The Baltazar Aquino Papers (BAP)

The Baltazar Aquino Papers (BAP) are documents generated by the ‘perpetuation of testimony’ proceedings (Special Proceedings No. 002) conducted by the Sandiganbayan from September 1988 to November 1989.  The Sandiganbayan is a special court created by the Philippine government to try corruption cases filed against government officials.

After the ouster of President Marcos in February 1986, the government of President Cory Aquino initiated several  moves for the general purpose of recovering so-called ‘ill-gotten wealth’ from the Marcoses and their cronies and to prosecute them for ‘grave crimes against the Filipino people.’  Among these moves included the creation of the Presidential Commission on Good Government (PCGG) and the subsequent filing of several suits (civil and criminal) in various courts in the Philippines and in other countries.

The Sandiganbayan ‘perpetuation of testimony’ proceedings were conducted for the purpose of recording for posterity and future use the testimony of an ailing Baltazar A. Aquino (who was 78 years old in 1989), former Secretary (or Minister when the Philippines adopted a parliamentary form of government in 1978) of Public Highways during the Marcos highways.  The proceedings were actually done in conjunction with the hearing of several civil suits against Marcos, his family, and friends where Baltazar Aquino himself was a prosecution witness.  At the time, the government of President Cory Aquino had decided, based on national security considerations, against allowing the Marcoses to return to the country.  For this reason, only civil suits were filed against the Marcoses in Philippine courts.  Under existing Philippine laws, when a criminal case is filed, the defendant must be physically present in the court and face his accuser.

 

The perpetuation of Balatazar Aquino’s testimony was done before the 2nd division of the Sandiganbayan.  Meanwhile, the civil suit against Marcos, his family, and friends (Civil Case No. 0002) was heard at the graft court’s 3rd division up to November 1989.  Ferdinand Marcos died while in exile in Hawaii on 28 September 1989.  In the light of Marcos’ death, the perpetuation of Aquino’s testimony was terminated in early 1990.  Solicitor General Francisco I. Chavez withdrew the petition for the perpetuation of Aquino’s testimony on 2 February 1990.

 

A general picture of Marcos’ irregular relationships with Japanese firms and suppliers vying for Japanese government-funded projects in the Philippines emerges from the Aquino testimony, the papers supplied by Oscar Rodriguez, and documents pertaining to the Angenit Investment Corporation headed by Marcos crony and former parliamentarian Andres Genito Jr.  The Marcos-Japanese relationship started with the Japanese Reparations Program, administered by the Reparations Commission headed by Marcos war buddy Gen. Eulogio Balao.  It continued up to the last years of the Marcos presidency when the Overseas Economic Cooperation Fund (OECF) became the main conduit of Japanese public funds into the country following the end of the Reparations Program.

 

In general, the Japanese government-provided funds are to be used to finance several general infrastructure and development contracts in the Philippines.  The equipment requirements of these projects were to procured from Japanese manufacturers or suppliers in the usual manner of so-called ‘tied aid.’  Ostensibly, the Japanese contractors must compete with each other in a bidding process where the qualified bidder submitting the lowest bid was awarded the contract.

 

However, Marcos and his associates perfected a system wherein no Japanese firm could win a contract unless a 15 percent (of the total contract price) ‘commission’ was paid.  This ‘commission’ would be included in the total contract price to be paid by the Philippine government out of Japanese government-provided funds.

 

Except for a specific instance (i.e., the Cagayan Valley Electrification Project) where they attempted to win contracts without paying any ‘commission’ to Marcos, the Japanese firms generally acceded to the ‘commission’ system.  All qualified bidders, therefore, knew that they were expected to pay the ‘commission’ if they wanted to win a contract.  They would still ‘compete’ in the bidding process.  One cannot be blamed however for thinking that since all were willing players anyway, the contracts were judiciously assigned to individual contractors in some sort of a queueing system.  This meant that if a firm was unable to win a contract for a particular project, it was sure to get one for another project in the future.

 

The key Marcos aides involved in the operations were Gen Eulogio Balao, Secretary Baltazar Aquino, Deputy Secretary Oscar Rodriguez, and Andres Genito Jr.  Balao collected ‘commissions’ on projects financed under the Reparations Program; most of these projects were administered by Philippine government agencies other than the Department of Public Highways.  Genito took Balao’s place when the latter had a stroke and eventually died in 1977.  In a kind of division of labor, Aquino collected commissions on projects administered by the Department of Public Highways and financed by the Overseas Economic Cooperation Fund (OECF).  Rodriguez, who was accountable only to Marcos, though technically Aquino’s subordinate, took care of the technical function of accepting and evaluating bids and recommending (to Marcos) the award of contracts to specific Japanese suppliers.  He could have been in charge of the ‘queueing’ system alluded to earlier.

 

The Japanese firms that paid regular contributions to Marcos through Balatazar Aquino included Sakai Heavy Industries, Sumitomo Corporation, Toyo Corporation, Nissho-Iwai, and Mitsui & Company.  Four representatives of Japanese firms–Susumu Makino of Sakai, Yoshio Kotake and Mr. Hara of Toyo Corporation, and Mr. Sato of Sumitomo–alternatively handed over these payoffs to Baltazar Aquino in Hongkong.

 

Among the key revelations of the Sandiganbayan proceedings include the following:

 

1. On several occasions from July 1975 to July 1976, Secretary Aquino travelled to Hongkong to receive monies from Japanese firm representatives, particularly Susumu Makino of Sakai Heavy Industries.  Aquino would then deposit the money to a numbered account (No. 51960) with the Hongkong office of the Swiss Bank Corporation.  A Swiss Bank Corporation official in Hongkong, a Mr. Barasoni issued deposit receipts which Aquino will turn over to Marcos upon his return to Manila.
2. Baltazar Aquino testified that Marcos instructed him to keep his Hongkong activities secret and unknown even to Aquino’s wife.  Aquino wrote Marcos a letter dated 25 May 1977 promising to keep his mouth shut.
3. After Gen. Balao’s death, Marcos expressed some worry that Genito was not giving a proper accounting of ‘commissions’ received through Angenit Investment Corporation.  Rodriguez was asked to perform an audit and he was able to prepare a schedule of collections made by Balao and Genito.  Genito was found, in one instance, to be short of a hundred thousand dollars (US$100,000.00).  For his part, Genito tried to persuade Rodriguez to withhold his deficiency from Marcos.
4. Yoshiko Kotake of Toyo Corporation wrote Genito to advise President Marcos not to use Baltazar Aquino to collect ‘commissions’ from Japanese firms.  Kotake warned of a possible scandal (similar to the Lockheed affair which led to the imprisonment of former Japanese prime minister Kakuei Tanaka) since Aquino was a high government official.  Aquino was himself in charge of Japanese government-funded projects in the Philippines.