HOW AMERICA SECRETLY
RECOVERED YAMASHITA’S GOLD
By Sterling & Peggy Seagrave
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-Mathey Chemicals, using equipment Marcos stole from Robert Curtis. Before it left Manila some was re-papered by Johnson-Mathey Bank, 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 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”.
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. [they make an excellent point here, about Carter not thinking this decision through very well, the Safari Club was a direct result of this blunder also. d.c ]
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, and involved in the Schlei case). 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 book; 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.
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, and finally masterminded the downfall and removal of Marcos, and his bullion.
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. Should bureaucrats be allowed to get away with murder-for-hire? Does this not lead to serial killing, and other addictions?
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 MFund. 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. Some sources have claimed that Singlaub was involved in Phoenix on the military side, although he denies this vigorously. He certainly was close to many people involved, including Shackley. 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. Congressional hearings declared that Phoenix was a ‘totally unlawful operation’. Yet Phoenix continued in rogue violation until the U.S. pulled out of Saigon in 1975.
“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 housecleaning 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. The New York Times journalist Seth Mydans quoted a well-placed source that “Singlaub comes in and out of the [Philippines]. He can even land at Clark without our knowing it.” We have established that senior Special Forces officers took brief leaves from duty in order to participate in Philippine treasure hunts with groups of PMFs linked to Singlaub, Cline and others. This erases a vital line between government service and private gain, and makes it impossible to enforce ethical standards.
Freedom from peer review is addictive. 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 not engaged by the White House, they work under contract to regimes whose human rights record is as bad as it gets. The Vinnell Corporation, PMF subsidiary of Dick Cheney’s Halliburton, worked with the army dictatorship in Myanmar, which has one of the worst human rights records on the planet.
Some of their motives are of questionable constitutionality. We reproduce letters from members of The Enterprise network, describing how they intend to use recovered Japanese war loot to set up a private FBI-style security force to police the American public, and a separate military-industrial complex ‘controlled by us’.
This costs money. Groups like the Moonies and Birchers, and wealthy individuals, put up only a portion of what is needed. One obvious solution was to divert existing Black Eagle funds, such as the dormant accounts controlled by Santa Romana. This is why Santy was brought to Washington in 1973, and pressed to make over funds to which he held title. When Santy died the following year, this may explain why several of his biggest accounts at Citibank and UBS were quickly transferred to Lansdale’s control. How they were used is unknown.
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. In Chapter Fourteen, we will see episode after episode where this overlap is demonstrated.
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 300,000 ounces 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.
According to a former Filipino diplomat, Ferdinand’s personal plane made many round trips to Switzerland. Commercial airlines also were used, as evidenced by waybills. Twelve secret shipments were said to have taken place aboard KLM, PAL, Air France, and Sabena. 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. This became clear during the Honolulu fraud trial of Ronald Rewald in 1983-85, which revealed that his investment firm, Bishop, Baldwin, Rewald, Dillingham & Wong, was a conduit for CIA funds in general. The firm helped Marcos and other wealthy Filipinos invest illicit funds in America. When Imelda later was tried in New York on charges of racketeering, her defense attorneys told us she and her husband had been encouraged to do so “by their friends in the White House”.
According to court testimony in Honolulu, 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 tight lipped 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. His relations with the Marcos family were complex and shifting. In the early 1980s he was mentioned as a possible successor as president. When Marcos crony Eduardo Cojuangco mounted an aggressive takeover of San Miguel Corporation, brewers of San Miguel beer, one of Ayala Corporation’s premier holdings, the family thought Don Enrique gave in too easily. This so displeased Aunt Mercedes and Uncle Joe that they stripped Zobel of his control over Ayala and handed it to his first cousin. Don Enrique went his own way thereafter.
Zobel knew a lot about Marcos efforts to recover war loot. In 1975, Ambassador Mutuc of the Leber Group notified Zobel that there was a Golden Lily vault under the control tower of Nelson airfield where Zobel was building the Peninsula Hotel. On June 3, 1975, Mutuc wrote: “I am with a group which has the necessary maps and eyewitnesses to the effect that in the premises in and around the old control tower … there is a buried treasure trove allegedly consisting of jewelries [sic] and gold bullions in a staggering amount of at least several hundred million dollars! We have noticed that the said building has been vacated and we fear that some construction work might be done in the premises. …any project you plan to do there can afford to wait until after we shall have located and retrieved the treasure trove.”
In 1983, Zobel was a patron of the lavish wedding of Irene Marcos to sports star Gregory Araneta, stepson of Lansdale’s top hit man, Napoleon Valeriano. It was reported that Imelda spent $20-million on the wedding. Austria’s Kurt Waldheim provided a silver carriage, pulled by seven white Arabian stallions provided by Morocco’s King Hassan. In return, the Marcoses deposited a very large dowry in Austrian and Moroccan banks. (Evidence of this dowry resurfaced in 2001, when the German government accused Irene and her husband of attempting to move some $13.4-billion illegally from Swiss banks to German banks.)
Flaunting money like this was part of the Marcos psychosis. He could have set up a charitable trust like the Ayala Foundation, and retired to his estates in Ilocos Norte. Andrew Carnegie once said, “The man who dies rich dies a fool.” Marcos had no time for charity because he was pressed continually by the Reagan White House to supply more black gold for its foreign policy objectives. 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.
According to this source, 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, all of which is correct. As pressure mounted on the Politburo, party hawks gained a stronger voice, pushing for invasion of Taiwan to gain control of its assets, 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.
As our source tells it, Nixon and Kissinger secretly offered Beijing $68-billion in gold (an amount they knew Marcos had), to be moved into PRC banks in a number of branches 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,” our 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.
Our Marcos source insists 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. Among related documents we reproduced on our CDs are letters from gold brokers asking for commissions to be paid after these transfers were successfully carried out. The Marcos family and wealthy friends subsequently traveled to Xiamen to inaugurate a new building for the PRC bank holding these accounts. Xiamen is adjacent to Amoy, home of the Hokkien dialect group long associated with the natural father of Ferdinand Marcos.
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.
In the early 1980s there was another bizarre development, when Ferdinand and Imelda learned of an extraordinary secret account set up with Golden Lily plunder after the Pacific War.
This was the billion-dollar gold bullion trust at Sanwa Bank in Osaka, set up in the names of General MacArthur and Emperor Hirohito, mentioned in Chapter Nine. Japanese call it the MacArthur Fund, while Americans call it the Showa Trust, using the name of Hirohito’s reign period. Sanwa Bank is one of Japan’s oldest, and Hirohito owned a large chunk of its stock from before World War II. The trust appears to have been set up by Robert B. Anderson shortly after he toured the Golden Lily treasure sites in the Philippines with MacArthur and Lansdale. Although MacArthur’s name is identified with it, it does not appear to have been intended to benefit MacArthur, at least not directly.
As for Hirohito, according to journalist Paul Manning who had access to SCAP records during an early stage of the U.S. Occupation, the emperor had $1-billion in gold and currencies hidden in overseas accounts since before the war. The emperor was pulling in $50-million a year in interest from overseas investments during the U.S. occupation, and SCAP financial advisors were aware of these income producing assets. Significantly, Sanwa Bank was one of three Japanese banks left untouched by General Marquat’s Economic and Scientific Section of SCAP. The other two were Tokai Bank and Dai-Ichi Kangyo Bank, involved in the Tanaka Club disbursements growing out of the M-Fund. Today, Sanwa Bank advertises its worldwide banking operations with the slogan “We’ve come a long way”. Indeed.
Ferdinand and Imelda learned of the Showa Trust at Sanwa Bank while combing through Santy’s papers after his death. According to documents we reproduce, by 1981 the Showa Trust was generating over $300-million in interest every quarter, or over one billion dollars of interest annually. As one of the bank’s owners, the emperor was doubtless getting a favorable rate of interest. (These documents were found in Marcos’s private safe in Malacanang Palace after he was removed from power, and confiscated by the Philippine government.)
The Marcoses imagined that if they played their cards right, they could gain access to the Showa Trust, or at least divert some of its interest payments in their direction. It would be acutely embarrassing to Tokyo and to Washington if news of the joint account leaked, for several reasons. First, Tokyo still maintained the pretense that Hirohito was so impoverished at war’s end that the Diet had to vote him an annual salary of $22,000 to keep him afloat. Second, Japan’s LDP was at that moment wallowing in yet another great scandal involving Tanaka’s bribe-taking and bribe-giving. As for Washington, disclosure of a Hirohito-MacArthur joint trust since 1945 would require fancy footwork, given repeated declarations that Japan had been flat broke.
A Marcos team, including negotiator Natividad M. Fajardo, flew to Tokyo for private talks with Japanese government officials, including three trustees of the Showa Trust (one Japanese and two Americans). Fajardo was a broker who acted for the Marcoses in a number of gold transfers. His trip to Tokyo occurred within days of Ronald Reagan’s first presidential inauguration. Reagan was an important friend of the Marcoses. He and Nancy first went to the Philippines in 1970 as President Nixon’s personal representatives at the opening of Imelda’s Cultural Center in Manila. It was the beginning of a long friendship in which Marcos and Reagan flattered each other.
Only when Fajardo and his team arrived in Tokyo did they reveal the true purpose of their visit. In short, the Marcoses offered to keep quiet about the Showa Trust in exchange for giant payments disguised as a financial aid package for the Philippines. They demanded that the quarterly interest from the trust be turned over to them.
This sounded something like extortion. The Japanese government was so alarmed that they kept Fajardo and his delegation sequestered under armed guard in their rooms at the Miyako Hotel the entire time they were in Japan. They had to eat all their meals in their rooms.
According to Fajardo’s letter to Imelda from Tokyo dated February 22, 1981, “The Japanese financial aid [for the Philippines] consists of accumulated interest income of dollar fund [sic] left in trust by General MacArthur to the Imperial family. …We are devising a means of how to bring out the money to Hong kong under the authority of the Ministry of Finance of Japan… It shall be made to appear that the money will be loaned to a Japanese company doing big business in the Philippines and they [the Japanese government] found that Kawasaki is qualified. The Trust money in the hands of the Imperial Family has already been deposited with Sanwa Bank in Osaka and is ready for transfer to Hong kong. To do this, it shall be made to appear that it is a loan to Kawasaki without any interest for a period of 30 years. It will be Kawasaki that will release the money to finance the massive economic development projects of the Philippines of the First Lady.”
We do not know if the deal negotiated by Fajardo went through. But bank documents show there are a number of Marcos accounts today in the Hong Kong branch of Sanwa Bank.
Tokyo probably complained to Washington about this threat, and it probably contributed to the downfall of the Marcoses soon afterward. But 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 introduce 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.
According to our sources, including one who was on the White House staff at the time, Reagan was dismayed that his old friend had let him down.
Given the concurrent attempt to blackmail Tokyo over the Showa Trust, 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. Our source, who was present, said 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 U.S. 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.
Treasury Secretary Regan certainly was not telling. He and CIA Director Casey had to resign in disgrace for their part in money laundering and gunrunning during Iran-Contra. Casey’s prominence in the Iran-Contra scandal kept us from fully appreciating his other role in making clandestine use of Japanese plunder to manipulate foreign governments, and to finance right-wing militias in America.
The fleecing of the Marcoses and the confiscation of their gold certificates on arrival in Hawaii may have been richly deserved, but many questions remain unanswered.
To begin with, why did Imelda and Ferdinand insist upon moving their black gold to banks controlled by other people, when in so doing they forfeited everything? In Hawaii, they discovered they could no longer access the bullion they had taken such pains to hide offshore. Their accounts were blocked on the pretense that, as a corrupt fallen dictator, it might turn out that these were ill-gotten gains.
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.
A few months later, looking increasingly puffy and jaundiced, Marcos sent out for a large order of McDonald’s burgers and fries for himself and his friends. In the midst of his meal, Marcos began to choke on a piece of Big Mac, coughing violently. The next morning, 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. [ what? Curtis omg, is he a glutton for punishment? lets find out. d c ]
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, Curtis 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. A navy cruiser would stand off Luzon in the international waters of the South China Sea. A sub would come in fairly close to shore, but remain submerged until night when commandos would launch inflatables to retrieve the gold bars from the beach. It was up to Curtis to open the vault, and get the ingots down to the beach.
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.
“This was exciting,” Curtis told us. “I was mad at Marcos and this would let me get even, although I would never be able to talk about it.” Getting rich would heal a lot of wounds.
“I chose the south end of Corregidor, which is the head of the tadpole-shaped island, because there was deep water for the sub. To get down the cliffs to a very narrow beach, my guys would have to traverse one of two ravines.” At high tide, the beach was submerged, so timing would be crucial. When the commandos came in their rubber rafts, it would have to be a moonless night, with a low tide.
Corregidor lies in the mouth of Manila Bay, off the Bataan Peninsula, where President Marcos had his summer palace at Mariveles. The island lies east-west, with the head of the tadpole – Topside – on the west. The low-lying eastern tail was called Bottom Side. In 1978, the only residents of Corregidor were half a dozen people living in the town of San Jose in Bottom Side. But each morning a tourist boat arrived from Manila.
As his target, Curtis chose a concrete bunker beneath the Crockett Battery, a mortar emplacement off the beaten path for tourists. The U.S. Coast Guard had built these mortar emplacements in 1901. Beneath a concrete slab, two intersecting tunnels originally served as a munitions magazine. During the defense of Bataan and Corregidor in early 1942, a direct hit on Crockett by an incoming round blew up the powder magazine and destroyed most of the bunker. After the Japanese gained control, Prince Chichibu saw the concrete-lined tunnels beneath the ruined emplacement, and decided to hide a mass of 65-pound gold bars there, covering it with a six-foot-thick slab of concrete, making the mortar emplacement look undisturbed. It was unlikely that anyone would remember Crockett blowing up.
As a metallurgical chemist, Curtis thought he could burn a man-sized hole through that slab using thermite, if he could enhance it enough. Thermite is a simple compound of equal parts powdered aluminum and powdered iron oxide. Once it ignites, it burns at around 3,000 degrees centigrade. Thermite was used as an incendiary weapon during World War II. Today it is used to pierce armor, or as a thermal decoy for heat-seeking missiles. It takes a lot of heat to ignite thermite. The simplest method is to use a match to light a fireworks sparkler, which burns hot enough to ignite the thermite.
In the Nevada desert, Curtis set up a test bed with a six-foot thick concrete slab, and found that ordinary thermite worked too slowly. He added other ingredients, enhancing the thermite till he had a blend that would burn at close to 5,000 degrees centigrade. This, he said, burned through six feet of concrete in forty minutes, making a hole big enough for a man to crawl through.
Curtis figured two men could make the recovery and carry the gold to the beach. He knew two, who seemed right for the job, and they were enthusiastic. Both had served in the Special Forces with Colonel ‘Bo’ Gritz, so Curtis figured they could handle just about anything. “One was a big macho military type,” Curtis said, “who was head of security for a large company in Las Vegas. He had a friend with similar background who was the son of a former sheriff of Las Vegas.” We will call them Gary and Mike. Both men needed to learn how to use the enhanced thermite, and to toughen up physically so they could make repeated trips up and down the ravine, lugging ingots to the beach. For this job, Curtis had a saddler make two heavy-duty backpacks shaped for the gold bars. After many weeks of strenuous training, Gary and Mike decided they could each manage two bars at a time. Two 25-pound bags of enhanced thermite would do the job with plenty to spare. Because thermite is an incendiary, it cannot be carried on airliners. So the special enhanced mixture was taken to Manila in a diplomatic pouch. [On a hunch I will suggest the former sheriff would be one Ralph Lamb given the timeframe d c ]
Gary and Mike assembled everything needed to live two weeks in a patch of rainforest on Corregidor, including machetes, food and water, high-tech sleeping bags, mosquito nets, medicines, and cobra anti-venom. Two weeks would give them time to carry down enough gold bars to satisfy the prime minister. As cover for Philippine immigration, Curtis obtained credentials attesting that Gary and Mike were Mormon missionaries on their first evangelical assignment. They flew to Manila and were lodged by the embassy in secure diplomatic quarters.
For reconnaissance, they took the tour boat to Corregidor. Crockett Battery was much as they expected, and Topside was empty of people. Returning to Manila with the other tourists, they gathered their gear and were driven by a diplomat to Bataan. There, at a harbor town called Cabcaben opposite Corregidor, they rented a banca, a brightly painted Filipino dugout with outriggers and a good-size outboard motor, paying a hefty deposit to use the boat without a paid skipper. Once their gear was aboard, the banca looked overloaded, but its owner assured them it was safe. They told him they were going camping.
It would have been wiser to let the sub put them ashore in a rubber boat, but for some reason that was not considered.
An hour and a half before dark, taking a casual fix on the small notch in Corregidor that was their destination, Gary and Mike shoved off. It would take an hour to get there; they would loiter offshore like fishermen, and make a run for the beach when darkness came.
Gary and Mike were soldiers, not sailors. They knew little about the sea. Every sailor knows Sod’s Law: If it can go wrong, it will. With tide racing out of Manila Bay, they should not have headed straight toward their target. They should have headed up into the tide, and let it carry them back to their destination. In the mouth of Manila Bay, fighting the tide proved too much for their outboard motor, which died. They tried desperately to restart it, as the banca was swept far out into the deep swells of the South China Sea. Several breaking waves hit them broadside, foaming over their low freeboard, nearly swamping them and carrying away the backpacks and thermite. This area was notorious for sharks scavenging on dog bodies and garbage flushed out from Metro Manila, and both men were now desperately afraid. To lighten the boat, they jettisoned the rest of their equipment.
Providentially, the motor then roared into life. They were able to turn the banca and make their way back to Bataan. After midnight they stumbled ashore, found a phone and called Curtis in Nevada.
Curtis was stunned and deflated. He wanted to abort the mission, but once back on dry land Gary and Mike were recovering from their fright, and needed to save face. They would try drilling through the concrete using a star drill and a sledge hammer. Curtis knew it would fail, but Gary insisted, so Curtis reluctantly agreed. Shock and disappointment were so great all around, it never occurred to them that Gary and Mike could lie low while a diplomat brought more enhanced thermite.
Returning to Manila, Gary and Mike purchased new supplies and tools, and again hired the troublesome banca. This time they made it to Corregidor. As Curtis foresaw, drilling the concrete proved hopeless. In two days they made a hole only three inches deep. They called Curtis again from Bataan and said they were giving up. 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. Toshi told his story on the condition that his name would not be revealed. During 194445 he said he was often in the company of Prince Chichibu, Prince Mikasa, Prince Takeda and Prince Asaka Yasuhiko, the butcher of Nanking. Toshi said he observed Ben Valmores bringing tea and cigarettes to the princes, while they toured Golden Lily sites. After the war Toshi returned to university and inherited money from his father. A handsome, cosmopolitan man, fluent in English and French, Toshi decided to devote himself full time to recovering the gold he had helped hide.
He bought a small house set in gardens on the outskirts of Manila, and went about his recoveries with single minded dedication and total secrecy. When his son graduated from university, Toshi set him up in the gold business in Tokyo. 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-Mathey 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’, Konsehala Candelaria V. Santiago. (See our CDs.) These papers were notarized by the U.S. Consul, who photocopied them and passed them to the CIA. According to Norman ‘Tony’ Dacus, who was paid a commission on the deal, 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.
Toshi used his share from the Luxembourg deal to buy real estate in Japan. Among other acquisitions, he bought some prime land opposite a suburban Tokyo railway station, and built a large apartment block where he installed all his relatives on the top floors, and rented out all the flats on lower levels. He made trips to America where he bought electronic devices for detecting metal in the ground, including a Filter King Plus, and an underground scanner, paying for everything from a big roll of crisp new hundred dollar bills. Genial and easygoing, Toshi was happy to pull out color photos showing him at various digs, including before and after photos. We have some of these color photos, but cannot reproduce them without identifying Toshi.
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. The sub’s skipper, Commander Charles Elliott Loughlin, was court-martialed because Japan claimed he had sunk a genuine hospital ship, implying that 2,009 people who died were mostly patients. (The only survivor was an illiterate crewman blown off the fantail and picked up by the sub.) After the war Commander Laughlin was vindicated when records were discovered showing that the 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. Astronaut Scott Carpenter and Jon Lindbergh, son of Charles Lindbergh, had found a copy of the sub’s log in naval archives showing exactly where the sinking occurred, and confirmed this with the sub’s executive officer, who was still alive. 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, whose capture off Java was described in Chapter Four. Her name was changed several times, including Tenno Maru and Hikawa Maru. 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 some day 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. (See color photos on our CDs.) 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, our sources said, the Australian ship slipped anchor and made it to international waters with the treasure before her disappearance was discovered at sunrise.
The most publicized treasure hunters of the last thirty years were the Nippon Star group of General John Singlaub, one of The Enterprise network of PMFs. Singlaub first became a national hero near the end of the Pacific War when he parachuted into Hainan Island and released hundreds of POWs from Japanese concentration camps. After that, he became one of the China Cowboys who holed up in Korea while Mao Tse-tung’s forces took over the mainland. Singlaub was involved in setting up the Korean CIA (KCIA), which developed a particularly nasty reputation backing military dictatorships over the decades. In the course of his long CIA career, Singlaub worked with all the most famous Cold Warriors, including Ted Shackley, Cline and Lansdale. In the 1970s he was America’s top military commander in Korea, when he had the first of several public differences of opinion with President Jimmy Carter and was forced to take early retirement.
He remained a hero of the far right, one of the PMF paramilitary proxies supporting bloodstained regimes around the world. Many of his ex-CIA associates in The Enterprise, such as Lansdale and Cline, knew all about Santa Romana’s recoveries in the late 1940s, and the Marcos recoveries of the 1970s.
After Marcos was removed from power, Singlaub and two PMFs called Nippon Star and Phoenix Exploration came to Manila to hunt for gold, with CIA knowledge and cooperation. Nippon was incorporated in Hong Kong, Phoenix in London. Along with Helmut Trading, registered in Liberia, they were all based in Colorado and closely tied to Phoenix Associates, founded by Colonel Robert Brown, publisher of Soldier of Fortune magazine and close friend and neighbor of Singlaub.
“Normally,” Singlaub said, “I would not have been interested in buried-treasure schemes, but the Nippon Star group were not naïve beachcombers. And I knew from past experience that stories of buried Japanese gold in the Philippines were legitimate.” He added: “Marcos’s $12-billion fortune actually came from [this] treasure, not skimmed-off U.S. aid. But Marcos had only managed to rake off a dozen or so of the biggest sites. That left well over a hundred untouched.” Singlaub would be the security advisor, in return for Nippon Star giving a percentage of the take to his U.S. Council for World Freedom.
Through the mid-1980s, many newspaper stories appeared about the misadventures of Nippon Star digging for treasure in the Philippines, with zero luck.
Continued failures led their financial backers to propose calling in Robert Curtis. Early in January 1987, Curtis received a phone call from someone named Alan Foringer in Seattle. Foringer said he wanted to come to Las Vegas the next morning to see Curtis about “the Philippine treasure”.
“How do you know about that?” Curtis asked.
“I’m with Jack Singlaub and Nippon Star,” Foringer replied.
“You guys are CIA,” Curtis said, “and I’m not interested.” He slammed down the phone.
When Curtis arrived for work at the Chevrolet dealership the next morning, just before 9 a.m., two men waiting in his office were Foringer and his deputy, John Voss. They said they were actually with an outfit called Phoenix Exploration in Denver, associated with Nippon Star. Later, Curtis said he learned that Phoenix Exploration was a CIA front, and that Foringer was really the administrative head or office manager of the CIA station in Manila, in the Magsaysay Building. He was not the CIA station chief, which is a separate post at the embassy usually held by the first secretary or deputy chief of mission.
Curtis was about to throw them out of the showroom when Foringer pointed at the clock and said, “In three minutes you will get a very important call from the Pentagon switchboard, which will explain why this is so important.” Exactly at 9 a.m. the phone rang and Curtis found himself talking to Major General Robert L. Schweitzer, until recently President Reagan’s senior army advisor at the National Security Council in the Executive Office Building beside the White House. In 1986, as the Iran-Contra arms scandal was breaking, Schweitzer retired from active service and joined Singlaub in The Enterprise network. But he still had an office at the NSC, and remained the man President Reagan turned to for advice on military matters. Schweitzer kept his hand in through his NSC deputy, Colonel Dick Childress, who had the Far East portfolio. Others in this circle were General Daniel Graham, former head of the Defense Intelligence Agency; General Jack Vessey, former chairman of the Joint Chiefs of Staff; and former CIA deputy director Ray Cline, who now headed the Center for Strategic Studies at Georgetown University.
Curtis said General Schweitzer told him he was calling from the Executive Office Building. He said President Reagan — “the old man in the funny house next door” — had personally endorsed the effort by Nippon Star and Phoenix Exploration to make new war loot recoveries in the Philippines. Because the White House and the CIA had to maintain deniability, Reagan could not give the project official sanction, but General Schweitzer said the U.S. Embassy in Manila was fully briefed, along with the U.S. commanders of Subic Bay Naval Base and Clark Air Force Base, who would provide support in the form of men and helicopters, and secure storage for the gold in underground bunkers. Schweitzer played heavily on patriotism, urging Curtis to meet in Hong Kong with Schweitzer, Singlaub, Foringer, Voss, and other ‘big hitters’. That very morning Schweitzer said Reagan had received a message from President Cory Aquino saying, “she would cooperate one hundred percent”.
Curtis had been so badly burned by the John Birch Society and by U.S. Government agencies colluding with Marcos and the Birchers that he wanted nothing to do with any of these characters. Since 1975 he had learned a lot about CIA/Enterprise involvement in moving Marcos gold out of the Philippines. He collected thousands of pages of documents proving this to his satisfaction. He had an uneasy feeling that he was going to be shafted again. But he was a patriot, and if this meant he could get back on his feet financially, it might be worth the risk. At least he could listen to what the generals had to say, and what President Reagan had to say through the generals. Reluctantly, Curtis agreed, and on February 11, 1987, he checked into the Mandarin Hotel in Hong Kong, where the others were waiting. Over the next four days they met in a hotel conference room, and ate their meals together. To protect himself this time, Curtis insisted upon taping the entire conference from start to finish. (He gave us copies of all the tapes from which we have drawn much of what follows.) As a further safeguard against being railroaded again, Curtis brought along as his partner Dennis Barton, chief criminal investigator for the Internal Revenue Service in Nevada. If anybody could make sure that Curtis did not get falsely accused of anything this time around, Barton could. Later in the week, they were joined by Olof Jonsson, the Swedish psychic, who Curtis regarded as indispensable.
As the conference began, Singlaub told the group their greatest danger was that Japan’s victims would band together to get the World Court to freeze further recoveries of war loot until its true ownership could be established. He said thirty-two countries in all claimed to have been looted of thousands of metric tons of gold. He did not say where he got these figures, but his group had access to U.S. Government archives that are not accessible to the public.
To Curtis’s astonishment, anger and dismay, it now emerged that Singlaub had persuaded the John Birch Society to take over funding Nippon Star, and it was Jay Agnew’s son Dan who had Foringer recruit Curtis. Foringer’s first phone call to Curtis was from the office of Agnew’s attorney in Seattle. This was truly bizarre, because it was the Agnews who had destroyed Curtis financially and professionally in 1975, bringing criminal charges against him, as recounted in Chapter Twelve. Having ruined Curtis, the Agnews told Singlaub they would only finance Nippon Star recoveries in the Philippines if he and Foringer recruited Curtis, to gain access to his maps and reverse-engineering.
“The Agnews ruined my life,” Curtis said, “and now they wanted my help. You don’t forgive something like that. I had been called the biggest criminal of the twentieth century, or words to that effect. If I was, I am certainly the dumbest. I was flat broke when I came back from the Philippines in 1975, and I remain flat broke today.”
At the Mandarin Hotel in Hong Kong, Generals Singlaub and Schweitzer worked on Curtis, whitewashing the Agnews’ involvement. They told Curtis they were offering him his best chance ever to make a major recovery, with President Reagan and the entire U.S. Government backing them all the way, including the American Embassy and the commanding officers of Subic and Clark. You could not do better than that, they said. These were the big hitters. It was a powerful argument. In 1975, the whole U.S. establishment had come down on Curtis like a Mack truck, flattening him like road kill. Now the same American establishment was pleading with the road kill to give them access to all his secret maps and special knowledge. Curtis felt sickened, but having come this far, he decided reluctantly to see where it led.
He liked Singlaub in particular, but he thought they all were nuts. Singlaub admitted spending upwards of two million dollars during the previous thirteen months, trying and failing to make recoveries at several sites. He was steered to these sites by two Pointers, a Filipino dentist named Dr. Cesar Leyran and his sidekick Pol Giga. They had given maps to Nippon Star claiming they were authentic. When Curtis saw the maps he knew immediately they were fakes. Curtis had worked with Pol Giga in 1975 and recognized that Giga had some first-hand knowledge of Japanese treasure sites from the war, but did not trust Leyran at all. If the two were working together, fobbing off fake maps like these, they were simply conning the gullible generals. But how do you tell two American generals they are fools?
Alan Foringer, an earnest, nice-looking man in his mid-thirties, of considerable intelligence, told Curtis: “Our game plan all along has been to hit a small site we control which is under water, on private property, and take a bar from there and demonstrate it to Cory [President Cory Aquino]. That should give us the full and complete blessings of the [Aquino] administration for all other sites.”
Problem was, Curtis discovered that this was the Anchor Site on a reef in Calitagan Bay, which Giga and Leyran had been flogging to gullible people for years, like selling the Brooklyn Bridge. Those two hustlers claimed that a solid platinum anchor had been pushed off the fantail of a Japanese naval vessel, chained to a bronze box filled with gold bars, and the anchor and box were lying on the reef. Curtis knew this was a lie, but he did not know how to tell a man like Cold Warrior John Singlaub that he had been conned by a couple of experts. When Nippon Star’s divers found nothing on the reef, Giga insisted that the anchor and box “must have slipped down into a crevice”. Investors were told that a Japanese concrete slab covering the treasure was too hard to penetrate, and tides kept shifting Nippon Star’s dive platform.
Once Curtis realized the generals had been duped on the anchor site, he pressed them to tell him about the onshore site they were working. They had been taken to this site at Alfonso, a town outside Cavite, by Cesar Leyran, who owned the property. When Foringer described it, Curtis could not believe his ears. Leyran had told Nippon Star that as a boy he had seen the Japanese hide treasure in a deep pit they dug under the house next door, which also belonged to the Leyran family. The excited generals put Leyran on a big monthly retainer and started to dig. When they found nothing, they figured it was deeper, so they kept digging. Over thirteen months they dug straight down 400 feet under the kitchen, bagging the dirt and hauling it away at night so neighbors would not guess what was going on. By this time the generals had spent so much money that they could not give up. Because the water table was only a hundred feet down, the next 300 feet had to be dug under water, so the generals had to bring in deep-sea divers from the U.S. Navy. At those depths, the divers had to use a decompression chamber each time they came up.
“Imagine,” Curtis said, “diving down more than 300 feet inside a 6 foot by 6 foot shaft, then digging underwater at that depth and hauling the mud and rocks up to be bagged. They never asked themselves, ‘How did the Japs dig this in the forties?’ It was sheer folly. According to their financial records they spent $1.5-million on this one hole. I had to argue with them to get them to stop throwing money away on that typical Leyran scam.”
Curtis also was amazed by the backbiting in Hong Kong. Although they claimed to be old pals, the tape recordings show that Generals Singlaub and Schweitzer were privately at each other’s throats.
Singlaub insisted on taking charge of security personally. He said the only Filipino he trusted was Teodoro ‘Teddy’ Locsin, President Aquino’s minister of information. Singlaub said Locsin also was tight with U.S. Ambassador Stephen Bosworth.
“Cory really doesn’t do anything,” Singlaub said, “without consulting Bosworth.”
Singlaub swore he had legal contracts with the Aquino government to dig any treasure site in the country, including federal property. He showed Curtis his authorization, written on Presidential Task Force stationery and signed by Wilfredo P. San Juan. (Later, it turned out that San Juan had no authority to issue treasure agreements of any kind.) Singlaub boasted about bribing people in Malacanang Palace, the Presidential Security Command, the mafia boss of Cavite, and – for extra security – guerrilla leaders of the leftist New People’s Army. When so many people are bribed, word gets around. As a result, a great many Filipinos knew about the activities of Nippon Star and Phoenix.
While Foringer was intelligent and rational, Curtis said, he had not commanded whole armies, so he was shouted down by the generals. When they wanted Foringer’s opinion, they would give it to him.
They urgently wanted Curtis to rescue them from their folly. He could tell them where to dig, and they would give him a percentage of the recovery. It sounded a lot like the offer Curtis had got from Marcos.
For starters, they asked Curtis to give them an easy site where they could make a quick recovery, to regain credibility in Manila and Washington. Assuming that Singlaub really did have permission from President Aquino to do a recovery on federal land, which was a big if, Curtis suggested targeting sites on Corregidor. He explained that there were several big sites there, and a small one that would be easy – although it was out in the open. They were sure to be seen, so a permit was absolutely essential. Singlaub claimed his permit was correct. He had the men in place to carry out this recovery. By this time, Singlaub had brought in thirty-seven U.S. Special Forces and Delta Force officers, who arrived at Manila International Airport in groups of two or three, traveling with false names and passports.
While the generals prepared a game plan, Curtis went back to Nevada to resume his nine-to-five job as Chevrolet sales manager. On the plane, he realized he had joined a ship of fools. Singlaub and Foringer were charming and personable in different ways, but Curtis seriously doubted they could ever achieve their goal. A week later he received a hand-written letter from Foringer. Addressed to his codename ‘George’ it began: “Following are some quick notes I would prefer not to have to relate to you over the phone. Board of Directors of Nippon have met and decided that Singlaub must stay out of the Philippines for the foreseeable future and should publicly be disassociated from Nippon. That will be a hard pill for him to swallow …we may find ourselves dealing with a hostile takeover attempt by investors loyal to him…” He told Curtis that all three of Singlaub’s existing gold recovery projects were being closed down. Nippon Star would continue as a club for super-patriots from the CIA, Pentagon, State Department, and National Security Council – people like Singlaub and Schweitzer – but its main purpose would be to divert attention from what was really going on.
In its place the Paladins were setting up a new Philippine/American Freedom Foundation (PAFF) that would seriously pursue recoveries of war loot in the islands, and its sale on the world gold market. Foringer said they would use the first ton of gold they recovered to complete their purchase of Benguet, the top Philippine gold-mining company, which Marcos had used to export re-smelted war loot with help from the Mafia based in Miami and Nassau. Benguet would serve as PAFF’s conduit for moving black gold into the world market. Foringer said the bulk of the proceeds would go to funding defense projects like the B-1 bomber and Reagan’s Star Wars program, “in effect to build a new military industrial complex controlled by us”. Accompanying his letter, Foringer had drawn a chart showing the relationship of all these people and organizations. (See our CDs.)
As partners with Phoenix Exploration and Nippon Star in this joint venture, Foringer said he hoped Curtis and his friend Barton — calling themselves C&B Salvage — would endorse this political strategy.
Curtis desperately wanted to make a gold recovery for his own sake, to get back on his feet financially. But he had serious misgivings about working with this bunch. He urged Foringer to concentrate on making a quick recovery at the movie theater site on Corregidor. This was the easiest, simplest, quickest site Curtis could give them. He would have done it himself years ago, but this site was right out in the open, so it required official sanction to dig on government property. Any child could do it. But could generals do it?
Opposite General MacArthur’s headquarters at Topside, there was a bombed-out movie theater. Beside it was a small cache — eighteen ingots — simple to reach with a shovel at a depth of only 15 feet in soft soil, if you knew where to dig. Eighteen 75-kilo bars meant millions of dollars. Curtis had learned about it in 1975, when he and President Marcos flew by helicopter to Corregidor for sightseeing. One photo taken that day shows them strolling by the movie theater, its walls peppered by shrapnel. When Colonel Villacrusis saw the photo he told Curtis an amusing story he had heard from an eyewitness in Tokyo, while meeting with Prince Takeda and Lord Ichivara. The eyewitness said he was at Corregidor visiting a senior Japanese naval officer in the headquarters building, when American forces began their assault to recapture the island on the morning of February 16, 1945.
A heavy bomb landed across the street by the theater, blasting a crater fifteen feet deep. The navy commander still had eighteen 75-kilo gold bars in his office, and saw his chance. He had his office staff drop the gold bars into the bomb crater. A small bulldozer nearby was used quickly to fill in the crater. A few minutes later, paratroopers of the 11th Airborne Division and the 503rd Parachute Regimental Combat Team began hitting the ground. Fighting was fierce and the navy officer was among those killed. After thirty years the eyewitness could recall that the crater was next to the theater, but not exactly where. In 1975, while he was working with the Leber Group, Curtis went back to Corregidor to visit the Pacific War Memorial. The walls of its rotunda displayed vintage black and white aerial photographs showing the 1945 bombardment and the assault, each taken by reconnaissance planes a few minutes apart. One taken at 10:16 a.m. showed the crater by the movie theater and one taken at 10:38 showed that the crater had been filled in. So Curtis knew exactly where those eighteen bars were hidden, if they were still there. These ingots could liberate Phoenix Exploration and Nippon Star from their most troublesome financial backers, and enable several years of big recovery projects at other sites Curtis had in mind.
When all was set, ten Americans from Phoenix and Nippon Star arrived on Corregidor. They brought with them a group of Filipino soldiers to guard the perimeter, led by a sergeant from the Presidential Security Command. Among the Americans were Foringer, President Reagan’s man General Schweitzer, five colonels, a U.S. Navy Seal, and Curtis’s associates Dennis Barton and John Lemmon. One of the five colonels was Eldon Cummings, a veteran of CIA covert operations in El Salvador. Two others were Colonel ‘Rock’ Myers, and Colonel James York, both legendary characters. The Seal was the equally iconic Tom Mix, now attached to a shadowy company called GIMCO or GEO-Innerspace, who worked closely with Nippon Star on offshore recoveries of Japanese treasure hulks. These were big guns. That day, they were all heavily armed in case of trouble. Leaving the five colonels in charge of work at the movie theater site, Schweitzer returned to their safe house in Alabang, south of Manila.
First the colonels got out an earth resistivity sensor. By the 1980s, these had advanced to a point where they could detect masses of gold down thirty feet, so the colonels knew the ingots were still sleeping there.
Over the next five days, they dug a hole ten feet deep. They expected to hit the gold bars the next day, or the day after – when all of a sudden there was a whoosh and three big Philippine Army Huey helicopters came whopping in over their heads, bristling with heavily-armed soldiers in flak jackets. While the other Hueys hovered menacingly, one landed and a squad of soldiers jumped down with light machine guns, followed by a Philippine Army general. He told the Americans brusquely that he had been sent by General Fidel Ramos, head of the armed forces, to throw them off the island, which was federal property. Foringer showed him the letter Singlaub had been waving around, giving presidential authority to be on federal land. The general looked at the signature and said, “That’s not legitimate. This man San Juan has no authority to issue such a permit.” He repeated his command to get off the island, immediately.
The Americans broke camp and left. General Schweitzer, informed that his handpicked team had been been expelled from Corregidor, was livid with rage. He threatened to phone President Reagan and have him intervene personally with President Aquino. He was persuaded by Curtis that this was not a good idea.
A lot of people in the Philippine government and armed forces were offended by the high handed behavior of Nippon Star. Manila journalists learned that Nippon Star was funded by John and Joan Harrigan with Moonie money. When Nippon Star first set up in Manila, Singlaub had bought weapons on the blackmarket, including Armalites and grenade launchers for which he then was unable to get licenses, because they turned out to be stolen goods. He also bought a fleet of cars cheap, which turned out to be hot. They had belonged to Marcos secret police boss General Fabian Ver, and when Ver fled into exile the cars were sold privately and Ver pocketed the money. When Singlaub tried to get the cars registered, it emerged that they were missing government property. These episodes were all it took for Juan Ponce Enrile and other artful dodgers in the Philippine Senate to claim that Nippon Star was riding roughshod over the islands, defiling national heritage sites. One impassioned journalist wrote, “If the Philippines is to remain a free and democratic society, and to not fall into the abyss of CIA engineered and created civil conflict, to prepare the stage for the forced intrusion and deployment of American troops, to force a retention of U.S. bases, the movements and activities of these enemies of democracy should be closely monitored and curtailed.”
When Phoenix and Nippon Star were booted off Corregidor, Singlaub was in Washington testifying before Congress about the Iran-Contra mess.
“I liked Jack Singlaub,” Curtis told us emphatically, “but he just couldn’t keep his mouth shut.”
When Curtis sent word to Foringer that he was pulling out of the joint venture, the nucleus of Phoenix and The Enterprise descended in a rush on his home in Las Vegas, including Generals Schweitzer and Singlaub. They pleaded with him to reconsider. At one point, Foringer asked to speak to Curtis privately. They went outside to sit in his Chevy Blazer with the air conditioner running and the radio on.
“He explained to me that he had to deliver me back into the fold, or they would ‘eliminate’ him. I asked: ‘You mean the CIA?’ He said, ‘No, not just them.’ He said GeoMiliTech had threatened him, saying that he should have forced me to stay in. He also said Agnew was giving him problems.”
But Curtis had made up his mind. The clincher was his discovery that the house next door to Nippon Star’s safe house in Alabang, where Generals Schweitzer and Singlaub and all the big guns had lived when they were in Manila, had been rented by KGB agents from the Soviet embassy, and they were monitoring and recording everything.
“We had all the windows open,” Curtis told us, “so they just sat by their windows and heard everything we said, including our radio communications, which were decoded there. I went bonkers over this.”
In the months that followed, Foringer contacted Curtis again and again, pleading with him to reconsider. Singlaub and Schweitzer also phoned. Curtis was adamant. The generals did not blame themselves. Everyone blamed Foringer.
Not long afterward, in Hawaii on his way back to Manila, Foringer was strolling in his bathing suit along the crowded beach at Waikiki after a swim, when his bare leg was nicked by a passerby holding something sharp. Later that day, he was rushed to a hospital in agony, having difficulty breathing. Doctors suspected shellfish toxin. For a while he was near death. Gradually, his condition improved, and he returned to Manila to recuperate at his own apartment, which he was sharing with a Filipino named Jun Mitra. When a friend came to visit one morning, Foringer had lost a lot of weight and was again complaining of breathing problems. He did have some appetite, and asked his friend to get them Italian food. When the man returned an hour later, Foringer was having a seizure. They rushed him to a nearby clinic. He had severe bronchial pneumonia and something was very wrong with his immune system. When another seizure soon followed, his heart stopped, and all attempts to resuscitate him failed.
Referring to the episode on Waikiki Beach, Curtis said, “One of Alan’s associates told me later that it could have been an assassination attempt.” Whatever happened in Hawaii, the Manila hospital’s clinical abstract does not indicate foul play. But absence of evidence is not evidence of absence.
Foringer had been under tremendous pressure. Strain was taking its toll on Curtis as well. On a trip to San Francisco in July 1987, in which he broke off all remaining ties to the generals, he had severe stomach trouble and had to undergo immediate surgery. When he came out of the anaesthetic, he was kept on painkillers that made him groggy. One of his visitors at the hospital was a total stranger named Charles McDougald, who said he was writing a book about Yamashita’s Gold. A former Green Beret, McDougald had studied for a while at the University of the Philippines, where he said he became a close friend of the dean, Noel Soriano, who was now President Aquino’s national security advisor. On repeated visits to the hospital, McDougald talked to Curtis about various treasure sites. In his fuzzy state, Curtis began to think that McDougald might be a suitable partner, assuming that his connection to Soriano was solid. They discussed going after one of the treasure vaults in Ft. Santiago, under cover of a restoration project. McDougald said he broached the idea to Soriano, who discussed it with President Aquino, and she approved. They would go after the gold Prince Chichibu had placed in the third basement of the fort, at the bottom of one of the airshafts. The project would be carried out by a new company headed by Curtis called International Precious Metals (IPM). McDougald would participate and share in the proceeds after the Philippine government had taken its cut off the top. The excavation would proceed in stages, with President Aquino’s approval required at each new stage. They would tunnel through the backfill the Japanese had placed in the way, then drill down in hope of striking the gold and getting a core sample with the drill bit, producing evidence that Aquino needed before they could continue.
Work began with teams of young Filipinos digging around the clock, sections of wood shoring going in to protect against cave-ins. There were four types of booby-traps. Most obvious were 100, 250, 500, or 1000-pound aerial bombs, activated by disturbing a spring. Bottles of cyanide placed in the backfill were easily broken. At some sites there were terracotta pipes that easily broke and flooded a tunnel. Least expected were sand traps, made by alternating layers of clay and very fine sand. If a worker disturbed it, the clay would collapse and trap the digger, while the fine sand suffocated him. Stout shoring was essential.
Curtis gave strict orders that shoring would be placed as digging proceeded. But he could not be onsite around the clock. As pressure mounted to reach the target, workers and supervisors became careless. Three men working deep in the tunnel after midnight one night, moving well ahead of the shoring, suddenly burst a sand trap. Sand poured down, and clay slabs crushed two men. The third man, his feet protruding from the debris, was pulled out alive.
Curtis and security chief Soriano were notified, but nobody was prepared for the public outcry. Journalists crowded into Ft. Santiago, and the Philippine Senate demanded an investigation. Marcos cronies led the attack, blaming Curtis for the deaths, and for ‘desecrating a national monument’. He countered that the gold they were on the verge of recovering would pay the Philippine national debt. President Aquino backed Curtis. She authorized IPM to continue for ninety days more.
Curtis knew he was only a few meters from hitting the gold vault. To prove it, he brought in a drill rig and bored down. Drill hole number twelve paid off. On April 23, 1988, the bit came up with fragments of gold, marble, wood. The Golden Lily map showed gold bars in wood crates on marble slabs. Curtis had hit paydirt.
His electronic sensors also detected a small but significant target just to the left of this drill hole, probably the oil drum of loose treasure that Ben said was added to the backfill at the last moment. It could be worth millions. President Aquino was elated.
Once again, however, there was mischief backstage. Fundraiser George Wortinger returned from Nevada with Ernie Whittenburg, who claimed to be a building contractor. Whittenburg’s money actually came from drug-traffic; he would later be convicted and imprisoned. Soriano and McDougald both knew that Wortinger was feeding Whittenburg’s drug money into this project all along, but nobody told Curtis.
When Curtis protested, Whittenburg countered by offering to buy a controlling interest in the project for $500,000 cash, on the condition that Curtis be removed and sent home. Now that Curtis had located the gold, he was no longer needed – Teresa-2 all over again. Any goldbug who wanted to make a recovery in the Philippines needed Curtis, because he had the maps and understood them. But once Curtis identified a target, he was expendable. This is typical of treasure hunting, as parodied in the book and movie Treasure of the Sierra Madre. Greed feeds narcissism, and narcissism feeds greed.
“Soriano begged me to take Whittenburg’s money,” Curtis told us. “It was drug money, and I wanted no part of it.”
Soriano then asked Curtis to turn over to him personally the treasure maps for Ft. Santiago, and for another important site in Manila at the Bonifacio Bridge. When Curtis flatly refused, the national security chief dropped the bomb. He told Curtis that unless he left the Philippines immediately, he would urge President Aquino to cancel the IPM permit. If Curtis cooperated, Soriano would let Curtis come back later. If he refused to leave, he would be arrested, and charges would be filed against him. Grimly, Curtis packed his bags and flew home.
According to Grand Jury testimony, the moment Curtis had gone, Soriano and McDougald took on Whittenburg as a full partner and moved ahead with the recovery at Ft. Santiago. A member of their team testified that they recovered an oil drum packed with 24 small gold bars, gold and silver coins, and loose jewels. The main target, which Curtis had drilled into, was several meters below that, but they would be on top of it soon.
They also started digging at Bonifacio Bridge, where they put Whittenburg in charge. In 1942, this railway bridge over the Pasig River was blown up during the American retreat. The bridge had collapsed but its big concrete abutments were still in place. Subsequently, 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 cache was hidden with a slab resembling the original concrete. Unfortunately for him, Curtis had revealed to his partners that it would be simple to penetrate the vault by excavating from the side. What always kept him from doing the site himself was the adjacent highway that made it too conspicuous. Now the Aquino administration had conveniently re-routed the highway, so Whittenburg, McDougald and Soriano could use drill rigs without being observed by every passing car or truck. Soriano arranged the official permit, and a few squatters were moved away.
Work at Bonifacio Bridge proceeded quickly when Craig Nelson, a California investor, gave $100,000 to bring in a drill rig able to bore a hole six feet in diameter. By November 30, they were down 170 feet below the bridge abutment. When Nelson arrived at the site that morning to check on progress, he found Ernie Whittenburg in a state of great excitement. “I touched a Jap!” Whittenburg shouted, an agreed code phrase meaning they had hit their target.
Nelson later testified: “Ernie Whittenburg told us that when he went down the hole in the elevator, he saw and touched two of the eight safes that were visible.” Soriano, Nelson said, had a plan to bring in army trucks to haul the gold away at night. Because of their weight, only twenty-five bars could be brought up the elevator each time, and there were more than six thousand bars.
Soriano immediately made a trans-Pacific phone call to McDougald, who cut short a trip to California and flew back to Manila. The next day, Nelson said, “McDougald told me… that I must have misunderstood Ernie Whittenburg …he said that Ernie Whittenburg didn’t actually see the safes.” Nelson said McDougald insisted they had not yet reached the chamber containing the safes. Realizing he was being lied to, Nelson returned to the site to see for himself and discovered that he was not allowed to enter, although he had paid for the drilling rig. All Filipino workers had been sent home, and security at the bridge was taken over by two heavily-armed members of the U.S. Special Forces, friends of McDougald, one of them a full colonel who reportedly took leave from active duty for this purpose. McDougald told all those involved that water had flooded the hole, so they had to abandon the project. According to Colonel Canson, head of the constabulary in Rizal province, he assigned two army trucks to McDougald for five nights, December 2-6, 1988, from midnight to 6 a.m. Other sources said a number of armored cars also were involved.
Eyewitnesses claim the trucks and armored cars carried heavy loads from Bonifacio 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. Fundraiser George Wortinger told a federal Grand Jury in Nevada that a total of $1.5-million in drug money had been poured into the digs at the fort and the bridge, by Ernie Whittenburg. Wortinger testified that McDougald and Soriano both knew it was drug money: “[McDougald] said ‘You know, if this ever breaks in the press …he [Soriano] will be in lots of trouble.’
“It was drug money,” Wortinger stated. “I mean, if that broke in the press over there, we would be crucified.”
Indeed, when Manila newspapers reported that some Whittenburg drug money was transferred to Soriano’s personal account, President Aquino demanded his resignation as national security advisor, effective February 15, 1989. Wortinger also testified that Whittenburg paid for $50,000 of furniture to equip a new house McDougald purchased in Manila, and helped to finance a new house McDougald bought in San Francisco. He said Whittenburg also gave Soriano and McDougald each $50,000 in cash. The Grand Jury then called in McDougald.
Government prosecutors initially sought forfeiture of McDougald’s new San Francisco home. But McDougald was persuaded instead to prepare a report on his partner. Thanks in part to McDougald’s testimony, Whittenburg was tried and sentenced to life in prison for drug trafficking.
Like Humphrey Bogart and his partners in the Sierra Madre, 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
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