It is nearly half way around the world from Ford Motor Company headquarters here to the Philippine presidential palace in Manila. But a recent $50 million shareholder lawsuit filed against the company claims the connections are very close indeed.
In 1973 Ford Motor, honoring an earlier commitment made by Chairman Henry Ford II, broke ground on a $35 million automobile stamping plant on the Bataan Peninsula in a specially created tax-free manufacturing zone across Manila Bay.
The timing was fortuitous for Philippine President Ferdinand Marcos. He had imposed martial law in September 1972, and, in response to criticof his policies which clamped down hard on civil liberities, marcos was able to point to large business investment including Ford, as proof that his law and order philosophy was creating the investment climate needed to bring in foreign manufacturers and help his country prosper.
Ford Philippines Inc. recently reported that the stamping plant has lost $17 million through 1977, but had gone into the black in the first half of 1978 to the tune of $1.1 million on $10.2 million in sales.
John Sagovac, president of the Ford subsidiary, which also includes a separate auto assembly plant and a local distributorship, said there had been consideration given earlier this year to closing down the Philippine operations entirely, but now the company was planning to invest an additional $4.3 million in an expansion program.
In the context of Ford's $40 billion in worldwide sales, the Philippine operation is small potatoes.
But the Ford Philippines stamping plant has now become the subject of the latest and the most serious of a number of allegations contained in a $50 million shareholder lawsuit brought by New York attorney Roy Cohn that alleges various misuses of funds by the company and its chairman.
One charge in the suit already alleges that Henry Ford II himself authorized a $1 million bribe in 1975 that was paid to an Indonesian official to secure a $30 million ground sate lite contract - a charge denied by the company.
But in a unique reverse twist, Cohn recently amended his suit to allege that in the case of the Philippine stamping plant, which he labeled an "improvident investment," the bribe went from the Philippine government to Ford officials.
If proven, that would make it the first case, in the long series of corporate foreign payoff incidents, where the money went from a government to a company.
Specifically, according to the suit, "an improper cash payment of approximately $2 million was made by the highest officials of the Philippine government to the defendant, at whose direction said improvident investment was made."
The wording seems deliberately ambiguous as to who paid $2 million to whom. Besides Ford, defendants include, the company, 19 directors and numerous other entities.
Privately, the entire Cohn suit has Ford officials fuming, and there has been a strong move to rally around the chairman.
Ford's net worth is said to easily exceed $250 million. His salary and bonus from Ford Motor last year exceeded $992.000. And if dividends on his company shares are counted, his total Ford company income last year topped 5 million dollars.
"To say you have an eyewitness and won't say who it is, is like saying you have in your pocket a list of Communists in the government, but won't disclose the names," said one company official.
This was a direct allusion to Cohn's work as an aide to the late Sen. Joseph McCarthy during the Communist witchhunting days of the early 1950s. And in fact the epithet "McCarthyite" is frequently used by Ford officials to characterize the entire Cohn suite.
Ford himself responded when the Cohn suit was initially filed in May (before the Philippine allegations were added in) that "I have never at any time accepted any payoff or kickback from anyone."
Cohn in turn claims he is being smeared by the company, and he says that he has the case "cold and hard." He denies that the case represents a personal attack on Henry Ford - as the company alleges - but says it is merely a first step in a move away from a criminal practice and toward one oriented to business cases. "These are allegations which under oath will either be proved or not," said Cohn in a telephone interview.
The case has led to lively speculation in legal circles about who is supplying Cohn with information and there has been some conjecture that Ford's now estranged wife of 13 years, Cristina Vettore Austin Ford, has played a part. But there has been no evidence that Mrs. Ford played a role in the decision to build in the Philippines or has supplied Cohn with information.
Divorce proceedings between the couple were filed last December. Further fueling the speculation is Mrs. Ford's well-known friendship and frequent jet-set partying with Philippine First Lady Imelda Marcos, sometimes known as the "Iron Butterfly."
Given the gossip, Cristina Ford recently felt compelled to issue a statement through her lawyer denying that she has been providing any adverse information against her husband, or that there is in fact any to provide. She called his business behavior "beyond reproach."
Cohn admits that he and Cristina are good friends, but says that reports that he or his firm are in any way representing her in her divorce case are absurd, since this would create a clear conflict of interest with the shareholder suit.
Has she been at all helpful on the suit? "That would be a difficult question to answer," Cohn replied cryptically.
In Manila there have long been unsubstantiated rumors that Imelda Marcos cultivated the friendship of Cristina Ford in part to get her husband to okay the Philippine investment, reports special Washington correspondent Bernard Wideman from Manila.
The close friendship of Imelda Marcos and Cristina Ford has been well documented in the Celebrity pages of magazines and newspapers since the two met in early 1971.
William Bourke, now executive vice president of Ford's North American automotive operations, said he introduced the Fords to President and Mrs. Marcos in early 1971 when Bourke was president of Ford Asia-pacific Inc. and the Fords were visiting the Philippines. It was at the time that discussions were intiated about the Philippine stamping plant, said Bourke.
In October 1971, Mrs. Ford was the guest of Mrs. Marcos in her tent at the shah of Iran's lavish $100 million celebration of the 2,500th anniversary of the founding of the Persian Empire at Persepolis. In 1974, Imelda Marcos was the target of substantial criticism for flying Cristina Ford and other jet-setting luminaries, supposedly at government expense, into the Philippines for a birthday party for herself at her beach house.
"Marcos was eager to show his people and the world that martial law could attract investment, and the single biggest investment at the time was Ford's, said Raul Mangiapus, a former Philippine Foreign Minister and leader of the Marcus opposition who now lives in exile in the U.S.
Manglapus says he was aware that Ford Motor initiated discussions about the factory in 1971, "but the investment was not put in until 1973," he said. "And since this was the largest single investment at the time, it enabled the Marcos administration to bring its graph of foreign investment way up in 1973 and to say that its law and order government had attracted investors."
Manglapus said he had no direct evidence that any improper influence was used to attract the factory, though it was a great value to the Marcos regime, and said he had not heard about allegations a bribe until the allegations were made in the Cohn suit. But he told a story that he said indicated the ability of Mrs. Marcos to influene the actions of Henry Ford II through Cristina.
When the Philippine opposition leader arrived in the U.S. in 1972, following the declaration of martial law, he was able to obtain a $12,000 fellowship from the Ford Foundation to take part in the Cornell Southeast Asia Program.
Some months later after the fellowship was already approved he heard that Henry Ford himself contacted the directors of the Ford Foundation about the grant to Manglapus.
The Ford Motor Co. confirmed that in 1973 Henry Ford "did receive an inquiry on Mr. Manglapus and his relationship with the Ford Foundation. He simply referred the inquiry to the Ford Foundation and he did not in any way try to interfere with the foundation or Mr. Manglapus."
A spokesman for the Ford Foundation also confirmed the inquiry from Henry Ford about "what the grant was all about."
"It was not unusual," said the spokesman, although the grant constituted only $12,000 out of total disbusements that year exceeding $100 million. "We then gave Ford the details, and there was no chance in the grant." The spokesman insisted that the inquiry was "not uncommon and did not constitute any interference." But Manglapus found it curious that his fellowship was personally reviewed by Henry Ford.
In late 1976, Henry Ford quit his seat on the multibillion dollar foundation, which his grandfather had endowed, leaving with a stinging letter that listed a variety of complaints, including the charge that "the foundation is a creature of capitalism" but that "it is hard to discern recognition of this fact in anything the foundation does."
The Ford Motor Company denies that the timingon its decision to go ahead with the Philippine auto stamping plant had anything to do with either pleasing the Marcos regime. According to a statement: "Ford's decision to establish the Philippine stamping plant and the timing resulted from the Philippine Board of Investment's formulation in December 1970 of a progressive car manufacturing program. This required establishment of minimum levels of local content as a condition of remaining in the Philippines.
"In January 1972, Ford submitted a proposal to construct a stamping plant at Mariveles. The board of investments in April 1972 announced that Ford would be allowed to participate in the progressive manufacturing program, starting Jan. 1, 1973. Ford broke ground for the stamping plant in March of 1973."
Bourke, who formerly headed Ford's Asian operations, noted when asked about the plant's lack of profitability that it had only been completed in 1976, and that to start registering profits after two years was a very good record.
Asked why Cohn would make such allegations and bring such a suit, the Ford executive vice president for North American operations joined other Ford officials in questioning Cohn's motives and charging him mainly with trying to seek the limelight.
"There's no better known industrialist in the world than Henry Ford II - he's an extremely powerful man and a titan of his time," said Bourke. "And here giant-killer Roy Cohn comes along who thrives on publicity and controversy - the more controversial the better, he loves it," said Bourke.
In court, Ford, through its outside law firm of Hughes, Hubbard & Reed, has also attacked the motives of the suit rather than the substantive allegations - which also include charges that Ford practiced nepotism in handing out contracts, had the company pick up the upkeep tab on his New York City apartment, and took a $750,000 bribe from the Canteen Corp. For granting it exclusive vending concessions at Ford factories.
A May 15 filing to have it dismissed called the Cohn suit "a lawyer's lawsuit masquerading as a shareholder derivative action." It noted that the law partner trustee that Cohn was representing owned only 10 shares of Ford stock.
Cohn, the filing said, "has engaged in a campaign to smear the company, its chairman and directors with extrajudicial publicity, and to promote his own name."
If Cohn has been seeking publicity through the lawsuit, the Ford Motor Co. has seemed willing to provide him with a platform.
Henry Ford took what for him was the unusual step of holding a full-dress news conference and issuing a detailed denial of the charges when the Cohn suit was first filed in May.
At the Ford Motor annual meeting on May 11, Ford reiterated his detailed defense, but was subjected to an hour of prosecutorial grilling from Cohn who arrived with a sensitive letter Ford had sent to the Justice Department concerning a grand jury investigation into possible Indonesian payments.
While most of the charges and counter-charges in this unusual suit have so far been conducted in public forums and the press, there are Justice Department, Securities and Exchange Commission, and Internal Revenue Service investigations into various allegations contained in the suit.