first pay the taxes due on the funds they used to acquire the properties and then return to the Philippine Treasury the proceeds from the sale of the properties which are forfeitable under RA 1379. This is the most difficult problem Napoles and others like her face from the properties they acquired from unlawful proceeds of corruption in the Philippines, USA and other countries, which the DOJ and Ombudsman should turn over to Pamusa to pursue by virtue of the PCGG-PAMUSA coop.

Sen. Lito Lapid’a wife, Marissa, found out nothing can be hidden from US investigators. In this regard, the same in other countries where the US is assisted by their counterparts. If Marissa, for instance, lied about her
personal account that actually was a joint account with Sen. Lapid with a balance of over $159,600 and Pamusa asks the FBI to access the account in the US Department of the Treasury’s Financial Crimes Enforcement Network’s (FinCEN) databases, the depository of all financial transactions in the US, Marissa most probably would’ve been fined more than the $159,600 found in her personal bank account with “restructured” deposits for each not to exceed $10,000 or the bank would advise FinCEN about it in a “suspicious account report” (SAR) and Marissa would’ve been in a watch list. She’s fined $40,000 for admitting to smuggle this amount and $159,600 her total deposit when her plea bargain was approved.

But the best news to President Aquino that potentially could be his greatest legacy is the probable eradication of big-time public corruption before he leaves office. I had the privilege to be referred by a US Senator’s staff
member to a senior justice department official who agreed to be interviewed by me. The official’s concern is the interface of the US strategy to bring the fight against public corruption across national borders mandated by the UNCAC and other ICAACs particularly the one in last June G8 Summit in Northern Ireland against tax evasion and safe havens where multinationals’ profits are diverted to evade taxes due the country where the company has established its legal domicile.

Consequently, enormous amount of funds on which taxes should have been paid are locked in with equally enormous amounts of money of drug traffickers and kleptocrats like Marcos et al. denying many countries of needed revenue which has caused serious fiscal problems to Greece, Spain, Ireland, Italy, Portugal, etc. Unable to sustain their welfare programs these countries have resorted to very tight austerity programs resulting in violent street demonstrations destabilizing governments.

The G8 nations agreed the remedy is when individual countries adopt a unified tax system enabling automatic exchange of tax information that will expose discrepancies between where multinationals earn their profits and pay their taxes. Naturally needed to make the remedy succeed is close cooperation between the BIR and anti-money laundering mechanism (AMLC) to track unusual movement of large amount of funds for instant reporting to the anticorruption agency (OMB) and exchange of tax information between the BIR and other national tax authorities.

Interfaced with the updated guidelines for the US strategy to internationalize efforts against kleptocracy (see: Policy and Legal Frameworks of our attached Proposal for Service Contract) my interviewee said without fear of contraction that big-time public corruption like smallpox is on its way to eradication because perpetrators will soon have no place to hide illicit gains. Let it be emphasized that an important part of the agreement is for the eight (G8) richest and most powerful nations on earth to close down safe havens used to evade taxes and hide proceeds from big-time corruption.

At this juncture, let me clarify it will be futile to defy the international agreement to stop tax evasion and close down safe havens used to evade taxes and hide proceeds from corruption when interfaced with the US strategy to internationalize efforts against kleptocracy whose first of six guidelines six under the proposal’s “Policy and Legal Frameworks” reads, as follows:

“First, the US Government (USG in short) will enhance its work of launching a coalition of international financial partners, the public and private sectors, to pinpoint best practices for identifying, tracing, freezing, and recovering assets illicitly acquired through kleptocracy. The US will also work bilaterally and multilaterally to immobilize kleptocratic foreign public officials using financial and economic sanctions against them and their network of cronies.”

Referring to Marcos’ funded foundations which are safe havens, so they thought, for a good part of his ill-gotten wealth the PCGG couldn’t touch, my interviewee said being a US corporation Pamusa may petition on behalf of the PCGG the USDOJ to help recover Marcos’ wealth hidden in his funded foundations. The USDOJ will ask its counterpart in the country where a foundation is domiciled which will be investigated if its organizers had the resources and standing to fund the foundation’s purposes and objectives.

While making the final touches of this column, I read in the Wall Street Journal (Aug. 24) that last Aug. 16, Edgar Paltzer, 57 years old, a Swiss lawyer formerly with the Zurich firm of Niederer, Kraft & Frey, pleaded
guilty in federal court in New York to a single count of conspiracy. He faces up to five years in prison plus fines, but experts said, because of his cooperation, he’s likely to receive a far shorter prison sentence, or
none at all. He is scheduled to be sentenced in February 2014. With the Paltzer indictment and plea deal, says Bryan Skarlatos, a criminal tax lawyer with Kostelanetz & Fink in New York, “the government is showing how
determined it is in its pursuit of undeclared offshore accounts.”

The WSJ added that US crackdown on undeclared offshore accounts greatly intensified after the Union Bank of Switzerland (UBS) admitted in 2009 that it helped U.S. taxpayers hide money abroad and paid $780 million to settle criminal charges. Since then, more than 38,000 taxpayers have entered an IRS limited-amnesty program for people who concealed offshore accounts. The government has collected more than $5.5 billion from them, with an estimated $5 billion still to come, and Switzerland’s oldest bank, Wegelin & Co.,
closed down after pleading guilty to helping U.S. taxpayers hide more than $1.2 billion.

Finally, with regards to Marcos funded foundations abroad that the PCGG couldn’t touch, Pamusa can petition on behalf of the Philippine Government the USDOJ and its counterpart where a foundation is domiciled to investigate if it’s really a safe haven used by the Marcos family for their ill-gotten wealth and if donations it has received were not from fictitious persons and corporations without a taint of illegitimacy. My interviewee also said that US properties whose registration is in the names of children, relatives, associates, surrogates, dummies, and other than the true owner are not accepted per se anymore. Registered owners are required to prove they had the resources to afford buying the property at the time of acquisition, or else it’s frozen, seized and confiscated to be returned to the country of the rightful claimant.

Mrs. Imelda Marcos and children should start thinking how to negotiate settlement of the different Marcos foundations’ assets which are bound to be frozen, seized and returned to the Philippine Government especially if the foundations are in Switzerland, Lichtenstein, or other safe havens of ill-gotten wealth the G8 nations want to close.

Norwalk, CA 82413