Manila Leader, Ally of Poor, Now Courts the Rich

http://www.nytimes.com/1998/12/13/world/manila-leader-ally-of-poor-now-courts-the-rich.html?pagewanted=all
By MARK LANDLER
Published: December 13, 1998

MANILA, Dec. 12— Joseph E. Estrada won a smashing victory seven months ago in the Philippine presidential election as a champion of the poor. But today, diplomats, business people and politicians say, Mr. Estrada is mainly benefiting the rich, the very people he inveighed against.

Some people here fear that under Mr. Estrada's relaxed style of leadership, the Philippines is drifting back into corruption and cronyism, a hallmark of the country's deposed dictator, Ferdinand E. Marcos, and an occasional weakness of his successors, Corazon C. Aquino and Fidel V. Ramos.

Since taking office in June, Mr. Estrada has helped nudge one of his main campaign contributors into the top job at the San Miguel Corporation, the biggest company in the Philippines. He has worked to rescue Philippine Airlines, which is controlled by another wealthy supporter. And he paved the way for a politically connected Hong Kong company to acquire control of Philippine Long Distance Telephone.

Two recipients of Mr. Estrada's aid were notorious cronies of the late Mr. Marcos: Eduardo Cojuangco, scion of one the most powerful Filipino families, who now runs San Miguel, and Lucio C. Tan, a billionaire who controls Philippine Airlines and is considered the richest man in the Philippines.

"It's something we are watching and worrying about," said Guillermo Luz, the executive director of the Makati Business Club, which represents corporate interests. "Because it's not just the old cronies who are coming back. It is the practice of cronyism that is coming back."

To be sure, nobody is comparing Mr. Estrada to Mr. Marcos, who awarded vast monopolies to trusted supporters and is suspected of looting billions of dollars during his 20-year rule. But Mr. Estrada's actions are raising eyebrows even in a country where high-level corruption is endemic.

"Everyone has been rooting for him to succeed," said Sergio Osmena, a member of the Philippine Senate who was jailed by Mr. Marcos. "But sometimes you neglect moral principles in paying back debts."

Adding to the fears of resurgent cronyism is the strange case of Imelda Marcos, the widow of Mr. Marcos. After denying for more than a decade that she and her husband plundered the country, Mrs. Marcos unexpectedly announced on Monday that she intended to sue several Marcos cronies to recover more than $12 billon in assets that her husband amassed during his presidency.

"We own practically everything," Mrs. Marcos said in an interview with The Philippine Inquirer. Her admission left officials here flummoxed, since they have spent more than a decade fruitlessly prosecuting the Marcos family.

Advisers to Mr. Estrada denied that the President was engaged in Marcos-style cronyism. They said his critics were distorting well-intentioned gestures by Mr. Estrada.

"In the first place, crony capitalism only thrives in an autocratic or dictatorial government," said Edgardo B. Espiritu, the Finance Secretary and one of Mr. Estrada's closest advisers. "In a system that is democratic, everyone must compete in a field that is supposed to be level."

Mr. Espiritu acknowledged that Mr. Estrada had befriended some powerful tycoons. But he added: "You may be a friend of the President, you may be a friend of politicians. But if you want to survive in the field, you have to be efficient, and you have to be ready to compete."

Mr. Estrada's ties to wealthy business executives contrast with his careful cultivation of an image as friend of the common man. Even on screen, the 61-year-old former actor often played Robin Hood characters.

With his generous paunch, garbled diction and Elvis Presley-style coiffure, Mr. Estrada put off many affluent, educated voters. But those same qualities made him a hero to poor voters.

Even now, rank-and-file voters believe that Mr. Estrada is looking out for them. The President's approval ratings are among the highest of any Filipino leader and have not been damaged by charges of cronyism.

"My dedication to the poor will be unwavering," Mr. Estrada said in an interview last month at the Asia Pacific Economic Cooperation summit meeting in Malaysia. "But I would say that although we are pro-poor, we are not anti-rich. We are pro-business because I believe business leads to growth."

Indeed, political strategists here said Mr. Estrada's campaign was financed by some very rich business people, notably Mr. Tan and Mr. Cojuangco. It is difficult to determine exactly how much they contributed because laws on disclosing campaign contributions are riddled with loopholes. But several political experts said Mr. Tan was the largest donor

It is clear that he has easy access to the President. During the summit meeting in Malaysia, Mr. Tan hovered at the back of the room while Mr. Estrada gave interviews to foreign journalists.

"He owes Lucio Tan a lot of favors," said Alexander R. Magno, president of the Foundation for Economic Freedom, a research group.

Mr. Tan has been struggling for months to rescue Philippine Airlines, the nation's flagship airline, which he took over in 1994 and which is $2.1 billion in debt. Mr. Estrada has plunged into the rescue effort, brokering an agreement between the airline and its union, and trying to attract foreign carriers to invest.

Mr. Estrada insists that the Government will not bail out Philippine Airlines, but he also says that he will not allow the nation's flag carrier to fail. As a result, he is likely to grant a request from Mr. Tan that would tighten restrictions on rivals and make it harder to compete with Philippine Airlines. And the Government is trying to line up public and private bank loans for Mr. Tan's company.

At San Miguel, the giant beer and beverage company, the Government's role was less direct. Mr. Cojuangco had been frustrated that he could not take control of the company even though his family owned 20 percent of its shares. A Philippine court had denied him the right to vote the shares because of charges that his family got them unlawfully during the years of Marcos rule.

Just before Mr. Estrada took office in June, however, the court finally allowed Mr. Cojuangco to vote his shares. He soon persuaded other stockholders -- including the Government, which owns 27 percent of the shares -- to support his effort to oust the chairman. Senator Osmena said Mr. Estrada's advisers pressed other shareholders to accede to Mr. Cojuangco.

Some political experts contend that although the Marcos-era cronies are making a comeback, the Philippines now has more vigorous institutions, like the legislature and the news media, to blunt their influence.

However, at a conference here on Dec. 4, the former American Ambassador to the Philippines, Nicholas Platt, warned that Americans were reluctant to invest because of a perception that cronyism is on the rise. Mr. Platt said investors were particularly skeptical of the Philippine courts, which have failed to convict either Mrs. Marcos or her husband's associates.

"The Philippines is a forgiving society, an engaging trait to many," Mr. Platt said. "But international investors ask whether they will get a fair hearing or a rapid resolution when involved in a dispute here."