A Marcos Loyalist Makes A Last Hurrah For Marcos!

A Marcos loyalist had wandered into my blog and  called me names: ‘gunggong’ and ‘bakla’ when I tried to compare the late dictator to the departed DILG Secretary.  One is hated, the other is well-loved.

He said that the comparison was way off because Marcos had the Bataan Nuclear Power Plant and a Sta.  Barbara nuclear project that could have handled the present Chinese aggression against RP on Scarborough shoals.

I would say that he could not even handle the mass of angry people armed only with flowers and rosary beads in February of 1986, how much more the Chinese in 2012, thirteen years after he was dead!

He considered Marcos a patriot, who tried to build a nuclear power plant and defensive missiles codenamed:  “Sta. Barbara Project,” that we can use against the present Chinese agression in our turf.  He is totally ignorant of the Bataan Nuclear Power Plant.  Typical of Marcos zealots who understand the man for the myths he adorned himself with and not for what he really is.  This particular zealot does not believe in books about Marcos because they were funded by anti-Marcos people.  He would believe only in pro-Marcos books and bloggers that used blinders to hide the truth.

Unluckily, he ventured into this blog which does not believe that Marcos was a patriot and a hero par excellence.  He should have gone to Bongbong’s or Imelda’s website and unload his macabre admiration of Da Apo and his family, whose last act in their ruthless rule of the country, was to pack duffel bags with cash, jewelries, gold, bank certificates, deposits accounts and newly-printed Philippine money from Central Bank and head off to Hawaii — leaving the economy bankrupt and their victims, the Filipino people, to pay for their debts from the World Bank/IMF.

Or maybe he was kidnapped by the CIA, imprisoned at Hickam Air Force Base in Hawaii, had to pay ransom in gold bars, gold bank deposits and Swiss bank accounts according to author Sterling Seagrave.  In which case, this has  similar undertones of the way Marcos had  ‘kidnapped’ the ‘oligarchs’ in the country to surrender their business empire to him and his cronies after  he declared martial law in 1972.

“What goes around, comes around!”

Anyway, here’s a credible account of the Bataan Nuclear Power Plant:

 “The crony who engineered the deal for Ferdinand Marcos was Herminio Disini. Disini was part of the royal family, married to Inday Escolin,  a first cousin of Imelda Marcos who also served as one of her physicians.  Like Eduardo Cojuangco, Disini was twenty years Ferdinand’s junior; like Rudi Cuenca, was a golf partner.  After martial law, Disini became president of the Wack Wack Country Club, the preserve of Manila’s old money.  Other players groused that Marcos and Disini cheated. Explained former golf partner M.J. Gonzales, “When Marcos played golf, he used his caddies, aides and bodyguards to do the dirty work. You could never pin anything on him personally.” Ferdinand had the lowest handicap of any chief executive in the world, which meant a lot to him.

Disini’s big break came in the early 1970s, when Ferdinand used him to take over the cigarette filter business in the islands – long dominated by a British-American firm called Filtrona Philippines, Inc.  Together they forced Filtrona out of business, leaving Disini’s Philippine Tobacco Filters Corporation with monopoly worth $1 million a month in profits. Disini then made a deal with Ferdinand‘s friend Lucio Tan, head of Fortune Tobacco, selling Tan filters so cheap that his cigarettes could undercut rivals and drive competition out of the market.  In appreciation, Tan gave  president Marcos $11 million in campaign contributions, plus $2.5 million a year.  (In the process, Tan avoided paying some $5 million a year in taxes.

With all the money he made in these deals, Disini created Herdis Group, Inc., a conglomerate of fifty companies with $1 billion in assets.  Not wanting to tie up his own millions, he did it all with borrowed money, exploiting Philippine government guarantees that were irresistible to foreign bankers. Disini hardly seems like the sort of man you would trust to build a nuclear power plant.  There were other strange aspects to the project.  The power plant sits on a jungle bluff in Bataan overlooking a stretch of the South China Sea –a site subject to tsunami tidal waves, 5 miles from a dormant volcano, and only 25 miles from three geologic faults.

It all began in 1973, when President Marcos ordered National Power (Corporation) to negotiate a deal to buy 600-megawatt nuclear plants. General Electric showed interest and began negotiating with National Power.  The Westinghouse district manager for the Philippines sought help from Jesus Vergara, president of Asia Industries which handled distribution in the islands for Westinghouse. Vergara knew how things worked and advised Westinghouse that if it wanted to beat GE to the punch, it should hire a lobbyist close to Marcos, a man like Disini.

On the golf course, Vergara mentioned the job to Disini, pointing out that his commission could run into millions. Disini arranged for Westinghouse executives do discuss their proposal in private with Ferdinand. Westinghouse offered to supply a single plant with two 620-megawatt reactors at a price of $500 million. Additional charge for fuel, power transmission lines, and so forth raised the estimated total around $650 million.

After this private audience, Ferdinand ordered the general manager of National Power, Ramon Ravanzo, to give the business to Westinghouse. There was to be no competitive bidding.

During nine months of cultivating National Power and discussing its own proposals, GE had never gone straight to the palace.  At a meeting with officials of National Power in the office of executive Secretary Alex Melchor, GE learned to its dismay that Westinghouse had the contract sewed up.

Melchor thinking that he still might persuade Ferdinand to drop Westinghouse if the GE proposal proved to make more sense assembled a team of experts to compare the costs and technical details of the two proposals.  Melchor’s team found nearly every alternative cheaper than Westinghouse.  But whatever deal Ferdinand had struck with Westinghouse pleased him so much that he was not moved by any of these arguments.

Already, the Westinghouse price was beginning to grow.  When Westinghouse first got the deal, U.S. Ambassador Sullivan had told Washington that the reported cost of $500 million appeared to be low by at least 20 per cent.  By September, Sullivan was advising Washington that Westinghouse now said that the cost would be over $1 billion. Sullivan cabled Secretary of State Kissinger:  “I stressed that embassy considered great deal of American prestige riding on Westinghouse performance, and that therefore we intended to follow project closely.  I pointed out that this was in effect Filipino Aswan Dam, being largest and most expensive construction project ever undertaken in this country… current cost estimates are over one billion dollars.”

By the time a formal contract was signed in February 1976, the deal was hardly recognizable.  The power plant would not have not two but only one 626-megawatt reactor.  At the prices Westinghouse was not quoting, international banks would not give Manila a loan big enough to finance the second generator.  Instead of getting two reactors for $659 million, the Philippines were getting one reactor, with half the power output, for $722 million.  It would cost another $387 million for interest and escalation costs, bringing the total price at $1.1 billion.  Given past experience, Filipinos naturally assumed that Westinghouse had bribed the president — or, to put it the other way around, that Ferdinand had demanded a huge kickback and that Westinghouse had agreed in order to snatch the deal away from GE. They speculated that “in the usual manner,” the Marcos slice had grown larger and larger to accommodate Disini and other cronies down the line and as the First Lady and her family and followers queued up.

According to Vergara who had asked Disini to intercede with Malacanang in the first place, Westinghouse paid Disini a commission of at least $50 million.  Vergara said Disini gave Marcos $30 million of that, and split the  rest with Vergara and Disini’s business partner, Rodolfo Jacob.  This meant  that Ferdinand demanded and received from Disini not just 10 per cent or 20 percent or 40 per cent, but a whopping 60  percent.  Jacob confirmed that kickbacks went to Marcos, without verifying how much.  A new Disini company, Power Contractors, Inc., became chief subcontractor of civil works in the project.  Another Disini outfit, Technosphere Consultants Group, provided engineering and construction management. The contract to install communications at the site was also won by a Disini –related company.  And Disini’s Summa Insurance Corporation was paid $10 million premium to write a $668 million policy on the project – the largest single policy ever written in the Philippines.  Disini took over Asia Industries, becoming Westinghouse’s Philippine distributor.

Westinghouse denied that any money went to Marcos, and said it paid Disini only $17 million in commissions. According to the U.S. Securities and Exchange Commission, a district manager for Westinghouse in the Philippines destroyed six volumes of documents related to the project, then retired.

Once financing was finally arranged with the U.S. Export-Import bank, Westinghouse needed a place to build the plant.   The Marcos and Romualdez family had taken over a large part of Bataan, opposite Corregidor, some of which was used to build a presidential seaside retreat, the rest turned into a tax-free industrial development zone – in which the lure of tax incentives was used to induce companies to buy sites from the royal family. Apparently Ferdinand made it a condition of the Westinghouse contract that the nuclear power plant had to be built in Bataan.

National Power, with the help from the U.N.’s International Atomic Energy Agency (IAEA), picked a seaside location there, and hired Ebasco Service, a subsidiary of Enserch Corporation of Dallas, to test the safety of the site and monitor construction. Ebasco concluded that the site was vulnerable to tidal waves.  National Power compromised on a nearby bluff.  Westinghouse began clearing the site in March 1976 before National Power had obtained a construction permit and while Ebasco engineers were still trying to determine whether the bluff site was safe; bulldozers interfered with seismic tests.  Filipinos wondered if anyone had considered the danger of earthquakes and the dormant volcano, Mount Natib, five miles away.  A team from the International Atomic energy Agency visited the site in 1978 and recommended that construction be halted until further tests were completed.  By then, Westinghouse had already spent about $200 million on the plant.

The head of the Philippine Atomic Energy Commission, Librado Ibe, said his arm was twisted by cabinet officials to let the project proceed, and that he was wined and dined and offered prostitutes by Westinghouse with continual reminders that this was a pet project of President Marcos.  Ibe gave in and issued the construction permit in April 1979, a week after the Three Mile Island accident, then took his wife and two younger children and moved to the United States.  His fear for their safety seemed justified. Bankers who had questioned earlier deals by Marcos cronies had been assaulted by thugs, and were warned that their families were in danger.

Several months later, Ferdinand acted on his own experts’ advice and halted construction himself, ordering investigation (into the technical side, not the financial side).  The investigators concluded that the design was unsafe, and recommended changes to incorporate new safety features after Three Mile Island.  Westinghouse renegotiated the contract to meet these objections and the price rose to $1.1 billion — $55 million for added safety equipment, $646 million for higher interest costs and inflation. Eventually, the cost reached $2.2 billion.  Work on the project pushed through to completion in 1984, as if Westinghouse itself had had enough and wanted to get out.  Observers wondered whether Ferdinand had really interrupted the work because of concern for safety – or because he had found yet another way to hold Westinghouse’s feet to the fire.

At about the same time, Disini’s business empire suddenly collapsed.  He left the Philippines hastily for Austria, where he had taken the precaution of salting much of his wealth, and where he had purchased a palace outside Vienna.  Fortunately, Disini had lots of friends in Austria.  During his travel with Imelda, Disini and the First Lady had become good friends with Kurt Waldheim.

As former secretary of defense and head of the World Bank, McNamara surely had access to secret information about Ferdinand and Imelda. Could he have been ignorant of the dark side of the regime?  Since Martial law, the World Bank had poured more than $2 billion into the Philippine economy, much of it diverted by the Marcoses into Swiss banks.  It was partly at the encouragement of the World Bank that private banks and banking consortia were footing the bills for improvable ventures by Marcos cronies involving land grabs, company takeovers, gigantic kickbacks and policies provoking widespread famine.  How could the Marcos regime be a “good risks?”

 It appears that the Bank was not ignorant as it pretended to be, which became clear with the leak of the Ascher Memorandum in December 1980. This provided what one critic called “a rare glimpse of the cold rationality and lucid class consciousness that guide the actions of one of the capitalist world’s most tight-lipped institutions.”  The Ascher Memorandum laid down guidelines by which the bank could begin to distance itself from the Marcos regime as it headed toward disaster.   That it was leaked right after Ronald Reagan was elected president revealed the concern  of some people in the foreign  policy community in Washington that Reagan was  going to  put its support behind Marcos at the very moment when Ferdinand bubble was about to burst.  What emerges from the memorandum is a simple rule of thumb:  There is nothing wrong with the Bank actively supporting a brutal and unscrupulous regime so long as the Bank gets out from under before the regime collapses.  The Bank can demand payment of debt from whoever picks up the pieces.  From the World Bank’s point of view, a dictator’s bills can be paid just as readily by his victims. “ (Marcos Dynasty, Sterling Seagrave, p. 289-94).