It Takes a Village to Loot a Nation: Cronyism and Corruption
Poverty and inequality have long plagued Philippine society. During the Marcos regime, however, the disparity between the rich and the poor swelled dramatically.
Within Marcos’s first ten years of office, for instance, the number of Filipinos who could not meet the minimum requirements for food, shelter, and clothing rose from 39% to 48% of the population; based on food intake alone, about 84.3% of households were poorly fed. Meanwhile, estimates showed that the Philippines actually had enough resources to feed twice its population. Inequality explains this paradox: for instance, in banana plantations owned by Antonio Floirendo, an associate of Marcos, bananas were exclusively produced for export. Bananas that did not meet the required specifications were instead given to cattle to eat; workers were forbidden from eating them. Choice cuts of this beef were then given as gifts to the Marcoses and other friends.
Poor healthcare was also a problem during the Marcos regime. Globally, at the time, the Philippines had the highest rates for whooping cough, diphtheria, and rabies; in the Western Pacific Region, it had the highest rates for tuberculosis and polio. About 400 children were dying every day due to diarrhea and communicable diseases. Although potentially fatal, these diseases were all preventable; 43.2% of annual deaths had preventable causes. Seven out of ten Filipinos died without ever seeing a doctor. For a typical hospital, the ratio of beds to patients was approximately 1:650. Meanwhile, the Marcoses had a mini-hospital in Malacañang worth an estimated $250,000. Imelda’s hospital projects like the Lung Center, on the other hand, could only be accessed by those with the money to pay their exorbitant fees. For instance, in 1986, the Lung Center had only one patient, while the Quezon Institute still had multiple tuberculosis patients sharing beds. Meanwhile, international donations from organizations like the WHO and UNICEF were diverted to Imelda’s London account to purchase diamonds, as well as Minister of Health Florentino Solon’s account to purchase several houses around the country and even a beach resort.
In 1963, about 105,000 informal settlers were said to be living in Metro Manila, a figure which doubled to about 200,000 in 1975, three years after the declaration of Martial Law. Conservative estimates gave a figure of about 1 in 5 Filipinos living in urban areas without decent housing. Many slum dwellers came to settle in these urban communities to relocate from areas being developed for hotels and infrastructure by Marcos’s cronies; these relocated families were then also hired as cheap labor to work in these projects. Such living conditions sharply contrasted against the dozens of houses the Marcoses owned across the globe, worth millions in regular maintenance. It is estimated that by 1985, the upkeep of the Marcos residences cost the amount it would take to feed a small town of 48,000 people for a whole year. A particularly disturbing account is told of the island of Calauit, 275 miles southwest of Manila, from which about 120 poor families were evicted to make room for giraffes, zebras, gazelles, and other animals from Kenya. Bought using government funds and maintained at about $30,000 a month, the island was used as a private hunting ground by Ferdinand “Bongbong” Marcos, Jr.
To understand the deep extent to which Marcos plundered the nation, it is thus important to examine the extensive network of cronies he built through a cycle of accumulating wealth and consolidating power. Through amassing vast political and financial capital, Marcos put himself in a position to exert massive influence over big businessmen and other politicians; in turn, their allegiance served to further widen Marcos’s sphere of control over the nation and its resources. Together, Marcos and his network of cronies engaged in nearly two decades of abusive, even perverse, activities which continue to leave a scar on the nation today—a scar most deeply felt by the ordinary Filipino.
Roberto Benedicto was Marcos’s classmate and fraternity brother at the UP Law School. When Marcos ran for president, Benedicto served as Chairman of Marcos’s party, Kilusang Bagong Lipunan, for Western Visayas, delivering a sizeable number of votes for the future dictator. Later, Benedicto was accorded power-of-attorney to deal with corporations on behalf of Marcos. With Benedicto’s help, Marcos opened his first of many Swiss bank accounts, through which he would funnel the nation’s wealth to his personal accounts.
In return, Marcos appointed Benedicto as chairman of the Philippine National Bank, which was the biggest state-owned bank at the time. He proceeded to use funds from this bank to finance other crony-owned businesses, including his own. Eventually, Benedicto took control of even more banks, which allowed him to control the terms of important loans. He used these to his advantage in edging out his competitors in various businesses.
Marcos also offered Benedicto the ambassadorship to Japan, through which Benedicto ratified questionable treaties, like the Treaty of Amity, Commerce and Navigation. These gave him personal advantage in making investments, as he knew precisely where Japanese businessmen wanted to invest. He also acquired over $550M in war reparations money from Japan, which he used to forward his own private interests.
Most notably, however, Benedicto took control of the Philippine Exchange Co. (Philex) which handled all the international trade of sugar for local hacienderos. Through Philex, Benedicto bought cheaply from local producers and made enormous profits abroad. Benedicto was further supported by Marcos decrees and his Japanese money to seize leadership of the Philippine Sugar Commission, which represented 27% of the country’s dollar earnings. As Benedicto grew his virtual monopoly of the sugar industry, a significant portion of the profits he made were paid to a “special fund” that was “subject to the disposition of the president for public purposes.”
Antonio Floirendo was a close business associate of the Marcoses. In Marcos’s 1965 and 1969 bids for the presidency, Floirendo greatly contributed to funding both campaigns. He soon became a regular member of Imelda’s entourage and a leading contributor to the First Lady’s projects.
In return, Floirendo benefited by taking control of one of the biggest banana plantations in the world, taking over vast expanses of land while driving away their indigenous inhabitants. With Marcos’s assistance, Floirendo initiated a partnership with the Bureau of Prisons to enlist prisoners as laborers in his plantations. With this cheap source of labor, Floirendo could continuously expand his interests with little concern about cost.
Worse than his greed in expanding his banana empire, however, was how he treated his prisoner-workers. Prisoners were forced to wake up at 3am and work overtime. From the strain of heavy lifting at the plantations, many grew to have deformed backs. Yet workers were offered no job or health security, even when they were injured by the chemicals used in the plantations.
One might argue that they were treated worse than the bananas themselves. Bananas were given special refrigeration and cushions in storage and transport to ensure that quality was maintained for export. Meanwhile, as millions of Filipinos starved, bananas were strictly off-limits to the workers even when they did not meet export quality; instead, these bananas were given to special cows whose meat was reserved solely for the Marcoses and the cronies.
Juan Ponce Enrile
Juan Ponce Enrile was a key supporter of Marcos in the years leading up to Martial Law and afterward. In 1965, he aided Marcos in his campaign for the presidency. In 1972, he was instrumental in the establishment of the dictatorship, acting as a scapegoat for the looming Communist threat. In a staged ambush, Enrile and his convoy were “attacked” by unknown assailants on his way to his Wack Wack subdivision; this became a trigger for the declaration of Martial Law.
During Marcos’s rule, Marcos appointed Enrile to key government positions such as Commissioner of Customs, Secretary of Justice, and then Secretary of Defense (which was the biggest item on the national budget), he used his positions to mercilessly implement Marcos’s policies in the country—through torture and murder of political opponents if necessary.
In exchange, Enrile became chairman of key institutions like the Philippine National Bank, the National Investment & Development Corporation, the Philippine Coconut Authority, the United Coconut Planters Bank, and the United Coconut Mills. He was also given key positions in big businesses as well as various logging concessions, a way of getting rich quickly with little investment.
Arguably the largest corruption scheme Enrile was involved with, however, was the imposition of the coco levy. The coco levy was essentially a tax that charged coconut farmers with $0.08 per 100 kilos of copra, supposedly to fund the Coconut Investment Company, Cocofed, and the Philippine Coconut Authority. These were all institutions which should have supported and defended the ordinary coconut farmer.
As chair of the Philippine Coconut Authority, which had control over Cocofed, Enrile benefited immensely from the coco levy and its continuous expansion. During Martial Law, the levy went up to $13 per 100 kilos of copra; from 1977 to 1981, it remained at $10, eating up about 33.8% of farmers’ incomes. Meanwhile, coconut farmers at the time could only afford about 10% of what was considered the minimum requirement for food.
An estimated $475M was raised from the levy, which was not used to support the farmers, but to finance Enrile’s business conglomerates and Imelda’s projects, like the Miss Universe pageant and the Cultural Center of the Philippines.
Danding Cojuangco was entangled with the Marcoses through various close family relationships. He was godfather of Marcos’s son and grandson, while Marcos was godfather of Cojuangco’s eldest son (named Marcos Cojuangco). Before Martial Law, in the time of Marcos’s corrupt Congress, Cojuangco was Marcos’s loyal representative in Tarlac, ensuring that Marcos’s votes and interests were secured in Central Luzon.
In exchange, Cojuangco was given free rein to practically cultivate his own empire under the Marcos regime. By Presidential decree, Cojuangco was given power alongside Enrile to reap the enormous funds diverted from the coco levy. Though the United Coconut Planters Bank was nominally owned by coconut farmers to use for their interests, Cojuangco was given permission to purchase the United Coconut Planters Bank (with money from the coco levy) and invest the bank’s money in whatever area he pleased. With little regulation, Cojuangco used the farmers’ money to take control of the sugar industry, the flour industry, and even the San Miguel Corporation
Alongside his business interests, Cojuangco was appointed Ambassador-at-Large, which allowed him to escape testimony in US courts and travel immediately to Mexico with little effort, escaping any accountability and investigation. Cojuangco was also awarded the rank of military reserve colonel, and permitted a netherworld army of about 5,000 men with high-powered firearms to do his bidding and ensure his interests were secured at whatever cost.
Armed with violence and the money of some of the poorest of the poor, Cojuangco became one of the richest men in the Philippines under the Marcos regime. At the height of Marcos’s power, Cojuangco controlled about $1.5B in assets, a sizeable chunk of the country’s GNP, due to monopolies in virtually all the industries he decided to invest in. In the Los Angeles Times, Cojuangco was described as “second only to Marcos in the systematic looting of the Philippines.”
Manuel Elizalde was Marcos’s cabinet minister in charge of ethnic groups. Through his seemingly harmless position in the Marcos government, Elizalde supported Marcos through unusual but powerful means.
Elizalde headed the Presidential Assistance on National Minorities, also known as Panamin, which claimed the discovery of a Stone Age culture called the Tasaday. It was posited that the Tasaday were a culture untouched by modern-day civilization, generating great interest among scientists and tourists from outside the Philippines. Some years later, however, the Tasaday were later found to be a hoax. Though indeed they belonged to an ethnic group, Elizalde had rehearsed them to look like cave dwellers to make them a more profitable venture, with better prospects for the public image of the Marcos government.
In exchange, Marcos favored Elizalde’s steel companies in terms of funding and regulations which ensured lucrative markets. For example, in 1980, Elizalde had attained enough control of the industry that he could increase the price of tin plates by 17% with little effort. He even threatened an additional 7.5% increase in prices unless he was allowed to import raw materials for free.
In another get-rich-quick scheme between Marcos and Elizalde, Marcos allowed Elizalde to borrow rifle stocks from the Armed Forces of the Philippines to export to Thailand. Instead, Elizalde simply sold them back to the Philippine Constabulary for a profit—easy money.
Rodolfo Cuenca campaigned and raised funds for Marcos in his first bid for the presidency in 1965. He soon became one of Marcos’s favorite golfing partners. From this relationship would spring some of the most well-known projects from the Marcos government—all of them meant to serve not the people, but Cuenca’s and Marcos’s private interests.
Cuenca formed the Construction & Development Corporation of the Philippines (CDCP), which supported by the Marcos government through the awarding of contracts, including the Manila North and South Expressways. The CDCP eventually became the major public highway builder under the Marcos administration, the largest civil engineering firm in the country, and even the biggest construction firm in Southeast Asia.
In classic Marcos crony fashion, the government continuously helped CDCP get the most lucrative government and even overseas contracts. It came to a point that Cuenca virtually had the power to approve all government construction projects, depending on whether he wanted to take them for himself. When the Asian Development Bank (ADB) chose to give the Japanese company Taisei the contract to construct the new Manila International Airport instead of the CDCP, the government asked ADB to reconsider. When ADB refused, the government merely restricted Taisei work until the firm left, and the CDCP was given the contract in its stead.
Through the CDCP, Cuenca was commissioned to do many more unnecessary projects, often at Imelda’s behest. One such project was the San Juanico Bridge. At the time, there was not much traffic between the two relatively underdeveloped islands of Leyte and Samar. Imelda simply wanted a bridge for her province; Cuenca, on the other hand, stood to gain a lot from his involvement in the project, including kickbacks and Imelda’s favor. Despite environmental warnings, Cuenca also reclaimed the land around Manila Bay to get quick money by selling the “new land.” In proposing the budget for what would soon become the LRT system, a swollen $278M was proposed instead of the supposed $8.1M in costs.
Cuenca also used his position in other schemes to accumulate more easy wealth. Under CDCP contracts, he imposed toll fees on the northern Manila-Tabang and southern Manila-Alabang highways. Although the contracts initially allowed tolls for the first 10 years, presidential decree allowed long extensions and even exorbitant increases in the fee. When buses boycotted the expressways to avoid the fee, the government simply forbade them from using service roads, so they were forced to pay the tolls again anyway.