The PCIJ’s award-winning investigation of the unexplained wealth of President Estrada employed many of the techniques described in this chapter. The findings of the investigation were published as news reports in major newspapers and aired as 10- to 15- minute segments on public-affairs programs in two major networks from July to December 2001. These reports also became the bases for the impeachment charges filed against the President.
Estrada’s two-and-a-half-year presidency provides a classic case study of political corruption in the Philippine context and of the vast amounts that can be amassed by a president who misuses the powers of his office. These included the powers to appoint over 3,500 officials, including the boards of government banks, corporations, and pension funds. The President also has the power to approve contracts above P50 million. He can veto laws, order the release of amounts from the national budget, and exercise influence on nearly every office in the bureaucracy.
By the time Estrada was ousted in January 2001, it had become apparent that he combined the vintage methods of presidential plunder that Marcos had perfected – behest loans, commissions from contracts, and the ownership of companies through nominees – with newer types of machinations such as stockmarket speculation and corporate mergers and takeovers using state pension funds. The estimate is that Estrada accumulated as much as P20 billion in cash and real estate while in Malacañang.
When the PCIJ began its investigation in January 2000, there was already coffee-shop talk about the deals made by the President and the huge amounts of money that were changing hands. It was, however, difficult to substantiate these rumors, especially when Estrada was at the height of his popularity and had succeeded in muzzling critical segments of the press. It was difficult at that point to get firsthand sources to be interviewed on the subject or to find documentation to support the allegations.
Such is often the case when one is investigating corrupt officials. This does not mean that one should stop probing. It only means that one should change the focus of the probe and the techniques used. The PCIJ investigation of Estrada took nearly a year and was done by a team of five journalists, several researchers, and interns.
The following is a simplified-step-by-step account of how the PCIJ investigated a president:
Aim for what can be documented
The challenge in investigating political corruption is to find a paper trail and to get sources to reveal information, especially when the targets of the investigation are powerful. The PCIJ knew that it had to find documents to back up its reports. Its investigation, therefore, was determined by what could be documented. It was difficult to document deal making and payoffs. It was easier at that time to document the fruits of the dealmaking. This was the reason the PCIJ decided to find out how Estrada spent his money, rather than how he got it.
Devise a research strategy
It is essential at the onset to conceptualize a strategy for the research. The strategy should include a list of the information needed and the documents and sources that can provide such information. Investigators should know what they are looking for. For the PCIJ, this requirement also entailed rereading the law on assets and conflicts of interest.
The main strategy at the initial stage of the investigation was to find out whether the President’s assets exceeded what he had declared in his statement of assets, making him liable for accumulating unexplained or ill-gotten wealth. As shown in the previous chapter, an asset check is often one of the simplest ways to document corruption. To do this, we needed to retrieve Estrada’s statements of assets since 1987. Then we would have to do a systematic search of his assets and see whether his statements contained major omissions.
Be patient with documents
The search for statements of assets was easy. The PCIJ had several of these already on file. Those when Estrada was a senator were still on file at the Senate, and those he filed as president were obtained from the Office of the Executive Secretary in Malacañang. The search for the other assets was more tedious. The PCIJ began with corporate records and did a systematic search of companies in which Estrada and various family members were registered as board members or incorporators.
The search began at a computer terminal at the Securities and Exchange Commission (SEC), where members of the public can key in a name and find out what companies list it as an incorporator or a board member. PCIJ researchers keyed in Estrada’s name and those of his wife, various mistresses, and children. More than 100 companies were found, but the list was trimmed down to take out companies that listed people who had the same name but were not Estrada family members.
The next step was to retrieve the registration records of the companies in the trimmed down list. This entailed queueing at the SEC for five to six hours to get a maximum of three records a day. The process took about three months. By the end of that period, the PCIJ had a list of 66 companies in which Estrada or his family held shares. The search had paid off as Estrada declared less than a dozen companies in his statement of assets.
Organize and analyze data
The crucial information from the corporate records (date of incorporation, board members, incorporators, areas of business, amount of assets) were inputted in Microsoft Excel, a basic spreadsheet program which sorts data, categorizes information, and alphabetizes. This allows the user to view the data in any number of ways and to discern patterns. The data were categorized according to which wife/mistress or child held the corporations, at what stage of Estrada’s political career the corporations were formed, and how much they were worth. The assets of 14 companies alone totaled more than P600 million, but in 1999 Estrada declared a net worth of only P35.8 million. Thus, the PCIJ’s first story, released in July 2000, basically said that Estrada had accumulated more assets than could be explained by what he had declared in public records.
Investigate further
Further trips to the SEC later showed that Estrada either did not divest himself from companies where his name was listed or that he divested only after the 60-day deadline set by the law. Moreover, the divestments were made to his wife, Luisa Ejercito, again a violation of the law that says there can be no divestments to relatives within the fourth degree. In effect, there were no real divestments, meaning t that Estrada could have violated the Constitution, which bans the President from engaging in business.
This violation became abundantly clear in the PCIJ’s investigation of 34 townhouses being constructed by JELP, a real estate company owned by Estrada, his wife, and their three children. The PCIJ team visited the project site in Antipolo and talked to neighbors who complained that the construction caused flooding in their area and tipped off the journalists that the project did not have the required permits.
The PCIJ team then did a research of the permits required for building housing projects and found that JELP had violated every rule in the book: it had none of the eight permits needed for such a project. Moreover, residents had seen Estrada himself inspecting the property, further proof that he had violated the constitutional ban on engaging in business. Because he had named himself housing czar overseeing his administration’s housing projects, the President was clearly in a conflict-of-interest situation. The PCIJ’s report released in August 2000 exposed the problematic housing project.
Continue the search
In the beginning, the PCIJ’s documentation of Estrada’s assets focused on those that were registered in his name or those of his family members. The PCIJ, however, suspected that he had more. For example, talk of fabulous mansions being built for various presidential mistresses was rife. If the rumors were true, then it was scandal on a grand scale. An initial search, including tips from various contacts, showed that the mansions were not in the names of either the President or those of his mistresses. This was going to be a far bigger challenge than the corporate search.
Land records are public, but researchers have to know exactly what they are looking for. The process of searching for Estrada’s properties involved a lot of trial and error. At the start, the PCIJ had only sketchy information, from rumors and numerous contacts, of the various real-estate acquisitions: in some cases, the journalists knew only who the previous owner of the property was; in others, only the address or the subdivision.
Use flow charts
To put some logic into its investigation, the PCIJ journalists made flow charts. One chart illustrated the process of building a house, who would be involved, and what papers were needed at every step of the way. First would be the owner of the property, the lawyer of the owner, the architect, the contractor. Soon the neighbors would sense that construction was going on, the village association where the building was taking place would have to be informed, permits would have to be obtained, and so on down the line. It is impossible to build a house without an entire army of people knowing about it and a boxful of documents being produced in connection with the construction.
Tap human sources
When the documents – land titles, building permits, etc. – did not show the names of Estrada or any of his family members, the focus of the investigation shifted to human sources. These included architects, lawyers, builders, suppliers, and other contractors as well as neighbors and residents of villages. These human sources had encountered either Estrada, one of his mistresses, or one of his cronies who had fronted for the sale. Some exclusive residential associations cooperated with the investigation by supplying information as well as giving access to documents such as barangay permits and building plans. Some neighbors saw Estrada inspecting his properties. One neighbor said one of Estrada’s intermediaries had offered to buy her property, which was next to one of the mistresses’ homes.
Look for patterns
From the beginning, it was clear to the PCIJ that proving the real ownership of the mansions would be problematic. But if there was a pattern that could be established, then it would be possible to link the houses to Estrada. As the investigation progressed, the patterns began to emerge in:
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From interviews, buildings plans, and photographs, the PCIJ found a pattern in the use of contractors, project managers, architects, and design firms, as well as a uniformity in the style of the mansions. A routine search of building plans – some obtained from village associations, others from City Hall, or from contractors – showed the grandeur of the constructions. Not only that, they revealed new information, such as the names of the President’s children in the blueprint of bedrooms being planned for them – additional proof that the houses were indeed being built for Estrada. While searching for documents, the PCIJ also found Forbes Park property that Estrada had bought without paying taxes.
Unmask front men and shell companies
The breakthrough in the investigation of the mansions came when the ownership of the ownership of the “Boracay†mansion in New Manila, Quezon City was uncovered. The property was purchased in 1999 from the wealthy Madrigal family. Estrada had both the house and the grounds redone. He also ordered the construction of a heated swimming pool surrounded by white sand. The pool came with wave- and mist-making machines.
From a tip in the address, the PCIJ located the land title for the property and discovered that its new owner was a company called St. Peter Holdings. The real-estate trail thus led back to the corporate trail at the SEC. From the corporate registration files, the PCIJ found St Peter’s incorporators. The journalists had no idea who they were. But around that time, the PCIJ was told by various sources, including Estrada’s press secretary, that the person to talk to about the President’s assets was his counsel, Eduardo Serapio, who had been appointed presidential assistant for political affairs.
A search on the Web showed that Serapio was part of the De Borja Medialdea Bello Guevarra Serapio & Gerodias law firm. The law firm’s Website also revealed the names of all the partners and associates working for it. It was here that the PCIJ found that all the names listed as incorporators of St. Peter Holdings were partners and associates of the firm. The link to Estrada had been established. Later, the PCIJ found that the law firm was linked to other acquisitions as well, including shares in a gambling casino.
In October and November 2000, the PCIJ released a series of stories on Estrada’s mansions. A total of 17 properties worth over P2 billion in Metro Manila, Baguio, and Tagaytay were uncovered. In December 2000, the PCIJ exposed how Estrada, through his crony Lucio Co, may have used shell companies to acquire the Fontana casino in Clark.
(For a more detailed explanation of how the PCIJ investigated Estrada, see Lars Moller and Jack Jackson, “Journalistic Legwork that Tumbled a President,†published by the World Bank Institute. That paper is available online at http://www.worldbank.org/wbi/governance/cases.htm.)
