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Bank With Links to Marcos Admits Illegal Transfer of Philippine Money

March 17, 1990

NEW YORK (AP) _ On the same day Imelda Marcos appeared at a final court hearing before her racketeering trial, a Los Angeles bank with links to her late husband admitted it illegally transferred funds from the Philippines.

The California Overseas Bank, which prosecutors said had been partially owned by ousted Philippine president Ferdinand Marcos, pleaded guilty Friday to wire fraud.

The bank was to have gone to trial with Mrs. Marcos next week on charges of racketeering and racketeering conspiracy.

Through its attorney, Don Smaltz, the bank admitted that certain officers had opened fictitious accounts to enable money to be transferred to the United States from the Philippines.

Prosecutors alleged that the bank was once partly owned by Marcos. Its former president, Rodolfo T. Arambulo, pleaded guilty to a conspiracy charge on Feb. 28 and is a potential witness against Mrs. Marcos.

Neither of the Marcoses were named during the plea. The only thing Smaltz said about why the money was transferred to the bank was that it was used by ″certain people.″

The bank faces a $500,000 fine when sentenced April 23.

The bank’s plea leaves Mrs. Marcos and Saudi financier Adnan Khashoggi as the only defendants in the trial. Jury selection starts Tuesday in Manhattan’s federal court.

Both Mrs. Marcos and Khashoggi attended Friday’s pretrial hearing before U.S. District Judge John Keenan.

The case is about the alleged transfer by Mrs. Marcos and her late husband, Ferdinand, of more than $160 million from the Philippines treasury to buy Manhattan real estate. The indictment also alleges that the Marcoses defrauded $165 million from banking institutions to finance the properties.

Khashoggi is accused of helping the Marcoses hide their ownership of the real estate through false documents.

Ferdinand Marcos, the ousted Philippine leader, died Sept. 28 in exile in Hawaii.

In keeping with the traditional one-year mourning period in the Philippines, Mrs. Marcos was dressed all in black.

An attorney for Mrs. Marcos expressed concern about finding a jury that will not have preconceived opinions about the former Philippine first lady.

″Mrs. Marcos and her late husband have received much unfavorable press,″ attorney Gerald Spence said. ″She has been tried and convicted in the press.″

It also was disclosed that Mrs. Marcos’ lawyers want to call 91 people in the Philippines as defense witnesses but that the present Filipino government won’t let them leave the country.

Keenan said he would go over the list of witnesses with Spence and decide who should be allowed to testify. The judge said he then would ask prosecutors to contact the State Department to see if a compromise, like the taking of depositions, could be worked out with the Filipino government.

Mrs. Marcos is charged with racketeering, racketeering conspiracy, mail fraud and obstruction of justice. If convicted of all the counts, she faces a maximum sentence of 50 years in prison and a $1 million fine.

Khashoggi, who will be tried on mail fraud and obstruction of justices charges, faces a maximum penalty of 10 years in prison and a $500,000 fine.

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