The Paladins
Once it was proved in U.S. courts that massive gold shipments did come out of the Philippines during the twenty years Marcos was president – gold that did not originate in the Central Bank or in mines like Benguet – the remaining mystery is where did it go? To be sure, the gold was shipped covertly, usually after re-smelting in Manila by Johnson-Matthey Chemicals, using equipment Marcos stole from Robert Curtis. Before it left Manila some was re-papered by Johnson-Matthey Bank, and then made its way to buyers through the gold pools in New York, Zurich and London. Other black bullion was sold privately to Saudi princes and Middle Eastern syndicates, or to discreet groups of Europeans through Luxembourg and Liechtenstein. Documents including waybills show that some shipments went to America aboard commercial ships and planes, while others went out on CIA aircraft to Hong Kong or to an American military base in Australia. So far as anyone can tell, the gold that went to America did not end up in Fort Knox. If it did, the U.S. Government is not admitting it. So where did it go? Who was shielding and helping Marcos, other than the CIA and Pentagon? Who else benefited from all this recovered plunder? Was the leverage of the federal government used to get some of this gold bullion into private hands?
The answer is that Marcos had connections beyond the CIA, to a shadowy network called The Enterprise, a cluster of private intelligence organizations (PIOs) and private military firms (PMFs).
These were staffed by former CIA and Pentagon officers who saw themselves as Paladins of the Cold War. Many PIOs and PMFs got their start in the 1970s during shakeups at the CIA. They mushroomed in the 1980s after Jimmy Carter stirred up the anthill, and this group of strongly motivated men had to continue their careers elsewhere.
At the end of 1972, when he replaced Richard Helms as CIA director, James Schlesinger made it clear that he intended to forcibly retire hundreds of agents who were dead wood, or part of a Dirty Tricks clique under Helms long engaged in operations that violated American laws, including assassinations. When it then became known that the CIA was involved in the Watergate break-in and other domestic break-ins, Schlesinger ordered an internal investigation and preparation of a complete list of all Agency projects that might embarrass the government. The resulting 693 page report, called ‘the Family Jewels’, led to leaks about assassination programs like Mongoose, death squads like Phoenix, and other wet-work hidden by national security. Over a thousand CIA agents were sacked or obliged to take early retirement.
When Nixon resigned, President Ford set up the Rockefeller Commission to investigate CIA wrongdoing, but staffed it with hardline conservatives who would avoid revealing things that would “blacken the name of the United States and every president since Truman”. What a strange thing, as the CIA was and is the Rockefeller’s personal creation, and it is so till today. So, to put Nelson Rockefeller in charge of investigating the CIA was a joke. The real aim was not to reveal, but, rather to hide. Congressional hearings into Phoenix, the Lockheed bribery scandal, and later Iran-Contra, resulted in additional housecleaning at CIA and the Pentagon. Added to these purges were disputes between CIA officials like Ray Cline and President Nixon over rapprochement with China, and between Jimmy Carter and top military officers like Major General John Singlaub, and Air Force General George Keegan. When
Carter got rid of so many professional soldiers and spooks, he does not appear to have given much thought to what they might do to keep busy in private life. No Roman emperor would have been so careless in disbanding a legion. Many of these clever and aggressive men regrouped privately, with funding from hard-right organizations like the Birch Society, Moonies, World Anti-Communist League, and wealthy conservative tycoons. Like Santy’s Umbrella organization, The Enterprise grew into a powerful and influential network during the late 1980s. Although they were now private citizens, these men continued to have close ties to serving military officers, to top men in the CIA and the armed services.
This overlap made it nearly impossible to distinguish between official U.S. Government operations and those that had private objectives. This was especially true because so many of these individuals had long experience in covert operations, deception, and the clandestine use of government resources and secret funds. They were accustomed to working with CIA proprietaries that had every appearance of being legitimate companies in private industry but were actually Trojan Horses for the intelligence community and, by extension, for the armed forces. In fact, some of the PMFs were little more than fronts set up so that generals, admirals, and former spooks could continue to draw salaries and pensions as if they had never left government service. Many CIA agents spent years or even decades under various covers, so it was hard to establish beyond any doubt whether they ever left the Agency, or merely went underground.
A perfect example is William Casey – Casey was one of the original OSS crowd. After law school, he went to work for an accounting firm but kept in touch with fellow lawyer John ‘Pop’ Howley, who worked for Wild Bill Donovan’s law firm, Donovan Leisure Newton & Irvine. When Donovan became head of OSS, Casey and Howley joined him. Casey was John Singlaub’s case officer in the war, while Paul Helliwell was Singlaub’s direct superior. Casey also was a close friend of Allen Dulles and John Foster Dulles, worked with Ray Cline, and became involved with Lansdale as Santa Romana’s torture of Major Kojima was bearing fruit. This put Casey in a position to know a great deal about the Black Eagle Trust, and one source insists that Casey’s financial skills made him one of the key players, along with Paul Helliwell and Edwin Pauley, in implementing the Black Eagle Trust under the guidance of Robert B. Anderson and John J. McCloy. Following the war, Casey and his old friend Howell founded their own Wall Street law firm. But what made Casey really wealthy was his involvement with other former intelligence officers in setting up the media holding company Capital Cities, in 1954. According to many investigators, during this period the CIA poured millions into setting up front companies for covert operations in broadcasting and publishing, and it is alleged that Casey funneled some of these funds into Capital Cities to acquire failing media companies and turn them around. It is likely that Casey never left the Agency, but only moulted into one of its financial butterflies. It would not be the first time a senior CIA agent has had a double career on Wall Street, Allen Dulles being but one of many others. From 1971-1973, Casey was Nixon’s appointee as chief of the Securities and Exchange Commission, where he worked closely with SEC attorney Stanley Sporkin (later appointed by Casey as CIA general counsel)Casey also served as Nixon’s Under-Secretary of State for Economic Affairs, and chairman of the Export- Import Bank. In 1978, Casey founded a think tank called the Manhattan Institute that absorbed a number of former CIA officers, and funneled money from conservative foundations to conservative authors. When Casey left Capital Cities to head the Reagan presidential campaign and then to become Reagan’s director of the CIA, he is said to have been its biggest single stockholder with $7.5-million in Capital Cities stock. He was still its biggest stockholder, and CIA director, in 1985 when Capital Cities bought ABC. A man who was involved in covert financial operations throughout his entire career, Casey had links to all the key players in this story; his DNA is all over the place, from pre-Santy to post-Marcos. He was one of the men who dreamed up the privatization of the CIA, and as CIA director he showed President Reagan how to implement it. A truly loyal Rockefeller servant, but low down on the totem pole of power.
One of Reagan’s first acts was to sign Executive Order 12333, which authorized the CIA and other government agencies to enter into contracts with PMFs, “and need not reveal the sponsorship of such contracts or arrangements for authorized intelligence purposes”. This put Casey back in harness with Cline, Singlaub, Shackley, Lansdale and many others purged earlier, while obscuring their activities, keeping them – theoretically at least – in the private domain. Simultaneously, Casey personally took over handling President Marcos, pressing him to provide black gold for covert purposes. Eventually, Iran-Contra revealed the intimate bonds between members of The Enterprise and unelected officials of the National Security Council, Pentagon and CIA. Such overlap can be useful to the government when, for example, it had Lansdale subcontract to the Mafia the assassination of Fidel Castro. Having PMFs train death squads in other countries enabled the White House to carry out secret foreign policy objectives including murder, and proxy military operations inside countries with which the United States was not at war. It is like putting on surgical gloves and a condom to carry out the dirty side of foreign policy, without leaving fingerprints or DNA.
Along the way, a surprising number of retired generals, admirals, and senior officials from the National Security Council, became involved in treasure hunting in the Philippines, and the covert movement of gold from Manila. Overlap in this case may have been used both to advance foreign policy objectives, and to enrich and finance private military forces whose secret agenda is exclusively that of the far right. Some of the best known figures in The Enterprise like Lansdale, Ray Cline, and John Singlaub began their careers with OSS in World War II, and rose rapidly during the Truman and Eisenhower Administrations, when Nazi and Japanese gold first was used to set up black bag operations like the M-Fund. Their political views as Cold Warriors were shaped as they tried to rescue Generalissimo Chiang, put the Shah in power in Iran, sought to remove Sukarno and Castro, helped arrange the overthrow of Allende in Chile, and had carte blanche to dispose of inconvenient civilians in Cambodia, Laos, and Vietnam. Lansdale, while still a colonel on active duty, ran Operation Mongoose, the effort to kill Castro. When Lansdale was forced to retire by President Kennedy, he simply went private, becoming a charter member of The Enterprise, and remained a ringleader till his death in 1987.
Operation Phoenix was overseen by Ted Shackley, CIA station chief in Saigon from 1969-1972; later CIA deputy director for operations. William Colby told a Senate hearing that Phoenix killed over 20,000 Vietnamese civilians (men, women and children) suspected of being communists; others put the total over 70,000. “Phoenix was the creation of the old-boy network,” says Colonel Stan Fulcher, who was part of the operation, “a group of guys at highest level – Colby and that crowd – who thought they were Lawrence of Arabia.” The same old boys were in El Salvador, this time using proxies, including Taiwanese officers trained by Ray Cline’s special warfare academy. Journalist Douglas Valentine explains: “What these ‘old Phoenix boys’ all have in common is that they profit from antiterrorism by selling weapons and supplies to repressive governments and insurgent groups like the contras. Their legacy is a trail of ashes across the third world.” Both Singlaub and Shackley later left the Agency, and became closely identified with The Enterprise network. Singlaub went private after a well-publicized dispute with President Carter in 1978. Shackley went private the next year after a dispute with Carter’s CIA director, Admiral Stansfield Turner. Singlaub and Lansdale then joined the Reagan campaign, headed by William Casey. The combined effect of the Family Jewels purge by Schlesinger and the subsequent house-cleaning by President Carter therefore backfired, in the sense that it drove the hard right underground, into the private sector, where it could operate without peer review to an even greater degree, while continuing to make free use of the government’s covert assets. If The Enterprise wished to use Air Force planes, Navy ships, SEALs or Special Forces, there were ways these could be put at their disposal without anyone being the wiser.
Under Presidents Reagan and Bush, the PIOs and PMFs multiplied and became a virtual private extension of the White House. To this day, leaders of The Enterprise and advocates of PMFs insist that the White House needs a private clandestine service run by experienced intelligence officers turned entrepreneurs. Accordingly, PMFs were involved in South Africa, Angola, Colombia, Croatia, Eritrea, Ethiopia, and Sierra Leone, to name only a few.
When Marcos began making his second-generation recoveries in the 1970s and needed help getting the black gold to market, he and The Enterprise made common cause. Because members of The Enterprise had access to CIA aircraft, U.S. Air Force planes, and U.S. Navy ships, when Marcos gold left Subic or Clark it was impossible to tell whether this was done officially by the White House or privately by The Enterprise. Increasingly, Marcos found himself in a tug-of-war with the Reagan White House for control, disbursal, and management of the gold he recovered. He resorted to every trick to bypass U.S. Government channels. This would be his downfall.
When international monetary authorities decided to allow central banks to buy gold directly from private sources, Marcos decreed that all gold mined in the Philippines had to be sold directly to the Central Bank. This enabled him to sell some of his gold, and the bank could then move it overseas without raising eyebrows. In November 1981, Manila announced it would place ‘excess locally derived gold reserves’ on the international market. Over three months, some 10 tons of gold were shipped to Hong Kong, New York, London, and Zurich. It was earmarked as Philippine government gold, but the commercial banks involved were allowed to play with it, meaning it could be traded over the short term. For this privilege, the banks paid 1 percent commission on these earnings, which went to Marcos.
In September 1983, for example, a KLM flight from Manila to Zurich carried seven tons of bullion. Another 1.5 tons were shipped to London at the same time. Meanwhile, CIA pilots and Pentagon cargo planes periodically airlifted Marcos gold to Australia and Hong Kong. While the Agency was physically moving Marcos bullion, it actively encouraged the Marcoses to salt their profits in America.
The pipeline was set up by Rewald with help from Filipino billionaire Enrique Zobel, a friend of the Marcoses. Rewald ran a polo club in Hawaii, and Zobel was a world-class player. Rewald testified that Zobel was, like him, a CIA confederate. Through such joint ventures as Ayala-Hawaii, they and the CIA would “shelter monies of highly placed foreign diplomats and businessmen who wished to ‘export’ cash to the United States, where it would be available to them in the event of an emergency”. The Zobel connection goes back to 1945 when Colonel Joe McMicking was the immediate G-2 superior of Santa Romana and Captain Lansdale as they tortured Major Kojima. Flush with money thereafter, McMicking married Don Enrique’s aunt Mercedes and helped the Zobel-Ayala clan become one of the world’s great fortunes. In this tightlipped milieu, Enrique Zobel is something of a renegade. After studying at UCLA, he made a name for himself developing Manila’s posh Makati financial hub. Zobel knew a lot about Marcos efforts to recover war loot.
According to a well-informed source in the Marcos family, “Bill Casey told Ferdinand the White House would keep him in power forever if he agreed to put his black gold in banks designated by the CIA”. One deal said to have resulted is the so-called China Mandate. Our Marcos family source insists that in 1972 President Nixon and Henry Kissinger made a secret deal with Premier Chou En-lai to keep China out of conflict with the United States over Taiwan, in return for access to a large quantity of gold provided by Marcos. We have not been able to confirm the political details. However, bank documents that have surfaced over the years clearly demonstrate that large quantities of gold bullion were moved into Chinese mainland banks during this period, including bullion accounts in the names of Santa Romana, Ferdinand and Imelda Marcos, and other members of their family and circle of rich cronies. Since all these people were loudly anti-communist, there is no plausible reason for them to transfer gold bullion to Chinese banks in the midst of the Cold War. For that reason alone, the story may well be true.
The China Deal
In 1971-1972 the economy of the People’s Republic was in very bad shape, its foreign currency reserves were flat, aggravated by the worldwide oil crisis and famine in the countryside. As pressure mounted on the Politburo, party hawks gained a stronger voice, pushing for invasion of Taiwan to gain control of its assets,(around $100 billion plus in bank deposits-the proceeds of the Golden Triangle drug scene- and this was CIA narco money) and as a much-needed distraction. CIA and Pentagon analysts concluded that Beijing was about to invade, while America had its hands full in Vietnam. This could lead to nuclear war. A way had to be found to defuse the situation, and a novel solution proposed by a CIA analyst was to help Beijing stabilize its economy with a huge infusion of black gold from Marcos, reducing the pressure for war. If America helped China out of this domestic crisis, it could bring a period of peace that would benefit the Philippines as well.
Nixon and Kissinger secretly offered Beijing 30,000 tons, or $68-billion in gold (an amount they knew Marcos had), to be moved into PRC banks in a number of tranches over several years. This would not be an outright gift. It would be deposited incrementally in various PRC banks in Hong Kong and major cities inside China. There the bullion would remain as an asset base, earmarked for various purposes negotiated in advance. The Chinese banks would be strengthened, the PRC economy would be stabilized, moderates in the Politburo would regain their leverage, and hawks pushing for an invasion of Taiwan would be silenced. No U.S. funds were involved. “It was only Japanese war loot,” the source said, “recovered by Marcos, being put to good use.” Chou En-lai, ever a pragmatist, reportedly pushed it through. The temptation for Marcos to agree was great; he would be fully supported by Washington, and rewarded in many ways. The White House sweetened the deal by assuring Marcos that he and Imelda could make state visits to Beijing, which would enhance their stature throughout the world. Additionally, Beijing would reciprocate by providing agricultural aid to the Philippines.
In 1974, Imelda and her son Bong-Bong did make a state visit to Beijing, where they were photographed grinning goofily with a startled and frail Mao Tse-tung clamped between them, one of the strangest photographs of Mao ever made. Ferdinand went to Beijing the following year, a curious thing for him to do as an outspoken Cold Warrior. In a subsidiary development, Imelda’s brother Kokoy Romualdez, noted more for his loyalty than for his intelligence, became Manila’s ambassador to Beijing.
The China Mandate was the foundation for Nixon’s historic visit to China and establishment of diplomatic relations with the Peoples Republic. Documents do show that beginning in 1972 and continuing over a period of years, Marcos gold was moved to PRC-owned banks including Po Sang Bank and Bank of China in Hong Kong, and to other Chinese banks in Xiamen. Documents from those banks show very large accounts in the names of Santa Romana, Ferdinand Marcos, Imelda Marcos and others. Further evidence came in 2000, when Imelda was accused by Hong Kong government authorities of hiring a Chinese woman to obtain access to some of these gold accounts by bribing bank officials. In December 1999, according to Hong Kong government prosecutors, Imelda agreed to pay the bounty hunters 35 percent to recover $2.5-billion from accounts at Bank of China, HSBC, and PRC banks in Xiamen. Imelda’s lawyers said she was only trying to raise money to help the poor. When news then came of yet another secret Marcos bullion account at UBS in Switzerland, containing $13.4-billion, Imelda sighed, “I wouldn’t be surprised. I know we used to have money.” When the existence of these bullion holdings in China was revealed, nobody seemed at all curious how they came to be there, some since the early 1970s, when the Cold War was still on. Nobody connected them to Nixon’s 1972 state visit to Beijing.
Washington Overthrows Marcos
The main reason Washington finally gave up on Marcos was the failure of Reagan’s Rainbow Dollars.
President Reagan declared at the beginning of his administration that he would restore the gold standard, abandoned by Nixon in 1971, and introduces a new gold backed currency called Rainbow Dollars. In the decade since Nixon’s action, the United States had experienced periods of raging inflation, recession, and killing interest rates. Reagan’s remedy was to go back on the gold standard.
Treasury Secretary Donald Regan said this would bring about a ‘roaring boom’. So many dollar banknotes were in circulation that if they suddenly became convertible to gold, as was the case before 1933, Washington could be swamped with demands for bullion. The solution was a two-tier system. Rainbow Dollars would replace greenbacks gradually, but ordinary people could not walk in and exchange them for gold. There would be special issues of Rainbow Dollars, convertible to gold when held by central banks. To make this work, America needed a large stock of gold, enough to manipulate gold prices. If the price fell too low, Washington would buy gold to keep currency values stable. If the price rose too high, and central banks demanded bullion from Washington, the government would release bullion into the market, depressing the price. This was Reagan’s essential plan. The change to Rainbow Dollars also would mean that people hoarding illicit cash, such as heroin and cocaine drug-lords would have to exchange their old currency for new, so money would come out of hiding. The result could help reduce the federal deficit.
President Reagan privately asked Ferdinand to lend part of his hoard of black gold to back Rainbow Dollars. As usual, he could charge a commission for lending his gold to Reagan. Unfortunately for Marcos, he demanded a higher commission than the White House thought fair. Reagan was dismayed that his old friend had let him down. Reagan’s advisors – particularly Casey – argued that Marcos had gone too far. The time had come to depose him, and in the process divest him of the mass of bullion he still had salted away. Casey swung into action. In the months that followed, People Power took to the streets of Manila, mobs demanding that Marcos step down. As popular clamor increased in the streets, Casey is said to have flown to Manila with Treasury Secretary Regan, CIA economist Professor Frank Higdon, and attorney Lawrence Kreagar. The purpose of the meeting, according to a Marcos aide, was to convince Ferdinand to turn over 73,000 metric tons of gold. Casey and Regan were giving Marcos a last chance. Regan reportedly told Marcos that he must sign over the gold in return for 80 percent of the value in U.S. debt instruments, 20 percent in cash. Sensing that the end was nigh, Marcos wanted 80 percent in cash, only 20 percent in debt instruments. When haggling proved fruitless, Professor Higdon is said to have told Marcos he would be out of power ‘in two weeks’. Indeed, weeks later Marcos was in Hawaii, effectively under house arrest. According to the same Marcos aide, the next move in the endgame came a few days after the meeting with Casey, Regan and Higdon, when an emissary from the Trilateral Commission hand-delivered a confidential request to Marcos asking him to contribute $54-billion in gold bullion to a global development fund. Marcos glanced at the ornate document and tossed it contemptuously into his out-basket. The emissary hurried back to the office of the Trilateral Commission in Makati, to report. Three days later, Marcos was given a last ultimatum by Nevada Senator Paul Laxalt, President Reagan’s go-between. By then Marcos was effectively under siege at Malacanang Palace. A very sick man, suffering from lupus, failing kidneys and liver, Marcos gave in, forfeiting ‘his’ gold in return for being rescued by U.S. Army helicopters. That evening, barges were towed up the Pasig River to the palace, and great quantities of gold bars were loaded on them from palace vaults and other vaults at the Presidential Security Command compound and other buildings adjacent to the palace. This went on all night and was witnessed by many people. At dawn the laden barges were towed out into Manila Bay, their ultimate destination Subic Bay naval base where the gold is said to have been put first into munitions bunkers, and then aboard U.S. Navy vessels. (What happened to the gold thereafter is hard to say because the U.S. Government has not publicly audited its gold stocks since 1950, and only admits to having 8,000 metric tons.)
That evening US Army choppers swarmed into the gardens of Malacanang Palace and took aboard the Marcos family and their minions. To their surprise, the Marcoses were not taken from Malacanang Palace to the family stronghold in Ilocos Norte, where they planned to mount a defense of their realm. They were taken to house arrest in Hawaii. “We were not rescued,” Imelda snapped, “we were kidnapped.” On their arrival in Honolulu, she said U.S. Customs agents seized billions of dollars’ worth of gold certificates she was carrying. The official list prepared by Customs did not mention them. Subsequently, she claimed that the U.S. Treasury admitted confiscating the certificates, but said its experts had determined that all of them were fakes. As we have seen, it is routine procedure to denounce gold certificates as counterfeit, even when they are real. This is a universally practiced form of confiscation. Under the circumstances, one wonders why wealthy people continue to entrust their gold to banks, if there is a very strong likelihood that sooner or later the banks will tell them their paperwork is fraudulent. In such a climate of deceit, it would be interesting to know precisely what Treasury did with the confiscated gold certificates. This was the position of the U.S. Government, which had been in bed with Marcos for more than thirty years.
The Swiss government took a more realistic position by simply denying that Marcos had any money in Swiss banks. Bankers all over the world said they knew nothing about Marcos accounts. When they could no longer pay their bills in Honolulu, Ferdinand asked old friend Don Enrique Zobel for a small loan of $250-million to tide them over. According to Zobel, Marcos showed him gold certificates to prove he could pay the loan back – certificates that had not been seized by the U.S. Customs. These, too, were later pronounced fraudulent by the U.S. Treasury. On January 15, 1989, he was hospitalized at Honolulu’s St. Francis Medical Center for a collapsed lung, remaining on life support until his death that September – and so ended one of the most corrupt relationships in Washington’s history. Or so it seemed. Santy was dead. Marcos was dead. In May 1987 Casey was dead. But leaders of the many Private organizations that make up The Enterprise knew lots of war-gold remained in the ground in the Philippines, and lying dormant in Santy’s worldwide bank accounts. They decided to see if they could recover some from the ground, or from the banks. Not knowing exactly where to look, the John Birch Society urged them to approach Robert Curtis, to see if bygones really could be bygones.
Loose Cannons
Robert Curtis had paid a very high price for becoming involved in gold recoveries with Ferdinand Marcos. But Curtis was stubborn, and he still had the only full set of Japanese treasure maps to surface since the war. Slowly putting his ruined life back together, he moved from Sparks to Las Vegas, where he became sales manager of a big Chevrolet dealership. In his spare time, he studied the maps, figured out many of the coded riddles of Golden Lily cartographers, and decided how he would approach a recovery next time — if there ever was a next time. So when the phone rang one day in 1978, he could hardly believe his changed luck.
A man he knew and trusted asked Curtis to meet privately with a foreign diplomat whose government wanted to sponsor a big clandestine recovery of war gold from the Philippines. The rendezvous took place in a Las Vegas hotel, where Curtis was put in direct contact with the prime minister of a major Western nation, prepared to put everything including a submarine at his disposal, for a fifty-fifty split. On the condition that we would not reveal the name of the country or the prime minister, Curtiss recounted what follows: The prime minister was well informed about earlier Marcos recoveries, and the crucial role Curtis had played. He wanted Curtis to pick a target suited to a midnight recovery from a sub. Curtis chose the island of Corregidor, where he knew of three substantial vaults. To avoid an international incident, the prime minister’s own navy would not put men ashore to open the vault, because they could be captured.
As Marcos was still in power, Curtis could not go to Manila himself for he would be arrested and murdered. Instead, he would send men to recover the gold, and carry the ingots to the beach. Then his men could be extracted by the sub. All went well, until the 2 men failed to bring the proper equipment to blow the seal on the vault open. He phoned the embassy in Washington and passed word to the Prime minister. The sub lurking off Bataan was called home.
Not all recovery efforts were such failures. Successful recoveries did happen during the 1980s. Japanese groups were well organized and their security was good because they kept their mouths shut. One group was headed by a man we will call Toshi, resident of a Tokyo suburb, who had been an intelligence officer with Golden Lily during the last year of the war, when he was in his early twenties .
In 1981, Toshi was one of a group of Japanese involved with President Marcos in a very large recovery from a vault in the Santa Maria Mountains. The gold was sanctified by Johnson-Matthey Chemicals, at the refinery Marcos had built with equipment stolen from Curtis in 1975. When Marcos sold a mass of gold in May 1983 through one of the leading international banks in Luxembourg, Toshi said some of the gold came from his recoveries. The first tranche alone was for 716,045 bars, at a sale price of $124-billion. The deal was signed by a number of attorneys representing the buyers, who were members of the London gold pool. The memorandum of agreement on Philippine presidential letterhead was signed by one of the Marcos ‘trusted gold ladies’, the gold was flown out of the Philippines to Hong Kong by U.S. Air Force planes from Clark, at sixty tons a week. Even if only the first tranche went down, this was one of the biggest single deals Marcos ever made.
There were offshore recoveries as well. In 1976 Curtis was contacted by a group of Americans who wanted to salvage the fake Japanese hospital ship Awa Maru, lying off the coast of China. The Awa Maru was sunk in April 1945 by the U.S. submarine Queenfish. Awa Maru was a fake hospital ship that had carried munitions, crated fighter aircraft, and VIP families to the South Seas, and was bringing war loot and VIPs back to Japan. The Awa Maru was, in fact, carrying over $5-billion worth of treasure when it was sunk. She had aboard 40 metric tons of gold, 12 metric tons of platinum, 150,000 carats of diamonds, large quantities of titanium and other strategic materials. Because the hulk was lying close to Chinese territorial waters, they tried unsuccessfully to make a deal with Beijing to carry out a joint venture and share the recovered treasure. When they started their own salvage operation, pinpointing the site, they were run off by the Chinese navy. Beijing then carried out the recovery itself.
A more intriguing recovery was that of the Dutch liner Op ten Noort. She spent the rest of the war as a fake hospital ship in the service of Golden Lily, carrying treasure to Manila and Yokohama. Just before the war ended, she arrived in Yokohama with 2,000 metric tons of gold. A few days later she was moved to Maizaru Naval Base on the west coast of Japan. Maizaru is an almost landlocked bay, meaning that any ship sunk there will remain near where she goes down, instead of being moved by strong ocean currents and tsunami. There she took on more treasure from underground bunkers in the hills around the naval base. Late one night, the ship was taken into the bay, her captain and twenty-four crewmen were murdered, and the ship was scuttled by opening its Kingston valve, which flooded the hull. The murderers were a group of high-ranking Japanese Navy officers who were anxious to keep this treasure to themselves. They liked to boast that someday the treasure would be used to rebuild the power of the Imperial Navy. The Op ten Noort recovery got off to a bad start in 1987 when the last survivors of this group of officers approached underworld fixer Sasakawa, who had worked with Kodama in the 1930s and 1940s, then made recoveries in Indonesia and the Philippines in partnership with President Sukarno and President Marcos. Efforts were made to bring in underwater recovery specialists and other equipment necessary for deep diving. But quarreling over Sasakawa’s share caused negotiations to break down.
In 1990 the recovery began again, with the participation of big Japanese corporations including the huge sea-crane ships of the Moricho Corporation. Also enlisted were international experts in deep sea recovery. They brought along a submersible belonging to Divcon International, carried aboard an Australian salvage vessel called the Torrens Tide, owned and managed by Tidewater Port Jackson Marine Pty. Ltd., of Sydney. Participants in the recovery told us that once the treasure was safely aboard the Torrens Tide, the Japanese went ashore that night to celebrate. During their absence, the Australian ship slipped anchor and made it to international waters with the treasure before her disappearance was discovered at sunrise. And with it went the 2,000 tons of gold plus the additional treasure placed on board before being sunk. The value of the treasure was put at an estimated $25 billion (now equal to some $100 billion plus in today’s time)! On a trip to San Francisco in July 1987, Curtiss met up with a stranger, who had studied with Noel Soriano, who was Philippine President Aquino’s security advisor. They discussed going after one of the Golden Lily vaults, with the permission of President Aquino. The site was at Fort Santiago. A year later, they drilled, found the gold. President Aquino was delighted. But once Curtis identified a target, he was expendable. This is typical of treasure hunting, as greed feeds narcissism, and narcissism feeds greed. Golden Lily had dug a deep vault beneath one of the concrete abutments, placing 340 metric tons of 50-kilo gold bars inside Mosler safes (worth about $4.5-billion in 1988). The trucks and armored cars carried heavy loads from Bonafacio Bridge to Ft. Santiago, where the cargo was loaded onto barges in the Pasig River. Subsequently, word got around that 325 metric tons of gold were for sale in secure storage at Manila International Airport – less 15 metric tons that were not accounted for. Remaining partners in the venture now turned on each other; all these men were obsessed with gold, and turned on each other. But they are small fry compared to international bankers who accept the gold on deposit then, in the manner of magicians, make it vanish.
Connect the Dots
After half a century of disinformation to hide the war-gold recoveries and secret slush funds,
Incontrovertible evidence is emerging from investigations, lawsuits, leaks and blunders. Until Marcos lost power, Japan’s looting was fobbed off successfully as isolated instances. If it rarely happened, why ask what became of the plunder?
Once on American turf, however, the Marcoses were hit by lawsuits accusing them of theft and conversion of recovered treasure, human rights abuse and racketeering related to that treasure.
Ensuing revelations in court lifted the veil of secrecy and provided an unexpected glimpse of Washington’s furtive conduct. The Reagan Administration’s inept damage control, especially during Iran-Contra, revealed black-bag operations previously unknown, and a network of private military and intelligence companies intended to privatize U.S. foreign policy and national security. It became obvious that their true purpose was to get around laws, and to avoid peer review.
For twenty-five years, Santa Romana’s heirs also were stonewalled, but they too filed suit to recover masses of bullion hidden in American banks – much of it still there.
For hard evidence, the keystone case was the Gold Buddha, because it proved certain elementary things about Japan’s looting of Asia and the postwar recoveries of this loot. This evidence was presented to a jury in a U.S. court in Hawaii, which awarded the largest sum in history. It happened this way: After years in hiding, Roger Roxas resurfaced in 1988. With Marcos under house arrest in Honolulu, Roxas thought he could safely press a suit to reclaim the Gold Buddha and bullion stolen from him in 1971.
In February 1988, Roxas’s lawyer, Cathcart filed suit against Marcos in Honolulu, asking for damages, including injuries from beatings and torture. The suit asserted that Marcos had stolen the Gold Buddha, diamonds, and gold biscuits from Roxas, then removed a lot more gold from the tunnel Roxas had spent years discovering. Technically, Roxas was the finder not only of the Gold Buddha, diamonds and gold biscuits he took home, but of all other Japanese war loot later recovered from the site by Marcos soldiers. Cathcart’s firm took seven years to gather evidence of eyewitnesses establishing that there was Japanese plunder in the Philippines, that Roxas had found a solid 22karat Gold Buddha and ingots, and that Marcos had stolen the Buddha and ingots, then tortured Roxas in a conspiracy to hush it up.
In the course of tracking down witnesses, a great deal of evidence emerged concerning the overall nature of Japan’s looting, how the loot was hidden in the islands, how it was recovered by Marcos, and how Marcos had used subterfuge to move the gold into the global market, clearly with help from the U.S. Government. All this was assembled in documents and depositions, many of them on videotape, eventually filling a large room. When Marcos saw the story, he hit the roof.
Aside from the Gold Buddha, there also was the theft of the small gold biscuit bars, and thousands of other gold ingots that Roxas sealed in the tunnel for his own later recovery. A Filipino army cook, Juan Quijon, testified to the Honolulu court that he had been assigned to Task Force Restoration, an army unit created in 1972 by Marcos and General Ver to secretly excavate treasure sites in the Philippines. Quijon spent nearly a year (1974-1975) with other soldiers excavating the tunnel behind the hospital in Baguio, where Roxas had found the Gold Buddha. Quijon watched three or four men at a time carry out heavy wooden boxes and, when some rotten boxes broke, he saw big gold bars fall to the ground, three to a box. He said on average of ten boxes of gold a day were removed from the tunnel during that twelve-month period. Hospital staff, who were watching during these months, confirmed this. Igorot tribesmen did the heaviest work, Quijon said. When all the gold was removed, he said the Igorots were taken into the tunnel and shot, to eliminate them as witnesses.
As evidence that Marcos was in possession of enormous quantities of gold bullion far in excess of known Philippine reserves, Friedman tracked down two Australian brokers who in the early 1980s had negotiated nine contracts with Marcos to sell a total of $1.63-trillion in gold. They established for the court record, and to the satisfaction of the jury, that the deals were made, and were not a fiction. The documentation they provided established beyond any doubt that Marcos did have in his possession and did sell $1.63-trillion worth of gold bullion. The Australians would also testify that while visiting Marcos they were blindfolded and taken to a warehouse where the blindfolds were removed, and they saw that the warehouse was full of gold bars.
Norman ‘Tony’ Dacus, a Las Vegas investor, told Friedman that on a visit to the Philippines he was taken to Mt. Apo where Marcos was building a Mt. Rushmore style memorial to himself. Dacus said the president’s son Bong-Bong took him into secret tunnels in Mt. Apo, where he was shown boxes of gold bars and other treasure. Dacus said Bong-Bong told him this gold was waiting to be flown out of the country by the U.S. military, at the behest of the CIA. Dacus was an expert source because he was linked by marriage to one of the senior Marcos intelligence officers, Colonel Pimentel, who arranged a number of these gold deals and personally escorted the gold to its destinations as a senior member of The Umbrella. Dacus also helped Pimental and Marcos broker the huge Luxembourg gold deal.
The Gold Buddha trial finally was set for May 25, 1993. As the trial date approached, Cathcart told Roxas to lie low and arranged for bodyguards to escort him from Manila to Honolulu. On May 24, he called Roxas and told him to catch a plane to Hawaii immediately. “An hour and a half later, he was dead,” said Cathcart. His widow and many others believe Roxas was poisoned. As she explained, her husband had been looking tired and anemic. When she went to a bakery, downstairs from the apartment where they were hiding, she was approached by a well-dressed man who offered to give her some free medication for her husband. When he took the pills, Roxas died.
A few hours later, a CIA informant known to Cathcart and Friedman phoned his law office from Manila and told Friedman, “Your client is dead. He was poisoned. Imelda ordered it, and we did it.”
After many delays, the trial got underway in Honolulu, and the jury heard eyewitnesses describe the Gold Buddha, rooms full of gold bars, deals involving thousands of metric tons of gold. From all this testimony, it became evident to the jury that Japanese war loot definitely had been hidden in the Philippines, Roger Roxas definitely discovered a major cache of it, the Gold Buddha definitely was solid gold, Marcos definitely stole the treasure, and Marcos definitely made major gold deals to sell billions of dollars’ worth of this recovered plunder. The jury decided in favor of Roxas and his heirs, and awarded GBC a judgment of $43-billion against the Marcos estate, the biggest civil judgment in history to that date. ($22-billion plus 10 percent simple interest since the theft). The estate of Roger Roxas was separately awarded $6-million for his imprisonment and torture an award that stood up on appeal.
As for the Gold Buddha itself, the chief government prosecutor in Zurich, Switzerland, assured journalists that it was in a Marcos gold bullion vault in a special repository beneath Zurich’s Kloten Airport. While an American jury judged these to be incontrovertible facts, Tokyo and Washington continue to deny them.
Encouraged by the Roxas lawsuit, other victims came forward. In 1999, the Filipino soldiers who removed the gold from the Roxas tunnel and other sites in the Philippines prepared lawsuits against the Marcos estate. According to an affidavit signed by nearly a hundred of these men, they carried out ‘massive diggings’ while pretending to restore national monuments, and recovered thousands of metric tons of gold, other precious metals and large quantities of loose gemstones. Marcos came to the sites, they said, often in the company of Japanese. Their first major success was in 1973 near Lake Caliraya in Lumban, Laguna, where one of their backhoes struck what turned out to be the first of several concrete vaults. Repeated banging of the backhoe broke open a corner of one vault, exposing 75-kilo gold bars. Marcos told them, “You will all share in everything that’s here, but you have to wait for the right time.” That time never came.
As other concrete vaults were unearthed – each 6 feet x 5 feet x 5 feet – a large crane hoisted them on to a massive army tank transporter, which took them to a secret destination.
From 1974 to 1979, the soldiers stated, they dug at Montalban, Antipolo, Baras, and Teresa, all Golden Lily sites in Rizal province. It was their failure to open Teresa-1 in 1974 that led to Robert Curtis successfully opening Teresa-2 the next year. They shifted operations to Intramuros, the old walled city in Manila, and to Ft. Santiago, where they said they recovered more than a hundred boxes of treasure.
According to their affidavit, crates of gold bars were shipped out of the Philippines from Manila International Airport using C-130 military aircraft. They said some of the gold was transported commercially by Cathay Pacific Airlines, and by American President Lines, through arrangement with Tamaraw Security Service, owned and operated for Marcos by General Ver, as part of The Umbrella.
Santa Romana’s dormant bank accounts were of special interest to his heirs – but also to The Enterprise, to the U.S. Treasury, and to major banks holding his cash and bullion. As these various parties bickered, maneuvered, and backstabbed, they became involved in very interesting lawsuits.
Seen at random, the bits and pieces are curious. Seen altogether they are astounding, and supported by government records.
When he died, Santy left to fourteen heirs a fortune estimated by their attorneys to be worth over $50-billion. All their efforts to recover his assets from banks have been blocked or, more often, evaded.
The three main heirs were Santy’s corporate accountant, Tarciana Rodriguez, acting for the estate; his common-law wife, Luz Rambano; and his adult daughter, Flordeliza. After a few false starts, they turned for help to the famous San Francisco lawyer Melvin Belli, New York attorney Eleanor Jackson Piel, former CIA deputy director Ray Cline, and one of America’s best-known bankers, Citibank CEO John Reed. Because of the size of Santy’s estate, and its secretive nature, Luz, Tarciana, and Flordeliza seem to have had every conceivable obstacle put in their path. The U.S. Government, and American banks, would like Santy’s assets to remain where they are. So would the Swiss government and Swiss banks, banks in Hong Kong, and in other financial centers. In a few more years, everybody connected to Santy will be dead, so custody of his cash and bullion will remain in the banks, like Holocaust gold.
For Washington, stonewalling is imperative not only because of the gigantic assets involved, but to block attorneys from pursuing discovery , which could reveal far more than Santy’s financial data. Potentially, discovery could result in disclosure of the whole subject of covert war-gold recoveries, the Black Eagle Trust, diversion to corrupt purposes of secret funds like the M-Fund. This could damage reputations and careers, and make unavoidable an investigation by the General Accounting Office of Congress. President Ford had addressed a similar problem in 1975 when he set up the Rockefeller Commission to pacify interest in the CIA Family Jewels affair, remarking that he did not want information getting out that could blacken the reputation of every U.S. president since Truman.
Ironically, Santy’s heirs were only interested in ending their poverty, not in exposing corruption, so it would have made sense to placate them with generous settlements in return for signed agreements never to raise the matter again. Yet both banks and governments have remained doggedly opaque and obstinate in blocking the heirs – a sure sign that they have much to hide. Although the three principal heirs showed these banks probated wills, passbooks, bank statements, receipts, all the necessary passwords, code-words, and secret account numbers, provided to them by Santy, the response was the same. With four exceptions, the banks flatly denied having such accounts, whether the account in question was a safe-deposit box, or a huge gold bullion deposit.
For example, according to the Union Banque Suisse documents, Santy’s biggest single account there was 20,000 metric tons of gold bullion. This is the account on which the title-holder was magically changed at the moment of Santy’s death, from his Crown Commodity Holdings to Major General Edward G. Landsdale, bearing in mind that spelling errors made by Swiss banks are part of deliberate authenticity codes. One possibility is that on this monster account Santy was merely a straw man, being replaced by another straw man: Lansdale. We might ask who else but a government would have sufficient leverage to make such a change at the biggest bank in Switzerland? At $300 an ounce, this account would be worth (in the late 1980s) $192-billion dollars, a lot more than the net worth of Bill Gates. Is this sum believable? Yes, if it is a covert U.S. Government account containing a mass of black gold. Just as no serious counterfeiter makes silly spelling mistakes, no conman in his right mind would dream up an account so big. Recall that the jury in the Roxas Gold Buddha case saw convincing evidence that $1.63-trillion in gold was sold by Marcos through his Australian brokers. Documents bearing the signatures of a number of top Swiss bankers show that UBS has other accounts, including gold bullion and platinum, which are even larger. Such giant accounts are not out of the question for immensely wealthy men like the King of Saudi Arabia, whose family have been banking bullion in Switzerland for decades. According to Gemini Consulting, worldwide private bank assets were $4.3-trillion in 1986, and were closing in on $40- trillion in 2020. So this account at UBS is not impossible. UBS documents show that Crown Commodity Holdings was a subsidiary of Santy’s Crown Enterprises.
According to videotaped interviews with Tarciana, immediately after Santy’s death Lansdale also was involved in the mysterious movement of gold bullion from Santy’s accounts at Citibank Manila to Citibank New York, possibly done to get the assets out of the Philippines before Marcos could attach them. Because the accounts were in Santy’s names, such transfers would appear to be illegal without authorization from a recognized trustee of his estate, or someone holding his power of attorney, such as chief accountant Tarciana. If Lansdale had such a power of attorney, for whom was Lansdale acting?
Once these assets left the Philippines, they joined other bullion and cash accounts that documents show Santy already had in America at Citibank, Chase, Wells Fargo, Hanover Bank, and other banks.
Soon after his death, Santy’s holographic will was probated in Manila, and Tarciana, Luz and Flordeliza were named by the court as legitimate heirs. Luz went to America hoping to gain access to the accounts at Citibank in Manhattan. There she enlisted the help of attorney Eleanor Jackson Piel, giving her Letters of Administration issued by the Philippine court. These had to be recognized by New York court, which would give Luz right of access to his accounts at Citibank, Chase, and Hanover. This took time.
While Luz pressed her case elsewhere, Piel wrote letters to the head offices of all the banks concerned, asking about the Santa Romana accounts. Not a single bank replied. Luz flew to Switzerland, visiting UBS in Geneva with two American friends. According to one of the Americans, Jim Brown: “I sat with Luz and another American… while she gave a vice-president of Union Banque Suisse [Santy’s] master gold account number with them [Master Gold Account 7257]. This banker not only admitted that it was a correct account, but also said he was familiar with the account.” Brown insists the bank vice president then told Luz “he wouldn’t recommend her trying to claim this account while she was in Switzerland, because before the bank or even the government of Switzerland would agree to allow her to take what this account represented, they would not be beyond having her killed first. He also went on to tell her that he wouldn’t recommend her hiring any Swiss attorneys, because the bank would simply buy them off.” Scared and deflated, Luz returned to the Philippines. Three years later she and Brown went back to Switzerland to approach a different bank. This time, Brown told us they were successful in recovering the accumulated interest from one of Santy’s accounts, but the bank would not release the bullion itself. Another source told us Luz kept this recovery secret, feeling that she had been stonewalled so long that it would be absurd to forfeit any of it in taxes.
Meanwhile, Tarciana – Santy’s corporate treasurer – tried to access his accounts at HSBC in Hong Kong. Following the advice of attorney Artemio Lobrin who had been Santy’s tax consultant, she asked HSBC to verify the existence of the accounts mentioned in Santy’s holographic will. After showing them all the necessary codes, passwords, and documents, a bank officer told her the accounts had not matured, were therefore inaccessible, and to come back in 1988. In turn, Flordeliza sought access to Santy’s accounts at the Hong Kong branch of Sanwa Bank. She had a passbook showing large cash deposits to that branch in March 1973. At first Sanwa denied it had a branch in Hong Kong in 1973. Then, despite all the documentation, they claimed they had no client called Santa Romana or any of his pseudonyms.
When Cory Aquino became president, her staff asked Australian financial expert Peter Nelson for help. He was shown computer sheets and forty passports bearing Santy’s photo. “The passports matched details on the numerous bank accounts… Most transfers had originated in Hong Kong before being moved to other parts of the world. I added up the amounts mentally as I went along and lost count at around forty billion dollars! I was shown photos of crates and some of these were open. I ofcourse could not vouch for this bullion but there were certificates to match.” The Aquino aides explained that Santy had left the majority of his estate to his daughter, which would make Flordeliza one of the richest women on earth, but when she tried to present the probated will to banks, she was told to prove that the man in the photo on all the passports with all the different names was in fact her father.
Meanwhile, the banks would sit profitably on the money. Nelson said: “I told my Filipino friends there was a way out. If [Flordeliza] agreed to hand the money back to the government in the Philippines for a finder’s fee of say five percent, that would give her more money than [she] could spend in a lifetime and the government would lend their weight in pushing for its return. They thanked me and I flew back to Sydney.” Nothing came of it, and Flordeliza stayed poor.
The Citibank Saga
Ultimately, all efforts fixed on Citibank, where John Reed was chairman and CEO. Under Reed’s direction, Citibank became involved in offshore private banking. With offshore deposits worth over $100-billion it was ranked third after UBS with $580-billion and Credit Suisse with $292-billion. By shifting money from country to country, offshore assets are protected from litigation by creditors, ex-spouses, or heirs. Except for cases involving money- laundering, securities fraud or narcotics, most foreign courts will not recognize a U.S. court order. So a claimant must fight for access through courts in the nation where the account is held, only to discover the money already has been moved to another jurisdiction. This is the key to what follows.
In December 1990, Tarciana went to Citibank’s head office in Manhattan, with a friend acting as financial advisor and witness. “We were taken in to see John Reed,” her friend said. “When we showed him our documents, passwords and code-phrases, the magnitude of it suddenly hit Reed. He went white, and panicked. You could see it in his face. He left the conference room in a hurry. A few minutes later he returned with several Citibank lawyers.” They told Tarciana to come back the following day.
“When we walked into the conference room the next day,” Tarciana’s friend recounted, “we found Reed sitting there with twenty lawyers. They told us these accounts did not exist.”
Again Tarciana and her friend went away. On inspiration, they flew to Albany where they visited the New York State Tax Office. In its public records archive, they obtained a list of all the accounts Santy had at Citibank and other banks in New York State under his own name and aliases, and his company names. They also discovered that all state and federal taxes had been waived on interest generated by these very big accounts, a curious exemption. Returning to Citibank, they were confronted once again by Reed and his phalanx of attorneys. Tarciana and her friend showed them a copy of the New York State tax records list, demonstrating that the bank had lied, and the accounts did exist. According to Santy’s own records and documents Tarciana had with her, Citibank held 4,700 metric tons of gold bullion belonging to Santy’s estate. No longer denying they had the accounts, the attorneys blandly told the two women to bring in ‘the real party’. They refused to identify whom they meant – possibly Santy’s corpse. They also said Tarciana needed ‘legal’ papers, which she already had shown them. They said Citibank wanted a statement from the Philippine government that it would not hold them responsible for releasing the money (again implicitly acknowledging the bank did hold the assets). This inferred that the funds might be claimed by Manila as gold stolen by Marcos, although the accounts were set up by Santy long before Marcos came to power. The attorneys also said they wanted a waiver from Imelda Marcos, implying that the Marcos family might make claims (real or imaginary) to some of Santy’s assets. Finally they said they also needed a waiver from the U.S. Embassy in Manila, apparently meaning a waiver from the U.S. Government. All this doubletalk was clearly to fend off Tarciana while the bank decided what to do next. That did not take long.
The solution was simple: Citibank would move all Santy’s assets offshore, from Citibank New York to Cititrust in the Bahamas. This would have the effect of putting the bullion outside the jurisdiction of New York courts, blocking any lawsuits contemplated by the heirs. Legally, such assets could not be moved out of New York jurisdiction without authorization of the account holder or his heirs, or assigns (meaning Tarciana as corporate treasurer). But, if the gold were moved offshore without the knowledge of the account holder or his heirs, the burden would be upon them to recover it. Large shipments of gold bullion also cannot take place without the knowledge and approval of the U.S. Treasury Department and the Federal Reserve. Nor could the bullion enter Nassau without approval of the Bahamian authorities. But there appear to have been ways to get around such obstacles, perhaps by attributing ownership of the gold to Citibank itself, which some attorneys might argue qualifies as ‘wrongful conversion’.
This offshore maneuver was underway by the close of 1990, when word of it was leaked by a bank officer to members of The Enterprise. A counterploy to halt Citibank was initiated by former CIA Deputy Director Ray Cline and George Depontis, the Florida lobbyist with powerful connections in Nassau, including friendship with retired former Bahamas Chief Justice Sir Leonard Knowles. In case they needed help in Washington, Cline called in Robert A. Ackerman, a former Justice Department attorney. To get him up to speed, Cline gave Ackerman many documents including letters, memos and faxes. According to a letter written by Ackerman in January 1991, Cline explained how “in Gen. Lansdale’s Philippine days” Santy had recovered a lot of Japanese war loot and moved it “to 176 bank accounts in 42 countries”. These accounts, Cline said, included “large amounts of bullion [and] cash”. He told Ackerman he was interested in brokering “an agreement between the Philippine claimant [Tarciana] and the USG under which most of any money belonging to the USG would go back to it”.
It is unclear why any of this war-gold belonged to the U.S. Government rather than to the people from whom it was stolen, unless it was claimed as a war prize – in which case, why would it have been kept secret for over half a century? Nor is it clear how Cline could separate what belonged to the U.S. Government from what belonged to Santy’s heirs; although, with Cline’s close CIA connections, it is likely that he could work out a split. According to Alan Foringer, “Ray Cline told us he had made it a point to read all Agency files on Santy and Lansdale’s recoveries.” Foringer said Cline knew all about the secret accord at Bretton Woods and the Black Eagle Trust growing out of them, how General MacArthur and Robert B. Anderson had toured the Golden Lily sites with Santy and Lansdale, and how John J. McCloy had been the key man setting up the M-Fund and other political action funds. Cline’s long career in the CIA lends authority to what he told Foringer, Ackerman and others. At the end of World War II, Cline was a young OSS analyst in what remained of Nationalist China. He then spent three years as the CIA’s chief analyst on Korea, dealing with John Singlaub, Paul Helliwell, and Bill Casey (who had moved to Wall Street but still was part of the Dulles brothers’ circle). During 1958-1962, Cline was CIA station chief in Taiwan, a job he got through the chief of dirty tricks, Frank Wisner, just before Wisner went insane. In Taipei, Cline was responsible for clandestine operations all over Southeast Asia. He set up a Political Warfare Cadres Academy where trainees from the Philippines and elsewhere were taught: “to defeat communism, we had to be cruel.” While Chiang Kai-shek was alive, Cline befriended the generalissimo’s hard-drinking son, Chiang Ching-kuo (CCK), who controlled the KMT intelligence services. Cline became “his main drinking companion”. When CCK succeeded his father as president of Taiwan, Cline’s star rose accordingly. He returned to Washington as CIA’s deputy director for intelligence gathering.
Cline understood the historical context, was expert on the financial side, and knew the personalities. He was personally acquainted with the wartime KMT secret police boss General Tai Li, Shanghai druglord Tu Yueh-sheng, yakuza boss Kodama, fixer Sasakawa, prime ministers Kishi and Tanaka, the CIA’s Wisner and Casey, Helliwell, Lansdale, Santa Romana, Marcos, Singlaub, and Schweitzer. In 1966, after clashing sharply with President Johnson over Far Eastern policy, Cline was forced out of his job as CIA deputy director and exiled to the U.S. Embassy in Bonn. When Johnson decided not to run again, Cline was able to return in 1969 to become director of State Department’s Bureau of Intelligence and Research, where part of his job was to keep tabs on the black money movements of President Marcos. Like Bill Casey, Cline always had a special interest in financial intelligence. He had impressive academic credentials from Harvard and Oxford. In 1973, with his extremely close ties to Taiwan, Cline quarreled with President Nixon over rapprochement with China, and was forced to retire from government, becoming head of a conservative think-tank at George Washington University. Now a key player in the shadow network of The Enterprise, Cline became a special advisor to President Reagan, closely tied to Casey, Schweitzer, and Singlaub. In audio tapes of the Hong Kong meetings where Curtis was cajoled into helping Nippon Star, Cline’s name was invoked many times.
According to Ackerman’s letter, Depontis initially suggested that Tarciana deposit several small checks into Santy’s corporate accounts at Citibank, which would not cause alarm. If Citibank accepted the deposits, it implicitly acknowledged Tarciana’s role as corporate treasurer. She could then ask the bank to send her regular statements regarding any activity on the account. If the bank did so, she would have established her legal right of access, and could begin withdrawals. When this did not work, Depontis prepared to file suit in Bahamian courts to block the transfer to Nassau. Before filing suit, he said he offered Citibank a deal. In a tape-recorded telephone conversation with Robert Curtis, Depontis related that if Citibank agreed to this deal, he expected to receive a 15 percent commission that would come to $7,287,937,000. At 15 percent, this meant the deal as a whole was for approximately $50-billion – the amount Citibank was trying to move offshore. He said on the tape that he needed this much money, because “I have to pay off Ray Cline, Ackerman, this guy, that guy…”
To gain leverage, Depontis sought powers of attorney from Tarciana and Luz. In September 1991, Tarciana agreed to a ten-page personal services agreement with him, and a power of attorney.
But when Depontis proposed offering Citibank a deal where she would settle for a mere $25-million, Tarciana said she broke off with Depontis. She was chasing billions of dollars in a dozen banks, so to accept such a small deal with Citibank would set a dangerous precedent. Thereafter, Depontis apparently put all his effort into getting a settlement for Luz. On June 3, 1992, he told Robert Curtis, “Citibank is really hung out on this. I think Citibank is going to go down big time.”
Weeks later, in July 1992, Tarciana and her financial advisor were back at Citibank again facing John Reed across his conference table. They demanded that the gold and cash accounts that had been moved to the Bahamas be returned to New York. According to Tarciana, when Reed realized that the two women knew the assets had been moved, he again “turned white and panicked” – and called in his attorneys. Once more the ladies left empty-handed.
This affront persuaded Tarciana to go after Citibank. She restored to Depontis her power of attorney. Eleanor Piel received a call from Depontis, telling her that he would now represent Luz and Tarciana in the lawsuit in the Bahamas. On July 25, 1992, a joint agreement was drawn up by Tarciana, Luz, Eleanor Piel, Depontis, Sir Leonard Knowles, and Philippine attorney Zosimo Banaag, authorizing Depontis to offer Citibank a last deal before filing suit: They would allow Citibank to buy from them the $50-billion in gold it had moved to the Bahamas, at a favorable rate of $305 an ounce, $50 less than the market rate at that time; Citibank could then turn around and sell the gold at the market rate, making a significant profit while avoiding a lawsuit for wrongful conversion.
When Citibank turned down the offer, Depontis and Sir Leonard filed suit in Bahamian courts. Eleanor Piel flew to Nassau where she met Depontis and Sir Leonard. Sir Leonard opened his files to her, and told her his position was that, by denying everything, Citibank was simply playing for time. Attorney Mel Belli joined the fracas, mounting a flanking attack on Citibank at state courts in California where the bank had branches. In a $20-billion lawsuit Belli filed for Luz, John Reed was named as a defendant wrongfully converting Santy’s assets for Reed’s personal use. According to friends, Belli was in ill health, and relished the idea of climaxing his career with a stunning victory over Citibank and Reed. Belli wrote Brian Greenspun, editor-in-chief of The Las Vegas Sun, “It may sound wild, and it did to me at first, but I’m now convinced that some very important banks around the world did have deposits of [Santy’s] money. We’ve taken several depositions of banking officials around the world who have denied deposits being made with them although we presented the receipts and passbooks.” Belli said he had reason to believe that Santy’s wealth could be “an offshoot of the Yamashita treasure”. Belli’s suit was based on wrongful conversion of personal property. After listing specific Citibank accounts belonging to Santy, the suit went on to say: “Defendant John Reed, the Chairman and Chief Executive Officer of defendant Citibank, has spearheaded Citibank’s conversion of the gold bullion which was owned by [Santy].” The crux of the lawsuit lay in the charge that “Reed and Citibank have systematically sold and are selling said gold bullion to buyers and converting the sales proceeds to their own use.” Belli’s suit also brought charges of wrongful conversion against Chase Manhattan Bank, HSBC, Bank of America, and Wells Fargo Bank, all of which had offices in California. The banks fought back through an impressive array of San Francisco law firms: Folger & Levin representing Chase; Heller Ehrman White representing Wells Fargo; Landels Ripley Diamond representing HSBC; Steefel Levitt Weiss representing Citibank as corporation and John Reed as personally named defendant. Bank of America was represented by its own general counsel. They were circling their wagons.
After further investigation and discovery, Belli concluded that he had chanced upon a major state secret. He told friends he now believed that Citibank’s John Reed had joined in a plot with President Reagan, James Baker, Bill Casey and Prime Minister Margaret Thatcher, to use Yamashita’s Gold to finance covert operations by America and Britain. He referred to the plan as ‘The Purple Ink Document’. Unfortunately, Belli’s health deteriorated sharply over the next two and a half years, and he died in 1996 before the case could make much progress. Those who succeeded him at his law firm did not pursue the case with similar vigor, but the Belli suit against Reed and these five major banks is still pending.
In 2000, after years of delay, upheaval, interference, threats, and reversals, Eleanor Piel filed new papers in the New York Surrogate’s Court to empower Luz and Piel as co-administrators of Santy’s estate, allowing them to move forward in locating Santy’s assets in New York State. All was not well at Citibank. It was accused of money-laundering. In December 1998, the General Accounting Office concluded that Citibank had laundered $100million dollars for Raul Salinas, brother of disgraced former Mexican President Carlos Salinas. The GAO report described how Citibank helped Salinas create “a money-managing system that disguised the origin, destination and beneficial owner of the funds involved”. In December 1996, CIA Director John Deutsch resigned under a cloud and immediately joined Citibank’s board of directors. In November 2000, just before another scandal broke at Citibank, John Reed resigned as CEO. This time the bank was embarrassed by the revelation that it had moved $800-million for Russian tycoon Irakly Kaveladze, who set up 2,000 dummy corporations in Delaware to which Citibank and others had been funneling his money for nearly a decade. Two other Citibank private clients were the sons of the late Nigerian dictator General Sani Abacha, accused of having siphoned off more than $4-billion from taxes, phony contracts and bribes. When Abacha’s son Mohammed made an urgent demand of Citibank for a $39- million overdraft, Citibank disbursed the funds to him through three different accounts. Curiously there has been no similar investigation by the GAO into what was done with Santy’s $50-billion at Cititrust.
Why are banks so evasive, and how can they deny having accounts? The answer is that there is much money to be made by delays. Merrill-Lynch sat for many years on $35-million in Marcos assets, and said not a word until the end of 2000 when they were ordered by a court to relinquish the funds. During those years, significant profits were made on the dormant funds. Swiss banks adamantly deny having Marcos accounts, but early in 2001 Irene Marcos and her husband were accused by the German government of attempting to launder $13.4-billion by moving it from Swiss banks to Deutsche Bank in Frankfurt. For decades, the same Swiss banks denied sitting on the assets of Holocaust victims. Heirs may show all manner of evidence, only to be told their documents are false. If they press, they risk arrest for negotiating ‘counterfeit’ instruments. But who says the documents are counterfeit?
For example, a certificate that assured President Sukarno of Indonesia those quantities of gold and platinum he deposited in Swiss banks were guaranteed by all the members of the Swiss banking trust, whose signatures are conspicuously displayed and easily validated. Yet every effort by Sukarno’s heirs to access the account failed, and the very idea that a Sukarno estate exists is derided. While some Sukarno precious metal certificates indeed may be counterfeit, how can you know for sure until an expert opinion is rendered? As the bank in question has a vested interest in claiming fraud, it is hardly the proper judge of validity. Only by testing the document in a court of law can that judgement be made, but as we saw, that avenue is subject to abuse.
Where can you turn? If you tell a bank you only want to know whether a document is real or counterfeit, you are almost certain to be arrested on the spot just for asking. You may be arrested even when you do not ask.
Take the bizarre case of Australian broker Peter Johnston, who was asked by a client to negotiate a UBS gold certificate in Europe. While traveling, Johnston did not want to carry the certificate, so he left it in ‘safe custody’ with the London branch of Australia’s Westpac Bank. He often lodged such certificates with Westpac. He did not ask Westpac to attest to its being genuine. Yet the branch manager felt ‘uneasy’, and without asking Johnston faxed copies to UBS in Switzerland, asking if it was genuine. Without ever examining the original, UBS ‘informally’ declared it a forgery.
Normally, the City of London Fraud Squad would refuse to pursue a charge based on an informal opinion, but this time the Fraud Squad set up a sting, and when Johnston walked in to the Westpac office on March 6, 1995, he was arrested and charged with attempted fraud – because the certificate might be phony and Johnston might try in the future to negotiate it. Amazingly, Johnston was convicted on this specious charge and languished in prison for 18 months. At no time did UBS actually establish that the certificate was a forgery, only saying it was not issued by UBS in Zurich. This was a blatant dodge, because UBS gold bullion deals are not done in Zurich but by their subsidiary, Warburg Dillon Read, at Glattbrug near Zurich airport. In short, Johnston appears to have been falsely imprisoned on false testimony, for something he did not attempt to do.
We have seen how Santy’s heirs presented all the necessary documentation and codes, but still were stonewalled. We saw that Japan’s Ministry of Finance deliberately contrived the “57s” to look different from ordinary Japanese government bonds so they could be denounced as forgeries, allowing the Ministry to dodge payment. That UBS, Citibank and other banks might do the same must come as no surprise. When a client dies, it matters little whether he was an inmate at Buchenwald or president of Indonesia — the bank will do all it can to retain the gold.
Here is an example of what John Kenneth Galbraith meant when he said, “The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it.” Against this background, it is revealing to see how quickly the U.S. Secret Service rushes to the aid of a Swiss bank, when a customer walks in asking if a gold certificate is genuine.
In March 1996, Filipino attorney Ben Aragones met retired Wall Street broker W.R. ‘Cotton’ Jones. Aragones was trustee of a big estate with bullion deposits in Switzerland. He told Cotton how he had been arrested by Swiss authorities for trying to negotiate a gold certificate, spent three months in jail, and was forbidden to return. On another trip to Zurich he said he and his wife were kidnaped and terrorized. He was told that UBS did this to scare him off forever.
Within the US, the banks used the Secret Service to conduct ‘sting operations’, in order to seize the gold certificates. The reason for these sting operations, for seizing such documents and declaring them counterfeit, is that they are worth a great deal of money. Once Treasury has them, they can be negotiated discreetly on a government-to-government basis. If so, it is a novel form of armed robbery by one’s own government. Foot-dragging does the job less dramatically. Like Swiss banks sitting on Holocaust gold, American banks had only to wait long enough and all contenders for Santy’s estate would be dead. In the meantime, the message is: Do not ask too many questions or you may go to prison.
In the next and final episode of this article, we now come across the entities and individuals working for the networks of power of these two families, https://behindthenews.co.za/yamashitas-gold-part-5-of-a-5-part-series/
