The Philippines' new finance minister disclosed today that a major mining corporation he ran for a dozen years before joining the government of President Corazon Aquino was apparently owned secretly by ousted president Ferdinand Marcos' brother-in-law.
Jaime Ongpin, the president of Benguet Corp. from 1974 until he joined the Aquino government in late February, said he made the disclosures in response to a spate of rumors and press reports about the ownership of the copper and gold mining giant, consistently one of the country's most profitable companies.
A longtime opponent of Marcos, Ongpin coined the term "crony capitalism" several years ago to describe the system under which, opposition leaders charged, relatives and friends of the former president plundered the Philippine economy.
While Ongpin made a clean breast of his role in the company, his disclosures also illustrated the tangled business relationships that bound opponents of Marcos with some of his supporters and front men.
Ongpin said he was sure that Benjamin (Kokoy) Romualdez, the younger brother of Marcos' wife Imelda and the former ambassador to the United States, was the principal stockholder in Benguet through two groups of nominees, but that Romualdez never wanted his role publicly revealed. Ongpin also divulged a proxy statement covering a May 1985 annual stockholders' meeting that showed a substantial holding by two real estate companies identified last month as fronts for Marcos.
Ongpin said the Romualdez groups recently lost control of Benguet when two banks foreclosed on their shares.
Ongpin defended his role in Benguet, in which he essentially made money for his political adversaries for more than a decade, by saying that while he long suspected Romualdez was a secret investor, he could never prove it. Until the Aquino government came to power, Marcos and his family successfully had concealed many of their investments behind nominees and dummy corporations.
The disclosures appeared designed to head off domestic criticism of Ongpin, one of the more financially conservative members of Aquino's Cabinet, before he travels to Japan and the United States this weekend to discuss loan agreements with the country's creditors.
Ongpin said he intended to sign four loan agreements in the two countries totaling more than $600 million and to push for accelerated U.S. aid disbursements. He also said he would seek to negotiate "an entirely new standby program" with the International Monetary Fund. The program would be designed to push the growth of the Philippines' gross national product to as much as 2 percent by the end of this year after a 10 percent decline during the past two years.
The finance minister has been resisting pressure in recent days from other members of Aquino's Cabinet who advocate a "selective repudiation" of foreign loans that allegedly were squandered by Marcos and contributed to the country's $26.4 billion debt. He also has been criticized by leftists as representing the same "capitalist class" that underpinned Marcos.
In addition to running Benguet with its controversial ownership, Ongpin, the brother of Marcos' trade and industry minister, formerly served on the board of a bank long identified with Romualdez. He said he now regrets having accepted that position.
Ongpin told reporters that Marcos first tried to acquire control of Benguet through two of his "cronies" in late 1971, but that the attempt failed.
In February 1974, Ongpin said, a Philippine group represented by Cesar Zalamea, a life insurance executive and later chairman of the government-owned Development Bank of the Philippines, succeeded in gaining control of Benguet by paying $9.4 million for 56.4 percent of the company's voting securities in a new share subscription. Ongpin said he initially refused the presidency of the company because he did not know the full identities of those behind the purchase by CCP Securities Corp., which described itself as a "Philippine investment banking firm."
In fact, several of Benguet's new directors were executives of companies that government investigators now identify as Romualdez holdings.
Among them was Zalamea, who arranged a $9.4 million loan from the Philippine National Bank to CCP Securities to buy into Benguet. He is fighting to hold on to his position as chairman of the controversial Development Bank of the Philippines, which ran up more than $3 billion in liabilities under Marcos by bailing out bankrupt "crony" companies.
Ongpin said he eventually was persuaded to accept the presidency of Benguet when he was promised that the new owners would not interfere with his management of the firm. He said this promise basically was kept, although he was occasionally asked by the nominees for certain favors, which he consistently refused. For example, he said, he was asked on separate occasions to name a businessman close to Romualdez as executive vice president, accept a secretary of Romualdez as a board member and "train" one of Romualdez's sons in the company.
Ongpin said the only time Romualdez personally spoke to him about the company was one morning in 1975, when a dispute had arisen between Benguet and lawyers for former U.S. owner Herbert Allen. Ongpin said Romualdez called him at home, interrupting his breakfast, to urge him to give in to Allen's people and maintain good relations with them.
"If nothing else, that confirmed it," Ongpin said of the question of Romualdez's ownership. He also said he believed Marcos was backing Romualdez in the venture.
"I can't imagine Kokoy being able to persuade the Philippine National Bank to lend him 67.5 million pesos [for the 1974 share purchase] without a little persuasion from Marcos," Ongpin said.
"I always perceived it as a Mexican standoff," he said. "They never wanted to admit they were the owners," and therefore could not show their hand by kicking him out as president of Benguet.
The head of the Presidential Commission on Good Government, Jovito Salonga, said Marcos would be charged here soon with "embezzlement and malversation of public funds" and other corruption counts to help speed up efforts to recover Marcos' assets from Swiss banks. He said criminal charges "should at least be initiated" to satisfy Swiss banking laws, although Marcos' presence would be required to proceed further.