Part 7 Gold Warriors, How America Secretly Recovered Yamashita's Gold ... Connect the Dots ... Conflict of Interest

I tell you what, there is enough bad karma attached to this stolen gold to last for thousands of years, and the outrageousness of the bankers involved is beyond disgusting. What our government has done to our soldiers makes me want to puke. It will not end well for all involved.

..o..

Gold Warriors, How America Secretly 

Recovered Yamashita's Gold 

By Sterling & Peggy Seagrave

CHAPTER FIFTEEN 

CONNECT THE DOTS 

After half a century of disinformation to hide the war-gold recoveries and secret slush funds, incontrovertible evidence is emerging from investigations, lawsuits, leaks and blunders. Until Marcos lost power, Japan’s looting was fobbed off successfully as isolated instances. If it rarely happened, why ask what became of the plunder? 

Once on American turf, however, the Marcoses were hit by lawsuits accusing them of theft and conversion of recovered treasure, human rights abuse and racketeering related to that treasure. Ensuing revelations in court lifted the veil of secrecy and provided an unexpected glimpse of Washington’s furtive conduct. The Reagan Administration’s inept damage control, especially during Iran-Contra, revealed black-bag operations previously unknown, and a network of private military and intelligence companies intended to privatize U.S. foreign policy and national security. It became obvious that their true purpose was to get around laws, and to avoid peer review. 

For twenty-five years, Santa Romana’s heirs also were stonewalled, but they too filed suit to recover masses of bullion hidden in American banks – much of it still there, as we now demonstrate. 

For hard evidence, the keystone case was the Gold Buddha, because it proved certain elementary things about Japan’s looting of Asia and the postwar recoveries of this loot. This evidence was presented to a jury in a U.S. court in Hawaii, which awarded the largest sum in history. 

It happened this way: After years in hiding, Roger Roxas resurfaced in 1988. With Marcos under house arrest in Honolulu, Roxas thought he could safely press a suit to reclaim the Gold Buddha and bullion stolen from him in 1971. He contacted Felix Dacanay, a childhood friend living near Atlanta, Georgia, who had prospered in America and had two sons attending the Annapolis Naval Academy. To protect Roxas, he and Dacanay formed Golden Buddha [sic] Corporation, or GBC, and Roxas assigned his interest in the treasure to GBC. As Roxas no longer had control over the claim, it was less likely that he would be threatened or tricked out of his interest. Dacanays Georgia attorney sought outside help, and reached an agreement with Daniel Cathcart’s influential firm in Los Angeles. In February 1988, Cathcart filed suit against Marcos in Honolulu, asking for damages, including injuries from beatings and torture. The suit asserted that Marcos had stolen the Gold Buddha, diamonds, and gold biscuits from Roxas, then removed a lot more gold from the tunnel Roxas had spent years discovering. Technically, Roxas was the finder not only of the Gold Buddha, diamonds and gold biscuits he took home, but of all other Japanese war loot later recovered from the site by Marcos soldiers. 

In Hawaii the Marcoses scoffed, and military aid Arturo Aruiza told the press the whole idea of Yamashita’s Gold was “a fantastic story that came out 16 years ago and there was an investigation by the [Philippine] Senate… Nothing came out of it. We dismissed the story 16 years ago, and don’t want to talk about it.” 

Cathcart’s firm took seven years to gather evidence of eyewitnesses establishing that there was Japanese plunder in the Philippines, that Roxas had found a solid 22 karat Gold Buddha and ingots, and that Marcos had stolen the Buddha and ingots, then tortured Roxas in a conspiracy to hush it up. 

In the course of tracking down witnesses, a great deal of evidence emerged concerning the overall nature of Japan’s looting, how the loot was hidden in the islands, how it was recovered by Marcos, and how Marcos had used subterfuge to move the gold into the global market, clearly with help from the U.S. Government. All this was assembled in documents and depositions, many of them on videotape, eventually filling a large room. 

Much of the legwork was done by Arlene Friedman, a feisty Los Angeles private detective employed by Cathcart. To her, the story Roxas told at first seemed utterly fantastic. Yamashita’s Gold involved quantities so huge, dollar figures so enormous, it was hard to believe. To convince a jury, Cathcart and Friedman had to track down gold brokers who shun publicity, treasure hunters who crave secrecy, eyewitnesses scared of being murdered. Petite but relentless, Friedman pulled off what had daunted and eluded most investigators since World War II, and in the process made startling discoveries bearing on the Tokyo-Washington cover-up. 

“As long as it’s legal and it won’t give me a disease,” she told us, “I will do anything to get information. If it means playing dumb woman or flirt, or putting on my Shirley Temple outfit, I’ll do it.” 

When Cathcart called her in to meet Roxas, she was startled by his lumpy, misshapen face and bulging blind left eye (souvenir of the beatings by Marcos thugs using a rubber mallet reported in Chapter Ten). Cathcart interviewed Roxas exhaustively for five days. Prying details from his memory, Cathcart concluded that ten people might still be alive who knew what really had happened. He asked Friedman to track them down one by one. Many years had passed. It would not be easy. 

Roxas remembered an American GI stationed in the Philippines who visited his home in Baguio and took photos of Roxas with the Gold Buddha just before it was stolen. His name might have been ‘Tim’ or ‘Chitem’. Friedman began the tedious process of poring over Pentagon records. After more than a year, she tracked down Ken Cheatham, working as a night security guard for a Las Vegas hotel. 

“It was,” she said, “like, Eureka!” According to what Cheatham later told the jury, in the early 1970s, age 26, he had been an Air Force intelligence officer stationed at Clark Field. An amateur treasure hunter, he was intrigued by stories of Yamashita’s Gold, and drove up to Baguio to search for Japanese artifacts. This was the very moment Roxas recovered the Gold Buddha and took it home, and the resort town was buzzing with rumors that a local man had found something amazing. Cheatham knocked on the door and introduced himself. It turned out they were members of the same treasure-hunting club run by Gene Ballinger. Roxas took Cheatham to his back bedroom and removed a bedspread covering the seated Gold Buddha, still coiled in heavy ropes. Cheatham got out his camera and took photos, including a shot of himself with Roxas and the Buddha – irrefutable proof that Cheatham was there, and the Buddha existed. Back at Clark Field, he wrote a letter to Gene Ballinger enclosing prints of his photos. Ballinger published an article on the discovery in his treasure-hunters’ newsletter, wrongly identifying Cheatham as Roxas’ partner. The story was picked up by news wires, and carried in the U.S. military paper, Stars and Stripes. 

When Marcos saw the story, he hit the roof. Cheatham was summoned to base security where he was confronted by a CIA officer and Marcos agents. He told Arlene Friedman, “The CIA guy told me to say the statue wasn’t made of gold and to downplay the whole thing, so Marcos would lose interest in me. If I got involved in this, he said they’d ship me out to Vietnam.” Cheatham was scared. At the insistence of the CIA officer, he signed an affidavit certifying that the Buddha was not made of gold. He told Cathcart that he lied about the Buddha from then on, saying it was brass or, anyway, not gold. At the trial in Hawaii, Cheatham’s photographs provided definite physical proof that Roxas did possess a Buddha with a removable head, totally unlike the brass Buddha with a fixed head hastily substituted by Marcos. 

Next Cathcart and Friedman had to establish that it was Marcos who stole the Gold Buddha. In Las Vegas she made contact with Robert Curtis, who eventually gave a long videotape deposition describing how in 1975 he had spent many hours with Marcos and had seen a seated Buddha of solid gold, with a removable head, in the office of the president at his summer palace in Mariveles. Curtis testified that he had examined the statue closely, unscrewed the head, and determined to his satisfaction as a metallurgist that it was solid gold. Examining the Cheatham color photos, Curtis testified it was exactly the same Buddha he saw in the summer palace. (There are unique qualities to the shape, color, and detail of this Buddha that are unmistakable.) 

Psychic Olof Jonsson then was located. Jonsson testified that when he was in the Philippines helping Marcos pinpoint gold treasure vaults, he, too, had examined the Gold Buddha in the summer palace, and corroborated the testimony of Curtis that it was identical to the one in Cheatham’s photos, with a removable head. 

Daniel Cathcart also had to establish beyond doubt that the statue really was solid gold. The answer came from Luis Mendoza, a Filipino goldsmith who had assayed the statue at the Roxas house in 1971, drilling tiny holes in the back near the neck to produce powder that he could run through the necessary tests. Mendoza testified that his test showed the Buddha was solid 22-carat gold, normal in Asia at the time. 

Aside from the Gold Buddha, there also was the theft of the small gold biscuit bars, and thousands of other gold ingots that Roxas sealed in the tunnel for his own later recovery. A Filipino army cook, Juan Quijon, testified to the Honolulu court that he had been assigned to Task Force Restoration, an army unit created in 1972 by Marcos and General Ver to secretly excavate treasure sites in the Philippines. Quijon spent nearly a year (1974-1975) with other soldiers excavating the tunnel behind the hospital in Baguio, where Roxas had found the Gold Buddha. Quijon watched three or four men at a time carry out heavy wooden boxes and, when some rotten boxes broke, he saw big gold bars fall to the ground, three to a box. He said an average of ten boxes of gold a day were removed from the tunnel during that twelve-month period. Hospital staff, who were watching during these months, confirmed this. Igorot tribesmen did the heaviest work, Quijon said. When all the gold was removed, he said the Igorots were taken into the tunnel and shot, to eliminate them as witnesses. 

As evidence that Marcos was in possession of enormous quantities of gold bullion far in excess of known Philippine reserves, Friedman tracked down two Australian brokers who in the early 1980s had negotiated nine contracts with Marcos to sell a total of $1.63-trillion in gold. They established for the court record, and to the satisfaction of the jury, that the deals were made, and were not a fiction. The documentation they provided established beyond any doubt that Marcos did have in his possession and did sell $1.63-trillion worth of gold bullion. The Australians would also testify that while visiting Marcos they were blindfolded and taken to a warehouse where the blindfolds were removed, and they saw that the warehouse was full of gold bars. 

Norman ‘Tony’ Dacus, a Las Vegas investor, told Friedman that on a visit to the Philippines he was taken to Mt. Apo where Marcos was building a Mt. Rushmore style memorial to himself. Dacus said the president’s son Bong-Bong took him into secret tunnels in Mt. Apo, where he was shown boxes of gold bars and other treasure. Dacus said Bong-Bong told him this gold was waiting to be flown out of the country by the U.S. military, at the behest of the CIA. Dacus was an expert source because he was linked by marriage to one of the senior Marcos intelligence officers, Colonel Pimentel, who arranged a number of these gold deals and personally escorted the gold to its destinations as a senior member of The Umbrella. Dacus also helped Pimental and Marcos broker the huge Luxembourg gold deal, described in Chapter Fourteen, for which he was paid a hefty commission. 

A lot of Friedman’s investigation in the Gold Buddha case was paper-chasing in libraries and archives, where she plowed through tens of thousands of pages of assets and business records. What had started as archival research became dangerous. One morning as she entered the stairwell of a parking garage, a man grabbed her from behind. 

“We just want your help,” he hissed. She punched her way free, escaping with a few cuts and bruises. 

Cathcart’s eighth floor office suite in a glass tower at Century City was broken into and bugged. Security experts told him the bugging was not done by Marcos, but by Washington, because the equipment was far too high-tech for anyone but the U.S. Government. His law office was under constant surveillance from teams in a high-rise opposite. 

The Gold Buddha trial finally was set for May 25, 1993. As the trial date approached, Cathcart told Roxas to lie low and arranged for bodyguards to escort him from Manila to Honolulu. On May 24, he called Roxas and told him to catch a plane to Hawaii immediately. “An hour and a half later, he was dead,” said Cathcart. His widow and many others believe Roxas was poisoned. As she explained, her husband had been looking tired and anemic. When she went to a bakery, downstairs from the apartment where they were hiding, she was approached by a well-dressed man who offered to give her some free medication for her husband. When he took the pills, Roxas died. 

A few hours later, a CIA informant known to Cathcart and Friedman phoned his law office from Manila and told Friedman, “Your client is dead. He was poisoned. Imelda ordered it, and we did it.” 

The news stunned Cathcart. 

“I told [Mrs. Roxas] to get the remaining pills and FedEx them to me immediately. But when the package arrived, the envelope was empty.” 

Cathcart tried to arrange an immediate autopsy, but this proved impossible. Roxas was hastily cremated. 

“The coroner never conducted a toxicology test,” Cathcart said, “and never opened [Roxas] up. He ruled that [Roxas] died of tuberculosis.” 

After many delays, the trial got underway in Honolulu, and the jury heard eyewitnesses describe the Gold Buddha, rooms full of gold bars, deals involving thousands of metric tons of gold. At one point, during a discussion of various Japanese imperial treasure sites in the Philippines, Imelda Marcos herself said the gold Marcos had in his warehouses “could have come from any of those sites”. 

Members of the Roxas family testified that Roger’s brother Jose was paid thousands of dollars by Imelda Marcos to lie and perjure himself by stating that the Roxas Buddha was not gold but only brass. During trial, the jury were shown photos of Jose’s tattooed back with the words in large letters: BRO. OF FOUNDER OF THE GOLDEN BUDDHA. INT’L NEWS PHILIPPINES 

From all this testimony, it became evident to the jury that Japanese war loot definitely had been hidden in the Philippines, Roger Roxas definitely discovered a major cache of it, the Gold Buddha definitely was solid gold, Marcos definitely stole the treasure, and Marcos definitely made major gold deals to sell billions of dollars worth of this recovered plunder. The jury decided in favor of Roxas and his heirs, and awarded GBC a judgment of $43-billion against the Marcos estate, the biggest civil judgment in history to that date. ($22-billion plus 10 percent simple interest since the theft). 

Later, on appeal, this award was reduced to $22-billion flat, based on the contention that nobody knew beyond question what was in every last one of the wood boxes recovered by Marcos soldiers from the Roxas tunnel. This is now being appealed by Cathcart to the Hawaii Supreme Court. 

The estate of Roger Roxas was separately awarded $6-million for his imprisonment and torture, an award that stood up on appeal. 

As for the Gold Buddha itself, the chief government prosecutor in Zurich, Switzerland, assured journalists that it was in a Marcos gold bullion vault in a special repository beneath Zurich’s Kloten Airport. 

While an American jury judged these to be incontrovertible facts, Tokyo and Washington continue to deny them. 

Encouraged by the Roxas lawsuit, other victims came forward. In 1999, the Filipino soldiers who removed the gold from the Roxas tunnel and other sites in the Philippines prepared lawsuits against the Marcos estate. According to an affidavit signed by nearly a hundred of these men, they carried out ‘massive diggings’ while pretending to restore national monuments, and recovered thousands of metric tons of gold, other precious metals and large quantities of loose gemstones. Marcos came to the sites, they said, often in the company of Japanese. 

Their first major success was in 1973 near Lake Caliraya in Lumban, Laguna, where one of their backhoes struck what turned out to be the first of several concrete vaults. Repeated banging of the backhoe broke open a corner of one vault, exposing 75-kilo gold bars. Marcos told them, “You will all share in everything that’s here, but you have to wait for the right time.” That time never came. 

As other concrete vaults were unearthed – each 6 feet x 5 feet x 5 feet – a large crane hoisted them on to a massive army tank transporter, which took them to a secret destination. 

From 1974 to 1979, the soldiers stated, they dug at Montalban, Antipolo, Baras, and Teresa, all Golden Lily sites in Rizal province. It was their failure to open Teresa-1 in 1974 that led to Robert Curtis successfully opening Teresa-2 the next year. They shifted operations to Intramuros, the old walled city in Manila, and to Ft. Santiago, where they said they recovered more than a hundred boxes of treasure. 

According to their affidavit, crates of gold bars were shipped out of the Philippines from Manila International Airport using C-130 military aircraft. They said some of the gold was transported commercially by Cathay Pacific Airlines, and by American President Lines, through arrangement with Tamaraw Security Service, owned and operated for Marcos by General Ver, as part of The Umbrella. 

This is independent corroboration by the recovery team itself of what we recounted in earlier chapters, and what was stated by Robert Curtis and others in their separate testimonies. 

Santa Romana’s dormant bank accounts were of special interest to his heirs – but also to The Enterprise, to the U.S. Treasury, and to major banks holding his cash and bullion. As these various parties bickered, maneuvered, and backstabbed, they became involved in very interesting lawsuits. Seen at random, the bits and pieces are curious. Seen altogether they are astounding, and supported by government records. 

When he died, Santy left to fourteen heirs a fortune estimated by their attorneys to be worth over $50-billion. All their efforts to recover his assets from banks have been blocked or, more often, evaded. The three main heirs were Santy’s corporate accountant, Tarciana Rodriguez, acting for the estate; his common-law wife, Luz Rambano; and his adult daughter, Flordeliza. After a few false starts, they turned for help to the famous San Francisco lawyer Melvin Belli, New York attorney Eleanor Jackson Piel, former CIA deputy director Ray Cline, and one of America’s best-known bankers, Citibank CEO John Reed. Also engaged in these efforts were Florida lobbyist George Depontis, former Bahamas supreme court justice Sir Leonard Knowles, and Washington attorney Robert A. Ackerman. 

Because of the size of Santy’s estate, and its secretive nature, Luz, Tarciana, and Flordeliza seem to have had every conceivable obstacle put in their path. The U.S. Government, and American banks, would like Santy’s assets to remain where they are. So would the Swiss government and Swiss banks, banks in Hong Kong, and in other financial centers. In a few more years, everybody connected to Santy will be dead, so custody of his cash and bullion will remain in the banks, like Holocaust gold. 

For Washington, stonewalling is imperative not only because of the gigantic assets involved, but to block attorneys from pursuing discovery (as in the Schlei case), which could reveal far more than Santy’s financial data. Potentially, discovery could result in disclosure of the whole subject of covert war-gold recoveries, the Black Eagle Trust, diversion to corrupt purposes of secret funds like the M-Fund. This could damage reputations and careers, and make unavoidable an investigation by the General Accounting Office of Congress. President Ford had addressed a similar problem in 1975 when he set up the Rockefeller Commission to pacify interest in the CIA Family Jewels affair, remarking that he did not want information getting out that could blacken the reputation of every U.S. president since Truman. 

Ironically, Santy’s heirs were only interested in ending their poverty, not in exposing corruption, so it would have made sense to placate them with generous settlements in return for signed agreements never to raise the matter again. Yet both banks and governments have remained doggedly opaque and obstinate in blocking the heirs – a sure sign that they have much to hide. 

Although the three principal heirs showed these banks probated wills, passbooks, bank statements, receipts, all the necessary passwords, code-words, and secret account numbers, provided to them by Santy, the response was the same. With four exceptions, the banks flatly denied having such accounts, whether the account in question was a safe-deposit box, or a huge gold bullion deposit. 

For example, according to the Union Banque Suisse documents reproduced on our CDs, Santy’s biggest single account there was 20,000 metric tons of gold bullion. This is the account on which the titleholder was magically changed at the moment of Santy’s death, from his Crown Commodity Holdings to Major General Edward G. Landsdale [sic], bearing in mind that spelling errors made by Swiss banks are part of deliberate authenticity codes. One possibility is that on this monster account Santy was merely a straw man, being replaced by another straw man: Lansdale. We might ask, who else but a government would have sufficient leverage to make such a change at the biggest bank in Switzerland? Had UBS alone made the change, they are unlikely to have chosen the eccentric Lansdale as the new titleholder. However, by 1974 Lansdale had been out of government for a decade, and was one of the founding fathers of The Enterprise network, and an intimate colleague of some of America’s wealthiest conservative moguls. If Lansdale and Santy always had shared control of this big UBS account, Lansdale might have been able to have UBS transfer title to his name, whereafter it could be accessed by his circle. The U.S. Government may not have been involved. 

At $300 an ounce, this account would be worth $192-billion dollars, a lot more than the net worth of Bill Gates. Is this sum believable? Yes, if it is a covert U.S. Government account containing a mass of black gold. Just as no serious counterfeiter makes silly spelling mistakes, no conman in his right mind would dream up an account so big. Recall that the jury in the Roxas Gold Buddha case saw convincing evidence that $1.63-trillion in gold was sold by Marcos through his Australian brokers. 

Documents we reproduce on our CDs bearing the signatures of a number of top Swiss bankers show that UBS has other accounts, including gold bullion and platinum, which are even larger. Such giant accounts are not out of the question for immensely wealthy men like King Fahd of Saudi Arabia, whose family have been banking bullion in Switzerland for decades. According to Gemini Consulting, worldwide private bank assets were $4.3-trillion in 1986, and were closing in on $14-trillion in 2000. So this account at UBS is not impossible. 

UBS documents show that Crown Commodity Holdings was a subsidiary of Santy’s Crown Enterprises. The group representative was Alfredo P. Ramos, an executive of Santy’s company Diaz & Poirrotte Enterprises, registered in Monaco. Ramos states in an affidavit that “I know the late Don Severino Garcia Sta. Romana, Ramon Poirrotte or Jose Antonio Diaz, under the code ‘From Father My Old Man… that once the work has begun, don’t leave it until it’s done, be the labor great or small, do it well or not at all’.” This homily, as we’ve seen, is one that Santy learned from Lansdale in 1945. It is the same homily Santy quoted in his holographic will. It is used as a code phrase consistently in Santy’s bank accounts. Such recurrences, over half a century, are not accidental. 

According to videotaped interviews with Tarciana, immediately after Santy’s death Lansdale also was involved in the mysterious movement of gold bullion from Santy’s accounts at Citibank Manila to Citibank New York, possibly done to get the assets out of the Philippines before Marcos could attach them. Because the accounts were in Santy’s names, such transfers would appear to be illegal without authorization from a recognized trustee of his estate, or someone holding his power of attorney, such as chief accountant Tarciana. If Lansdale had such a power of attorney, for whom was Lansdale acting? 

Once these assets left the Philippines, they joined other bullion and cash accounts that documents show Santy already had in America at Citibank, Chase, Wells Fargo, Hanover Bank, and other banks. 

Soon after his death, Santy’s holographic will was probated in Manila, and Tarciana, Luz and Flordeliza were named by the court as legitimate heirs. Luz went to America hoping to gain access to the accounts at Citibank in Manhattan. There she enlisted the help of attorney Eleanor Jackson Piel, giving her Letters of Administration issued by the Philippine court. These had to be recognized by New York courts. Piel proceeded in Surrogate’s Court for the issuance of Ancillary Letters of Administration, which would give Luz right of access to his accounts at Citibank, Chase, and Hanover. This took time. 

While Luz pressed her case elsewhere, Piel wrote letters to the head offices of all the banks concerned, asking about the Santa Romana accounts. Not a single bank replied. 

Luz flew to Switzerland, visiting UBS in Geneva with two American friends. According to one of the Americans, Jim Brown: “I sat with Luz and another American… while she gave a vice-president of Union Banque Suisse [Santy’s] master gold account number with them [Master Gold Account 7257]. This banker not only admitted that it was a correct account, but also said he was familiar with the account.” Brown insists the bank vice president then told Luz “he wouldn’t recommend her trying to claim this account while she was in Switzerland, because before the bank or even the government of Switzerland would agree to allow her to take what this account represented, they would not be beyond having her killed first. He also went on to tell her, that he wouldn’t recommend her hiring any Swiss attorneys, because the bank would simply buy them off.” 

We might scoff at the notion that a UBS vice president would make murder threats, but what of Christoph Meili? A student working nights as a security guard at UBS in Zurich, in January 1997 he discovered very old documents and books waiting to be shredded. They concerned assets of depositors who died in Nazi death camps. He knew that, a few months earlier, the Swiss government had ordered banks not to destroy archival material. He took some documents and gave them to the Hebrew Congregation of Zurich. When asked later why he did it, Meili replied that he had recently seen the movie Schindler’s List. 

“I knew I had to do something.” 

A month later, when the documents were made public by others, Meili was fired from his $18,000 job at UBS. Robert Studer, president of UBS, insinuated that Meili was financed by an international Jewish conspiracy. “This issue of so-called unclaimed Jewish money in Swiss banks rears its head again and again. For us it is no issue at all. The problem was thoroughly discussed after the Second World War and we conscientiously investigated then what money in our bank might have belonged to Holocaust victims because we wanted to settle the question once and for all. For us the case is closed.” 

Much as the State Department insists the 1951 San Francisco Peace Treaty closed the door on compensation and reparations for Japan’s war victims. Much as Washington and the Marcoses insisted the Yamashita Gold story was only a myth. 

UBS passed off the shredder incident as ‘unfortunate’ saying, “no one in our senior management would ever have approved such a decision.” Robert Studer was removed from all official duties, but remained the bank’s Honorary Chairman. 

Meili received over 100 death threats, and threats to his wife and children. They fled to America where they were given asylum. Meili testified before U.S. Congressional committees investigating the hiding of Nazi assets by Swiss banks. Senator Anthony D’Amato called Christoph Meili an international hero. “The criminals are the ones who ordered the shredding of the documents.” 

Scared and deflated, Luz returned to the Philippines. Three years later she and Brown went back to Switzerland to approach a different bank. This time, Brown told us they were successful in recovering the accumulated interest from one of Santy’s accounts, but the bank would not release the bullion itself. Another source told us Luz kept this recovery secret, feeling that she had been stonewalled so long that it would be absurd to forfeit any of it in taxes. 

Meanwhile, Tarciana – Santy’s corporate treasurer – tried to access his accounts at HSBC in Hong Kong. Following the advice of attorney Artemio Lobrin who had been Santy’s tax consultant, she asked HSBC to verify the existence of the accounts mentioned in Santy’s holographic will. After showing them all the necessary codes, passwords, and documents, a bank officer told her the accounts had not matured, were therefore inaccessible, and to come back in 1988. 

In turn, Flordeliza sought access to Santy’s accounts at the Hong Kong branch of Sanwa Bank. She had a passbook showing large cash deposits to that branch in March 1973. At first Sanwa denied it had a branch in Hong Kong in 1973. Then, despite all the documentation, they claimed they had no client called Santa Romana or any of his pseudonyms. 

When Cory Aquino became president, her staff asked Australian financial expert Peter Nelson for help. He was shown computer sheets and forty passports bearing Santy’s photo. “The passports matched details on the numerous bank accounts… Most transfers had originated in Hong Kong before being moved to other parts of the world. I added up the amounts mentally as I went along and lost count at around forty billion dollars! I was shown photos of crates and some of these were open. I of course could not vouch for this bullion but there were certificates to match.” 

The Aquino aides explained that Santy had left the majority of his estate to his daughter, which would make Flordeliza one of the richest women on earth, but when she tried to present the probated will to banks, she was told to prove that the man in the photo on all the passports with all the different names was in fact her father. 

Meanwhile, the banks would sit profitably on the money. 

Nelson said: “I told my Filipino friends there was a way out. If [Flordeliza] agreed to hand the money back to the government in the Philippines for a finder’s fee of say five percent, that would give her more money than [she] could spend in a lifetime and the government would lend their weight in pushing for its return. They thanked me and I flew back to Sydney.” Nothing came of it, and Flordeliza stayed poor. 

Ultimately, all efforts fixed on Citibank, where John Reed was chairman and CEO. Under Reed’s direction, Citibank became richly involved in offshore private banking. With offshore deposits worth over $100-billion it was ranked third after UBS with $580-billion and Credit Suisse with $292-billion. By shifting money from country to country, offshore assets are protected from litigation by creditors, ex-spouses, or heirs. Except for cases involving money laundering, securities fraud or narcotics, most foreign courts will not recognize a U.S. court order. So a claimant must fight for access through courts in the nation where the account is held, only to discover the money already has been moved to another jurisdiction. This is key to what follows. 

In December 1990, Tarciana went to Citibank’s head office in Manhattan, with a friend acting as financial advisor and witness. 

“We were taken in to see John Reed,” her friend said. “When we showed him our documents, passwords and code-phrases, the magnitude of it suddenly hit Reed. He went white, and panicked. You could see it in his face. He left the conference room in a hurry. A few minutes later he returned with several Citibank lawyers.” They told Tarciana to come back the following day. 

“When we walked into the conference room the next day,” Tarciana’s friend recounted, “we found Reed sitting there with twenty lawyers. They told us these accounts did not exist.” 

Again Tarciana and her friend went away. On inspiration, they flew to Albany where they visited the New York State Tax Office. In its public records archive, they obtained a list of all the accounts Santy had at Citibank and other banks in New York State under his own name and aliases, and his company names. (Reproduced on our CDs.) They also discovered that all state and federal taxes had been waived on interest generated by these very big accounts, a curious exemption. 

Returning to Citibank, they were confronted once again by Reed and his phalanx of attorneys. Tarciana and her friend showed them a copy of the New York State tax records list, demonstrating that the bank had lied, and the accounts did exist. According to Santy’s own records and documents Tarciana had with her, Citibank held 4,700 metric tons of gold bullion belonging to Santy’s estate. 

No longer denying they had the accounts, the attorneys blandly told the two women to bring in ‘the real party’. They refused to identify whom they meant – possibly Santy’s corpse. They also said Tarciana needed ‘legal’ papers, which she already had shown them. They said Citibank wanted a statement from the Philippine government that it would not hold them responsible for releasing the money (again implicitly acknowledging the bank did hold the assets). This inferred that the funds might be claimed by Manila as gold stolen by Marcos, although the accounts were set up by Santy long before Marcos came to power. The attorneys also said they wanted a waiver from Imelda Marcos, implying that the Marcos family might make claims (real or imaginary) to some of Santy’s assets. Finally they said they also needed a waiver from the U.S. Embassy in Manila, apparently meaning a waiver from the U.S. Government. All this doubletalk was clearly to fend off Tarciana while the bank decided what to do next. That did not take long.[right there is why these bankers are all filth and need to be hung until dead d.c ] 

The solution was simple: Citibank would move all Santy’s assets offshore, from Citibank New York to Cititrust in the Bahamas. This would have the effect of putting the bullion outside the jurisdiction of New York courts, blocking any lawsuits contemplated by the heirs. Legally, such assets could not be moved out of New York jurisdiction without authorization of the account holder or his heirs, or assigns (meaning Tarciana as corporate treasurer). But, if the gold were moved offshore without the knowledge of the account holder or his heirs, the burden would be upon them to recover it. Large shipments of gold bullion also cannot take place without the knowledge and approval of the U.S. Treasury Department and the Federal Reserve. Nor could the bullion enter Nassau without approval of the Bahamian authorities. But there appear to have been ways to get around such obstacles, perhaps by attributing ownership of the gold to Citibank itself, which some attorneys might argue qualifies as ‘wrongful conversion’. 

This offshore maneuver was underway by the close of 1990, when word of it was leaked by a bank officer to members of The Enterprise. A counterploy to halt Citibank was initiated by former CIA Deputy Director Ray Cline and George Depontis, the Florida lobbyist with powerful connections in Nassau, including friendship with retired former Bahamas Chief Justice Sir Leonard Knowles. In case they needed help in Washington, Cline called in Robert A. Ackerman, a former Justice Department attorney. To get himup to speed, Cline gave Ackerman many documents including letters, memos and faxes. According to a letter written by Ackerman in January 1991, Cline explained how “in Gen. Lansdale’s Philippine days” Santy had recovered a lot of Japanese war loot and moved it “to 176 bank accounts in 42 countries”. These accounts, Cline said, included “large amounts of bullion [and] cash”. He told Ackerman he was interested in brokering “an agreement between the Philippine claimant [Tarciana] and the USG under which most of any money belonging to the USG would go back to it”. 

It is unclear why any of this war-gold belonged to the U.S. Government rather than to the people from whom it was stolen, unless it was claimed as a war prize – in which case, why would it have been kept secret for over half a century? Nor is it clear how Cline could separate what belonged to the U.S. Government from what belonged to Santy’s heirs; although, with Cline’s close CIA connections, it is likely that he could work out a split. According to Alan Foringer, “Ray Cline told us he had made it a point to read all Agency files on Santy and Lansdale’s recoveries.” Foringer said Cline knew all about the secret accord at Bretton Woods and the Black Eagle Trust growing out of them, how General MacArthur and Robert B. Anderson had toured the Golden Lily sites with Santy and Lansdale, and how John J. McCloy had been the key man setting up the M-Fund and other political action funds. 

Cline’s long career in the CIA lends authority to what he told Foringer, Ackerman and others. At the end of World War II, Cline was a young OSS analyst in what remained of Nationalist China. He then spent three years as the CIA’s chief analyst on Korea, dealing with John Singlaub, Paul Helliwell, and Bill Casey (who had moved to Wall Street but still was part of the Dulles brothers’ circle). During 1958- 1962, Cline was CIA station chief in Taiwan, a job he got through the chief of dirty tricks, Frank Wisner, just before Wisner went insane. In Taipei, Cline was responsible for clandestine operations all over Southeast Asia. He set up a Political Warfare Cadres Academy where trainees from the Philippines and elsewhere were taught: “to defeat communism, we had to be cruel.” While Chiang Kai-shek was alive, Cline befriended the generalissimo’s hard-drinking son, Chiang Ching-kuo (CCK), who controlled the KMT intelligence services. Cline became “his main drinking companion”. When CCK succeeded his father as president of Taiwan, Cline’s star rose accordingly. He returned to Washington as CIA’s deputy director for intelligence gathering. 

Cline understood the historical context, was expert on the financial side, and knew the personalities. He was personally acquainted with the wartime KMT secret police boss General Tai Li, Shanghai druglord Tu Yueh-sheng, yakuza boss Kodama, fixer Sasakawa, prime ministers Kishi and Tanaka, the CIA’s Wisner and Casey, Helliwell, Lansdale, Santa Romana, Marcos, Singlaub, and Schweitzer. In 1966, after clashing sharply with President Johnson over Far Eastern policy, Cline was forced out of his job as CIA deputy director and exiled to the U.S. Embassy in Bonn. When Johnson decided not to run again, Cline was able to return in 1969 to become director of State Department’s Bureau of Intelligence and Research, where part of his job was to keep tabs on the black money movements of President Marcos. Like Bill Casey, Cline always had a special interest in financial intelligence. He had impressive academic credentials from Harvard and Oxford. In 1973, with his extremely close ties to Taiwan, Cline quarreled with President Nixon over rapprochement with China, and was forced to retire from government, becoming head of a conservative think-tank at George Washington University. Now a key player in the shadow network of The Enterprise, Cline became a special advisor to President Reagan, closely tied to Casey, Schweitzer, and Singlaub. In audio tapes of the Hong Kong meetings where Curtis was cajoled into helping Nippon Star, Cline’s name was invoked many times. 

When Cline testified before Congress in the Iran-Contra hearings, he was asked if he visited General Singlaub in the Philippines. Cline said Singlaub met him at the airport. “I had it very fully explained to me, by both him and General Schweitzer, that he was there exploring for the recovery of gold and precious objects that had been buried in CENSORED which I knew about, and that he had found clear indications that he could recover this treasure, and that he was representing a group of people there who were trying to do so. …I discussed nothing with Singlaub except the treasure. …He showed me a lot of… told me things that made me believe that, that he felt he would be able to recover from several buried sites CENSORED a lot of bullion, money, and that was his sole objective, as far as I know.” 

From this testimony, it is obvious that Cline was evasive with Congress, not revealing what he told Ackerman. Basic historical and geographical details of his testimony were censored out, because they could not be shared with the American public. 

According to Ackerman’s letter, Depontis initially suggested that Tarciana deposit several small checks into Santy’s corporate accounts at Citibank, which would not cause alarm. If Citibank accepted the deposits, it implicitly acknowledged Tarciana’s role as corporate treasurer. She could then ask the bank to send her regular statements regarding any activity on the account. If the bank did so, she would have established her legal right of access, and could begin withdrawals. 

When this did not work, Depontis prepared to file suit in Bahamian courts to block the transfer to Nassau. Before filing suit, he said he offered Citibank a deal. In a tape-recorded telephone conversation with Robert Curtis, Depontis related that if Citibank agreed to this deal, he expected to receive a 15 percent commission that would come to $7,287,937,000. At 15 percent, this meant the deal as a whole was for approximately $50-billion – the amount Citibank was trying to move offshore. He said on the tape that he needed this much money, because “I have to pay off Ray Cline, Ackerman, this guy, that guy…” 

To gain leverage, Depontis sought powers of attorney from Tarciana and Luz. In September 1991, Tarciana agreed to a ten-page personal services agreement with him, and a power of attorney. But when Depontis proposed offering Citibank a deal where she would settle for a mere $25-million, Tarciana said she broke off with Depontis. She was chasing billions of dollars in a dozen banks, so to accept such a small deal with Citibank would set a dangerous precedent. 

Thereafter, Depontis apparently put all his effort into getting a settlement for Luz. On June 3, 1992, he told Robert Curtis, “Citibank is really hung out on this. I think Citibank is going to go down big time.”

Weeks later, in July 1992, Tarciana and her financial advisor were back at Citibank again facing John Reed across his conference table. They demanded that the gold and cash accounts that had been moved to the Bahamas be returned to New York. According to Tarciana, when Reed realized that the two women knew the assets had been moved, he again “turned white and panicked” – and called in his attorneys. 

Once more the ladies left empty-handed. 

This affront persuaded Tarciana to go after Citibank. She restored to Depontis her power of attorney. Eleanor Piel received a call from Depontis, telling her that he would now represent Luz and Tarciana in the lawsuit in the Bahamas. On July 25, 1992, a joint agreement was drawn up by Tarciana, Luz, Eleanor Piel, Depontis, Sir Leonard Knowles, and Philippine attorney Zosimo Banaag, authorizing Depontis to offer Citibank a last deal before filing suit: They would allow Citibank to buy from them the $50-billion in gold it had moved to the Bahamas, at a favorable rate of $305 an ounce, $50 less than the market rate at that time; Citibank could then turn around and sell the gold at the market rate, making a significant profit while avoiding a lawsuit for wrongful conversion. 

When Citibank turned down the offer, Depontis and Sir Leonard filed suit in Bahamian courts. Eleanor Piel flew to Nassau where she met Depontis and Sir Leonard. Piel told us Sir Leonard opened his files to her, and told her his position was that, by denying everything, Citibank was simply playing for time. 

Attorney Mel Belli joined the fracas, mounting a flanking attack on Citibank at state courts in California where the bank had branches. In a $20-billion lawsuit Belli filed for Luz, John Reed was named as a defendant wrongfully converting Santy’s assets for Reed’s personal use. According to friends, Belli was in ill health, and relished the idea of climaxing his career with a stunning victory over Citibank and Reed. Belli wrote Brian Greenspun, editor-in-chief of The Las Vegas Sun, “It may sound wild, and it did to me at first, but I’m now convinced that some very important banks around the world did have deposits of [Santy’s] money. We’ve taken several depositions of banking officials around the world who have denied deposits being made with them although we presented the receipts and passbooks.” Belli said he had reason to believe that Santy’s wealth could be “an offshoot of the Yamashita treasure”. 

Belli’s suit was based on wrongful conversion of personal property. After listing specific Citibank accounts belonging to Santy, the suit went on to say: “Defendant John Reed, the Chairman and Chief Executive Officer of defendant Citibank, has spearheaded Citibank’s conversion of the gold bullion which was owned by [Santy].” The crux of the lawsuit lay in the charge that “Reed and Citibank have systematically sold and are selling said gold bullion to buyers and converting the sales proceeds to their own use.” 

Belli’s suit also brought charges of wrongful conversion against Chase Manhattan Bank, HSBC, Bank of America, and Wells Fargo Bank, all of which had offices in California. 

The banks fought back through an impressive array of San Francisco law firms: Folger & Levin representing Chase; Heller Ehrman White representing Wells Fargo; Landels Ripley Diamond representing HSBC; Steefel Levitt Weiss representing Citibank as corporation and John Reed as personally named defendant. Bank of America was represented by its own general counsel. They were circling their wagons. 

After further investigation and discovery, Belli concluded that he had chanced upon a major state secret. He told friends he now believed that Citibank’s John Reed had joined in a plot with President Reagan, James Baker, Bill Casey and Prime Minister Margaret Thatcher, to use Yamashita’s Gold to finance covert operations by America and Britain. He referred to the plan as ‘The Purple Ink Document’. 

Unfortunately, Belli’s health deteriorated sharply over the next two and a half years, and he died in 1996 before the case could make much progress. Those who succeeded him at his law firm did not pursue the case with similar vigor, but the Belli suit against Reed and these five major banks is still pending. 

In 2000, after years of delay, upheaval, interference, threats, and reversals, Eleanor Piel filed new papers in the New York Surrogate’s Court to empower Luz and Piel as co-administrators of Santy’s estate, allowing them to move forward in locating Santy’s assets in New York State. Piel told us she now had “the right to recover any Santa Romana gold in the banks in New York State, or gold that previously was in those banks but had been moved elsewhere”

All was not well at Citibank. It was accused of money laundering. In December 1998, the General Accounting Office concluded that Citibank had laundered $100million dollars for Raul Salinas, brother of disgraced former Mexican President Carlos Salinas. The GAO report described how Citibank helped Salinas create “a money-managing system that disguised the origin, destination and beneficial owner of the funds involved”. In December 1996, CIA Director John Deutsch resigned under a cloud and immediately joined Citibank’s board of directors. In November 2000, just before another scandal broke at Citibank, John Reed resigned as CEO. This time the bank was embarrassed by the revelation that it had moved $800-million for Russian tycoon Irakly Kaveladze, who set up 2,000 dummy corporations in Delaware to which Citibank and others had been funneling his money for nearly a decade. Two other Citibank private clients were the sons of the late Nigerian dictator General Sani Abacha, accused of having siphoned off more than $4-billion from taxes, phony contracts and bribes. When Abacha’s son Mohammed made an urgent demand of Citibank for a $39-million overdraft, Citibank disbursed the funds to him through three different accounts. Curiously there has been no similar investigation by the GAO into what was done with Santy’s $50-billion at Cititrust. 

Why are banks so evasive, and how can they deny having accounts? The answer is that there is much money to be made by delays. Merrill-Lynch sat for many years on $35-million in Marcos assets, and said not a word until the end of 2000 when they were ordered by a court to relinquish the funds. During those years, significant profits were made on the dormant funds. Swiss banks adamantly deny having Marcos accounts, but early in 2001 Irene Marcos and her husband were accused by the German government of attempting to launder $13.4-billion by moving it from Swiss banks to Deutsche Bank in Frankfurt. For decades, the same Swiss banks denied sitting on the assets of Holocaust victims. Heirs may show all manner of evidence, only to be told their documents are false. If they press, they risk arrest for negotiating ‘counterfeit’ instruments. But who says the documents are counterfeit? 

For example, a document we reproduce on our CDs is a certificate that assured President Sukarno of Indonesia that quantities of gold and platinum he deposited in Swiss banks were guaranteed by all the members of the Swiss banking trust, whose signatures are conspicuously displayed and easily validated. Yet every effort by Sukarno’s heirs to access the account failed, and the very idea that a Sukarno estate exists is derided. While some Sukarno precious metal certificates indeed may be counterfeit, how can you know for sure until an expert opinion is rendered? As the bank in question has a vested interest in claiming fraud, it is hardly the proper judge of validity. Only by testing the document in a court of law can that judgement be made, but as we saw in the case of Norbert Schlei, that avenue is subject to abuse. 

Where can you turn? If you tell a bank you only want to know whether a document is real or counterfeit, you are almost certain to be arrested on the spot just for asking. You may be arrested even when you do not ask. 

Take the bizarre case of Australian broker Peter Johnston, who was asked by a client to negotiate a UBS gold certificate in Europe. While traveling, Johnston did not want to carry the certificate, so he left it in ‘safe custody’ with the London branch of Australia’s Westpac Bank. He often lodged such certificates with Westpac. He did not ask Westpac to attest to its being genuine. Yet the branch manager felt ‘uneasy’, and without asking Johnston faxed copies to UBS in Switzerland, asking if it was genuine. Without ever examining the original, UBS ‘informally’ declared it a forgery. It is UBS policy to call all such documents forgeries, but to avoid doing so formally by Tested Telex because that is equivalent to sworn testimony in a court of law. An informal opinion casts doubt, while avoiding liability. UBS does this routinely to scare away people hoping to negotiate gold certificates. Normally, the City of London Fraud Squad would refuse to pursue a charge based on an informal opinion, but this time the Fraud Squad set up a sting, and when Johnston walked in to the Westpac office on March 6, 1995, he was arrested and charged with attempted fraud – because the certificate might be phony and Johnston might try in the future to negotiate it. Amazingly, Johnston was convicted on this specious charge and languished in prison for 18 months. At no time did UBS actually establish that the certificate was a forgery, only saying it was not issued by UBS in Zurich. This was a blatant dodge, because UBS gold bullion deals are not done in Zurich but by their subsidiary, Warburg Dillon Read, at Glattbrug near Zurich airport. In short, Johnston appears to have been falsely imprisoned on false testimony, for something he did not attempt to do. There are many similarities to the Schlei case. 

An expert on gold certificates, Wolfgang Jentsch, explains that these instruments “may take many forms and quite possibly will not be in the banking form. They are by their very nature private banking documents and will not be in the public domain. …the larger the amount concerned, the closer becomes the circle of those who know. …it is rare that the main structure of the bank itself would ever know of their existence… The owner of the funds…would be given a number of other documents in order to secure the certificate. He would be given a letter which would provide the details of only those persons who would be able to verify the existence of the certificates and he would be given coded security numbers.” Jentsch said coding typically includes “what would appear to be severe spelling or grammatical errors…” Such errors enable the bank, when it wishes, to denounce the certificate as counterfeit. 

In this chapter we have seen how Santy’s heirs presented all the necessary documentation and codes, but still were stonewalled. We saw in Chapter Nine that Japan’s Ministry of Finance deliberately contrived the “57s” to look different from ordinary Japanese government bonds so they could be denounced as forgeries, allowing the Ministry to dodge payment. That UBS, Citibank and other banks might do the same must come as no surprise. When a client dies, it matters little whether he was an inmate at Buchenwald or president of Indonesia — the bank will do all it can to retain the gold. Here is an example of what John Kenneth Galbraith meant when he said, “The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it.” 

Against this background, it is revealing to see how quickly the U.S. Secret Service rushes to the aide of a Swiss bank, when a customer walks in asking if a gold certificate is genuine. 

In March 1996, Filipino attorney Ben Aragones met retired Wall Street broker W.R. ‘Cotton’ Jones. Aragones was trustee of a big estate with bullion deposits in Switzerland. He told Cotton how he had been arrested by Swiss authorities for trying to negotiate a gold certificate, spent three months in jail, and was forbidden to return. On another trip to Zurich he said he and his wife were kidnaped and terrorized. He was told that UBS did this to scare him off forever. 

Cotton, being a romantic, offered to test the water by seeing if the New York branch of Swiss Bank Corporation would tell him whether one of Ben’s certificates was real. Cotton would not try to negotiate the ‘cert’, which could be dangerous. If he only took a notarized photocopy, the original would not be confiscated. To be cautious, he chose the cert with the smallest denomination, only $25-million. 

“On March 20, 1996,” he told us, “I walked into the Swiss Bank Corporation in New York City and asked that the bank verify and authenticate a $25-million Certificate of Deposit issued by their bank and bearing the Federal Reserve Seal.” They asked him to leave it for examination and come back in two days. When he returned on March 22, three men posing as bank officers demanded the original and made threatening noises. When Cotton tried to snatch his photocopy back, all three men jumped up and identified themselves as U.S. Secret Service Agents, displaying badges and ID cards. They blocked his way and said if he forced the issue he would be assaulting a Federal Agent. 

“I kept denying and still deny that I ever knew whether the documents were valid or not. They told me I would be in jail twenty-two years… that I had better cooperate with them so it would go easier on me.” 

After ninety minutes of bullying, Cotton was taken downtown and issued two U.S. District Court Grand Jury subpoenas and ordered to be in Secret Service Agent Tom Atkinson’s office at 10 a.m. Monday. When Cotton appeared, he suffered more browbeating. Yet not once did anyone call the certificate false. He was told to appear before the Grand Jury the next day. 

Cotton arrived on time, only to be informed that his presence was unnecessary. Astounded, he went home and wrote to his U.S. Senator, Phil Gramm, telling him how the Secret Service had violated his rights, and asking for help clearing up the matter. The Justice Department told Senator Gramm that “Mr. Jones’ claims are the subject of his suit against the United States Department of the Treasury, Office of the Comptroller of Currency, which is now pending before the Second Circuit Court of Appeals … legal and ethical considerations preclude any further comment concerning it.” This was not true; there was no suit. Either the Justice Department was lying to Senator Gramm, or being misinformed by the Treasury Department. In July 1999, the Justice Department told Senator Gramm, “The matter was closed some time ago. Regarding Mr. Jones’ allegations that his civil rights were violated, I suggest that he contact the local Federal Bureau of Investigation for information and assistance.” When Gramm persisted, he was told by the Controller of the Currency “…there is no indication the Swiss Bank Corporation was ever under the regulation of the OCC. All future correspondence… should be directed to the Federal Reserve.” It was a classic runaround. 

Cotton was miffed: “How does any bank in the U.S. have any Federal Agency intervene on their behalf and confiscate (steal) personal possessions? What right did the Secret Service have to detain, interrogate, intimidate, and threaten me on the bank’s behalf, issuing me a Grand Jury subpoena?” Senator Gramm, knowing Washington well, did not press the matter further. He had his hands full elsewhere. 

Professor Lausier argues that the reason for these sting operations, for seizing such documents and declaring them counterfeit, is that they are worth a great deal of money. Once Treasury has them, they can be negotiated discreetly on a government-to-government basis. 

If so, it is a novel form of armed robbery by one’s own government. 

Foot-dragging does the job less dramatically. Mel Belli died before his lawsuit progressed far in court. In March of the same year, 1996, Ray Cline also died, removing another player in the legal maneuvers. When the health of Sir Leonard Knowles deteriorated, the lawsuit he filed in Nassau for Tarciana, Luz, Depontis and Cline ran out of steam. Knowles left Nassau to stay with his son in Macon, Georgia, where he died in 1999. In November 2001, Luz Rambano died in the Philippines. Like Swiss banks sitting on Holocaust gold, American banks had only to wait long enough and all contenders for Santy’s estate would be dead. 

In the meantime, the message is: Do not ask too many questions or you may go to prison. According to Douglas Valentine, in 1976 when Congressional committees were investigating the Agency’s role in criminal activities, CIA director George H.W. Bush’s representative before the Congressional committees, Donald Gregg, gave them an ultimatum: Back off or face martial law. Today, this has a more ominous resonance. In July 2002, determined to stop continuing leaks of classified information to journalists, CIA official James B. Bruce declared, “We’ve got to do whatever it takes – if it takes sending SWAT teams into journalists’ homes.”

CHAPTER SIXTEEN 

CONFLICT OF INTEREST 

In March 2001, only weeks into the new Bush Administration, two U.S. Navy ships arrived in the Philippines carrying teams of SEAL commandos. According to a source at the U.S. Embassy, they were sent to the Philippines to recover gold as part of a plan to enlarge America’s reserves. This gold, the embassy source said, would come from two places: – New excavations of Yamashita Gold vaults, and the purchase (at a deep discount) of Japanese loot already recovered and held in private vaults by wealthy Filipinos. One of the two ships sailed on to Mindanao to take on a load of bullion the embassy source said was owned by the family of the new president, Gloria Macapagal Arroyo. President Bush, the source said, was ‘being aggressive’. 

The buzz among gold hunters in Luzon was that associates of President Bush and his family were privately in the market to buy some of the bullion still being recovered from Golden Lily sites. One of the names being dropped by goldbugs in Manila was that of East Texas oil billionaire William Stamps Farish, an intimate friend and fishing companion of the Bush family. Will Farish, who raises horses in Kentucky and is board chairman of Churchill Downs where the Kentucky Derby is staged, had just been nominated by President Bush to be America’s new ambassador to the Court of St. James’s, where he was a personal friend of Queen Elizabeth. The buzz had special resonance because Will Farish is said to be the manager of President Bush’s blind trust. 

It should come as no surprise that yet another U.S. president may be taking an interest in Japanese plunder, while shielding Japan’s biggest corporations from lawsuits by POWs and other victims. Every president since Harry Truman has been involved in covering up the looting and the slush funds. Even Jimmy Carter played a role, becoming a personal friend of the great fixer, Sasakawa, who was up to his knees in dog-tags. 

Bluntly put, the terrible secret is that for over half a century some officials of the U.S. Government – not least of them Nixon – greatly advanced their careers by receiving stolen goods, made unscrupulous use of covert funds, and continue to collude with Tokyo. Justification always has been the Cold War and national security. As federal officials, this meant their security. In plain English, this is conflict of interest, and double standards. Politicians, diplomats, bureaucrats, military officers and businessmen have been involved in falsification and manipulation of facts and records. Whether cynical or misguided, they aided and abetted extraordinary corruption. 

A quote from Chalmers Johnson bears repeating: “The Cold War is over. Whatever the United States may have believed was necessary to prosecute the Cold War, the Cold War itself can no longer be used to justify ignorance about its costs and unintended consequences. The issue today is not whether Japan might veer toward socialism or neutralism but why the government that evolved from its long period of dependence on the United States is so corrupt, inept, and weak.” 

The answer is that one thing leads to another. When Truman chose to keep secret the recoveries of Japanese war loot, he then had to endorse the cover-up, followed by a phony Peace Treaty based on fraudulent claims about Japan’s postwar poverty. As contrived by John Foster Dulles in total secrecy, this peace treaty blocked POWs, and civilian victims including Comfort Women, from any compensation for their suffering. Their suffering continues to this day because the Department of State and Justice Department still block all legal recourse by Japan’s victims in American courts. We may rightly wonder whether this really is what Truman had in mind. 

President Eisenhower then authorized the use of war-gold to set up the LDP, interfering in the domestic political process in Japan, putting the Japanese people back under a one-party dictatorship, under a man – Kishi – who had been involved in armed robbery, narcotics, and slave labor since the 1930s. 

How much did the LDP secretly contribute to Nixon’s presidential campaigns, in return for exclusive control of the M-Fund? What were aides of President Nixon and President Ford doing with President Marcos in 1975 during his shipboard discussions of war loot recoveries? 

Was President Carter oblivious to Sasakawa’s participation with Marcos in recovering treasure vaults where hundreds of Allied POWs were buried alive? 

How could Lansdale transfer Santy’s assets at UBS into his own name, while transferring other Santy assets from Citibank-Manila to Citibank-New York? Why did Citibank first deny having Santy’s accounts, later concede they had them, then moved them offshore when his heirs fairly demanded access? What was Ray Cline really up to, trying to grab some or all of Santy’s $50-billion that Citibank moved to Nassau? 

What happened to all the bullion that was removed from Malacanang Palace when President Reagan had CIA Director Bill Casey kidnap the Marcoses? Is it in Fort Knox, or has it vanished into a black hole? 

Why was Reagan’s NSC advisor General Schweitzer using U.S. Army colonels, Navy Seals, and Navy deep-divers to recover war loot from the Philippines – is this normal, and if so, why be so evasive? 

Was Clinton also playing games with black gold? Yes, according to the Gold Anti-Trust Action Committee. In September 2001, The Economist reported, “it has uncovered evidence that the American government, assisted by others, has somehow ‘lent’ thousands of tons [of gold bullion] to speculators and bullion banks, notably Citibank and J.P. Morgan Chase, to depress the gold price.” 

Conflict of interest is evident in all these instances. 

As E.L. Doctorow remarked not long ago, “I try to think of a President in my lifetime who has not lied to the American people.” 

These are not things that happened long ago, that can be swept under the rug. When Japan was exonerated by Dulles of its duty to pay reparations, it was allowed to keep the artworks, cultural artifacts, and other plunder stolen from its Asian neighbors since 1895. Little of this has been returned; the rest remains in Japanese vaults, enriching the ruling elite and continuing to impoverish those cultures, and individuals, from whom it was stolen. Thus the crime continues to be perpetrated to this day. Because justice has not been done, the victims continue to be victimized. There is no statute of limitations on guilt. 

Washington’s role is all too clear, in the way the Peace Treaty was bullied through. Professor John Price sums up: “The U.S. monopolized and abused the treaty preparations.” 

As we now know, Japan was not bankrupted by the war. By 1951, six years after the war, Japan’s economy was stronger than it had been during the best business years before the war. Carlos Romulo, head of the Philippine delegation to the peace conference, “demolished the U.S. argument that Japan lacked the ability to pay for economic reasons”. Japan’s industrial activity was 32 percent above pre-war levels, its fiscal position showed a surplus, and its balance of trade had moved into the black. In discussions between U.S. monetary experts and Japan’s Finance Minister Ikeda Hayato just before the peace conference, he admitted to a budget surplus of over 100-billion yen and planned to use 40-billion of it as a tax-rebate to Japanese citizens. The governor of the Bank of Japan pleaded with U.S. authorities to take custody of $200-million worth of gold holdings because he feared “the Filipinos might try to attach the gold as reparations”. 

Dulles allowed certain other nations such as the Netherlands to make secret deals with Japan on reparations. These agreements were so sensitive that Washington classified these documents as top secret for the next fifty years. The Dutch gambit only came to light in 2000. 

The problem with the treaty terms laid down by Dulles, as the Dutch government expressed it, was that “it would appear the Dutch Government was, by the act of signing… giving up without due process the rights held by Dutch subjects.” Dulles grudgingly agreed to give Dutch citizens the right to make separate claims against the Japanese government. Speaking of this secret deal, a U.S. Senator remarked, “Dulles classified it and kept it classified for 50 years to keep these [victims] from having the right to go to court. That is what he did. That is what the U.S. Government did. That is wrong, and we need to correct it.” Then he added: “Our own government would not give these documents to our own soldiers. What an outrage that is.” 

Subsequently, the Dutch government secretly negotiated a deal with Japan that resulted in Tokyo paying $10-million in 1956 – a drop in the bucket. In 1952, the U.S. Senate Foreign Relations Committee admitted that claims of Asian nations alone could total “as much as $100-billion” (1952 values). 

Washington has much to hide. It played an active role in covering up Nazi looting, until its feet were held to the fire in the mid-1990s by Senator Alfonso D’Amato, backed by the deep pockets of Seagram’s billionaire Edgar Bronfman, a leader of the World Jewish Congress. In an effort to redeem himself in the eyes of that important segment of the electorate — the Jewish community — President Clinton finally let the investigation proceed. But before then Washington dragged its feet, and was neither conscientious, nor honest, with Holocaust victims. Much of the documentary evidence was hidden, lost, or destroyed. The deputy archivist of the United States told D’Amato that the Reichsbank gold records (once in possession of the U. S. Government) ‘have been lost’. Other records, the archivist admitted, were returned to the German government and, strangely, no copies were retained by the U.S. 

There also is clear evidence of outright U.S. collusion with German business, bankers and former Nazi leaders, in strong parallels to Japan. 

In December 2000, President Clinton signed into law the Japanese Imperial Army Disclosure Act to declassify documents about World War II in Asia and the Pacific. This bill originally required the government to open all classified documents from World War II that have bearing on Japanese war crimes, which include looting. But before the bill was passed, a filter was added providing for an interagency task force to review all the records and remove any that the CIA director thinks are too sensitive and might compromise national security. For Nazi records, withholding any information was specifically disallowed. For Japanese records it was specifically allowed. 

Remarked one observer, “It arouses suspicion when the U.S. Government has a double standard in treating such issues with the two countries.” 

What could possibly be in Japanese war records to compromise American security sixty years or more after the fact? Who will be shamed by such disclosures? As it stands, the interagency task force was given three years to decide which records to declassify, which makes a joke of the whole process. A lot of outrage has been expressed about money-laundering. This is history-laundering. 

By the time these archives finally are opened, those that reveal the true nature of U.S.-Japanese collusion will have been ‘lost’ like the Nazi gold archives. 

Destroying the evidence actually began before Japan’s surrender. 

Before the Occupation began in 1945, Japan burnt great quantities of war records and documents. Skies all over the islands were filled with smoke and ashes. In 1946, millions of pages of Japanese government and military records that remained were transferred to Herbert Hoover – peculiar, as Hoover was not a government official. However, as we revealed in The Yamato Dynasty, he was a chief mover in whitewashing the emperor, suborning General Tojo, and putting the war criminals back in power. Hoover shipped these records to the Hoover Institution in California, but half a century later their location remains a mystery. 

Another huge collection of Japanese documents was transferred to the CIA in the late 1940s. After ‘sensitive’ documents were removed, the rest were turned over to the National Archives. The State Department then decided, amazingly, to return them all to Japan. Despite protests from scholars, only 10 percent were microfilmed first, and these were bleached of any evidence of looting and collusion. 

When we did Freedom of Information queries on Yamashita’s Gold in 1987, the Treasury Department, the Defense Department, and the CIA, dodged all our requests, claiming these records were exempt from release. In other words, the records did exist, but could not be seen. Yet during the Schlei lawsuit in the 1990s, the government claimed it carried out a thorough search of all government agencies and archives for any records related to Japan’s looting of Asia, and postwar slush-funds, declaring to the court that no such written evidence could be found. What had happened to it in the intervening years? 

While Germany has paid more than $45-billion in compensation and reparations, Japan has paid only $3-billion. Even today, Germany continues this program of compensation and reparations, but Japan has dug in its heels and said it was all settled in 1951. Its position is backed adamantly by the State Department, which is determined to block compensation payments even to U.S. citizens, even to former POWs. 

Britain, having parroted Washington by declaring that all this was ‘settled’ in 1951, finally reversed itself. In 2001, the British government agreed to pay – from its own tax revenues – a £10,000 one-time settlement on former British POWs of Japan and their heirs. This may seem humane, but it sidesteps the real question of why Japan continues to be shielded from paying. It also does not satisfy the demands of British POWs and internees for an official apology from Japan. 

Since the war, Tokyo has passed fifteen laws giving its own nationals compensation of $400-billion. Among those receiving compensation and pensions were indicted war criminals. Japanese sociologist Tanaka Hiroshi said, “We are generous with ourselves, stingy with others, [and] our policy on war compensation is manifestly unfair to foreigners, and unrepentant of the past.” 

Washington has paid compensation to Japanese civilians interned unjustly in America during the war. Each internee, even babies born at the end of this period, was awarded $20,000. Most of them were complete innocents and their lives were, in many cases, damaged or destroyed by the internment. But not one was forced to perform slave labor. 

Since 1999, more than thirty lawsuits have been filed in California courts by survivors of the Bataan Death March and other POWs who were forced to provide slave labor for Japanese companies. They were focused in California because the state legislature had extended the period when such claims could be filed. The U.S. Government then had the cases transferred to a federal court in San Francisco, where most of these suits then were rejected in September 2000 by Federal Judge Vaughn Walker. Judge Walker said they were ‘barred’ by the terms of the 1951 Peace Treaty, the same stonewalling used by Tokyo and Washington. 

Hard as it may be to believe, the State Department argued on the side of Japanese corporations in these cases. Walker summed up his decision by stating that the San Francisco Peace Treaty had “exchanged full compensation of plaintiffs for a future peace. History has vindicated the wisdom of that bargain.” 

Chalmers Johnson reacted by pointing out that since the treaty was signed, at least ten million people and 55,000 Americans have died in Asian wars. By those facts alone, he rightly called Judge Walker’s statement “one of the more abysmal moments of denial”. 

Some fought back. In March 2001, U.S. Congressmen Mike Honda (D-San Jose) and Dana Rohrabacher (R-Huntington Beach) introduced a bill, “Justice for Prisoners of War Act” before the U.S. Congress. The bill had strong bipartisan support and by August 2002 had 228 co-signers including House whips for both parties. Honda’s bill called for “clarification of the wording of the 1951 Peace Treaty between Japan and the United States” to keep the State Department from deviously interfering in victims’ lawsuits. 

If this bill became law, it could open a window for compensation to POWs who were forced to perform slave labor for Japanese companies like Mitsui, Mitsubishi and Sumitomo, which are among the richest on earth. The bill would remove a key legal barrier used in Judge Walker’s rejection of the slave labor lawsuits. Article 26 of the 1951 treaty reads: “Should Japan make a peace settlement or war claims settlement with any State granting that State greater advantages than those provided by the present Treaty, those same advantages shall be extended to the parties to the present Treaty.” 

In other words, if Japan were ever to give another country greater advantages for war claims than those granted in the treaty, then it has to extend such terms to all forty-eight countries that signed the treaty. And as we now know, a secret deal was arranged by Dulles for the Dutch government to receive $10- million from Japan. Both Switzerland and Burma also negotiated compensation to their citizens that would today be worth about $50,000 each. While Burma was occupied by Japan, Switzerland was not even a belligerent during the war. When these settlements with Burma and Switzerland went through, the British government (confronted by demands from its own POWs) decided against reopening negotiations, although it was entitled to do so by the terms of the treaty. In fact, none of America’s closest allies deviated from Washington’s instructions not to meddle with Article 26. 

Judge Walker, possibly under considerable pressure, sided with the State Department and ruled that Article 26 cannot be invoked by private citizens, but only by their government. The Honda-Rohrabacher bill would get around that bizarre ruling by having Congress act for the victims. 

The State Department’s unelected bureaucrats, aghast at the temerity of America’s elected lawmakers, realized that Honda’s bill cannot be thrown out by the exercise of political pressure over federal judges. Instead, State took the high moral ground by claiming that passage of Honda’s bill “would be an act of extreme bad faith”. 

Bad faith toward Japan’s biggest corporations and its extraordinarily corrupt and incompetent LDP bosses. Since spring 2001 this bill has been stalled in committee. Once through the House of Representatives, the battle for the bill would have to be fought again in the Senate. Thereafter, the presidential veto could be (and probably would be) invoked. In which case, President George W. Bush would be honoring the tradition of cover-up by every American president since Truman. 

Another Congressional effort to force State and Justice Departments to let justice take its course, was an amendment to an appropriations bill. This made it illegal for the State and Justice to spend any of their 2002 budget “to file a motion in any court opposing a civil action against any Japanese person or corporation for compensation or reparations in which the plaintiff alleges that, as an American prisoner of war during World War II, he or she was used as a slave or forced labor”. This amendment was passed with overwhelming bipartisan support one day before the World Trade Center attack. 

Of course, nothing prohibits State or Justice from ‘advising’ courts against favorable settlements for POWs, or putting pressure on judges in federal courts. The bill was only valid for twelve months, after which it would have to be reintroduced, so it is popular, patriotic, but toothless. 

Sadly, this judicial gridlock is like France before the Revolution, when a two-tiered system of justice was in place – one for nobility, one for ordinary people. 

However, it may be too late for Washington to save Japan’s LDP from its own ineptitude and venality. Japan’s financial collapse has been predicted by scholars at Massachusetts Institute of Technology, on the premise that the LDP would refuse to undertake the serious reforms needed. In fact, all Japan’s top banks failed long ago, but – as in a silent movie – the edifice collapsed without the audience hearing any sound. 

Japan’s banks had $1-trillion in bad loans on their books, in sweetheart deals for men like Prime Minister Tanaka, or zero-interest loans to the yakuza. Among the banks hit hardest were Sanwa Bank and Tokai Bank. Together with Dai-Ichi Kangyo Bank they are the three that were exempted by General MacArthur and General Marquat from reorganization in 1945.

Former prime minister and finance minister Miyazawa proposed a painless bailout – painless, that is, for the banks. They would be bailed out by Japanese taxpayers. After which the banks could resume their bad habits. Whether taxpayers would stand for it is questionable. 

If anyone knew how to arrange such a magic trick, it was Miyazawa. Few other men have been so intimately and continually involved in the inner workings of the Ministry of Finance since the early 1940s. He began his career in the Finance Ministry in 1942 and was one of the three Japanese who negotiated the secret terms of the 1951 Peace Treaty with John Foster Dulles. Thanks to cachet he gained in those warped negotiations, Miyazawa entered politics where he remains to this day as a man of phenomenal leverage. He served as minister of finance in the Nakasone, Takeshita, Obuchi and Mori cabinets. Over all those decades, Miyazawa was chief of accounting for the LDP, so he had intimate knowledge of all the slush funds. He held many other ministerial posts, such as chief cabinet secretary to Prime Minister Suzuki when the M-Fund “57s” first were issued. When minister of finance for Takeshita, Miyazawa had to resign along with Takeshita in the Recruit insider-trading scandal tied to the M-Fund. In 1991, thanks to his rescue by M-Fund controllers Kanemaru and Gotoda, Miyazawa became prime minister. He then named Gotoda as his deputy prime minister and made Kanemaru the LDP vice president, giving Kanemaru the informal role of ‘co-prime minister’. 

At a drunken celebration of this collaboration in a posh Tokyo restaurant, Miyazawa pledged to Kanemaru that, “I will not do anything that differs from [your] intentions. I will consult you on everything.” The honeymoon was brief, as in 1992 Kanemaru became involved in the great scandal of the Sagawa Parcel Company, which was delivering war-gold bribes to politically influential people. Before his trial was concluded, Kanemaru conveniently died. 

If anyone knows the truth, Miyazawa does. But he is not talking, nor is his son-in-law, Christopher J. Lafleur, a career U.S. Foreign Service officer who for years has been the most powerful diplomat at the American Embassy in Tokyo, as deputy chief of mission, or DCM. 

In 1986, the 38-year-old Lafleur was dispatched to Tokyo, ostensibly to negotiate sales of the FS-X fighter plane (the same year Schlei came to Tokyo to negotiate his client’s “57s”). Miyazawa, then minister of finance, was Japan’s FS-X negotiator, under a cloud in the Recruit scandal, linked to the “57s” and M-Fund moneys. 

One unexpected outcome of the friendship that bloomed between Lafleur and Miyazawa was that Lafleur married Miyazawa’s daughter. 

In September 1997, Lafleur was made Deputy Chief of Mission at the U.S. Embassy in Tokyo – called the ‘de facto boss of the embassy’. A few months later, in 1998, Miyazawa was back in the drivers seat as finance minister in the Obuchi cabinet. Like his earlier appointments to this job, Miyazawa was returned to office to practice damage control. According to Professor Lausier, this time Miyazawa was put back in as minister of finance because a large number of “57s” were coming due – documents that the LDP and the government of Japan could ill afford to redeem, and therefore denounced as counterfeit. Lausier believes that Miyazawa was there to decide which of these IOUs would be honored and which would not. 

During the same period, the U.S. Embassy’s Lafleur was vocal in claiming that the “57s” were fraudulent, and arguing against victims’ rights to sue Japanese corporations, on the basis of the 1951 treaty negotiated by Lafleur’s father-in-law. 

Not only Lafleur but a string of ambassadors he served also showed conspicuous conflict of interest. 

Many people were troubled to learn that Ambassador Tom Foley’s wife was a paid consultant to Sumitomo Heavy Industries, one of the primary targets of the POW lawsuits for slave labor. The State Department declared that it saw no conflict of interest in Mrs. Foley’s job and the simultaneous appointment of her husband as ambassador to Japan. However, in that post Foley vigorously denied the right of American POWs to sue Japanese corporations including the one his wife worked for. 

After retiring as ambassador and returning to Washington, Foley openly became a paid lobbyist for Mitsubishi Corporation as a member of its advisory panel on strategy. Mitsubishi was among the biggest employers of American slave labor during the war. 

When he was appointed DCM under Foley, foreign correspondents in Tokyo joked that Lafleur was a member of Japan’s ‘dream-team’. 

In 2001, when news of Lafleur’s special status as Miyazawa’s son-in-law became more widely known, making the issues of conflict of interest and double standards too obvious to ignore further, Lafleur was recalled to Washington and made Deputy Assistant Director to the Bureau of East Asian and Pacific Affairs at the State Department. This removed him from potential embarrassment in Tokyo, but put him in a prime position to monitor and guide Congress, as well as to oversee any legal actions in U.S. courts. 

The low point of this farce came in late September 2001, when a letter appeared in The Washington Post written by three former ambassadors to Tokyo – Thomas Foley, Michael Armacost and Fritz Mondale. The letter linked the claims of American POWs against Japan to the terrorist attacks on the World Trade Center: 

“Why would Congress consider passing [the Rohrabacher Bill], which could abrogate a treaty so fundamental to our security at a time the president and his administration are trying so hard…to combat terrorism?” 

In other words, Honda and Rohrabacher, and America’s POWs, were no better than terrorists! 

Even Japan’s government winced at the Foley-Armacost-Mondale attack. A Japanese Embassy spokesman in Washington told the media that the government of Japan regarded the claims of POWs and the problems of world terrorism to be ‘different issues’. 

As a dissident State Department official quipped, “Sometimes it [seems] that Japan [has] two embassies working for them — ours and theirs.”

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