The curse of Stonehill’s ‘blue book’

(Continued from Wednesday)

CANBERRA—Inside the National Bureau of Investigation building, I saw teams of agents returning in waves early Saturday evening after four hours of raids that continued up to the small hours of Sunday. They were hauling in boxes of documents, tape recorders and bugging devices on six-by-six Army trucks, seized from 27 establishments of Harry Stonehill. The boxes jammed the building; there was hardly any space for a cockroach to squeeze itself into.

The agents told us that Stonehill’s office at the former Cuban Embassy on Dewey (now Roxas) Boulevard was “thoroughly bugged” with listening devices. They found the telephone tapping equipment still working. They also found rooms with two-way mirrors. When the agents took me to that office days later, I was amazed by its appurtenances. One of its walls was lined with shelves full of books. Behind the shelves was the room wired with listening devices. It looked like a scene in a James Bond movie.

On the basis of the seized documents, the Department of Justice filed with the deportation board charges against Stonehill and his business associate Robert P. Brooks, calling them “undesirable aliens” and a “menace to the security” of the country.

The charges included illegal remittance of foreign exchange, illegal manufacture of cigarettes, business malpractices, corruption, and influence-peddling.

In a press briefing, the then justice secretary, Jose W. Diokno, and Col. Jose Lukban, the then director of the NBI, told us for the first time, after their examination of the inventories of the seized documents, of the existence of a “blue book” that contained a five-by-seven ledger showing monies paid to a number of officials in both the then Liberal-Party-led administration and the previous Nacionalista-Party-led administration.

It was the beginning of the serial disclosure by Diokno and Lukban of the politically explosive contents of the documents they were sitting on. Stonehill and Brooks were held incommunicado in the NBI for three days over the weekend, without bail. We reporters were not allowed to interview the captives, thus enabling the government to control the flow of material derogatory to Stonehill in a grossly one-sided trial by publicity aimed at managing public opinion. It was not until two weeks after the raids that the deportation board began a public trial on the charges.

Among the documents seized were assessments by the Bureau of Internal Revenue, which estimated a tax deficiency of P113.5 million for 1959 and 1960 by the US Tobacco Corp., a Stonehill firm. The government planned to use these assessments as evidence to back its charges. Before the government could present its case, the hearings at the deportation board were suspended in the last week of March 1962, after the Supreme Court slapped a temporary injunction on the use of the documents in the trial, ruling that these had been illegally obtained. Stonehill’s lawyer said the agents had even busted the safe of US Tobacco Corp. They could not wait for the man in charge of the safe’s lock combination. Worse, they found nothing inside the safe.

Receipts for the seized papers were as generally worded as the search warrants. Nobody knew what papers or things were carted away. The receipts merely stated: “batch of folders” or “a wooden cabinet with 77 folders,” etc. The law requires a specific inventory.

“The point is, how do we know that no documents from other sources were made to appear as among Mr. Stonehill’s papers? Mr. Stonehill has many enemies, particularly influential Chinese competitors.” (This pleading was reproduced in Lewis E. Gleeck Jr.’s book based on classified diplomatic material obtained through the US Freedom of Information Act.)

The trial did not resume until July 30, 1962—four months after the raids. In the interval, the case generated various ramifications that suspended the public disclosure of the documents filed with the deportation board. The more the documents were suppressed, the more public pressure increased, demanding the release of Stonehill’s “secret payroll” listed in his blue book.

Neither Diokno nor Lukban nor then President Diosdado Macapagal had the faintest premonition that they were sitting on a political powder keg that would devastate the credibility of Macapagal’s New Era administration beyond repair. In May 1962, or just two months after the raids, Macapagal sacked Diokno from his Cabinet.

(On Wednesday: Why Diokno was sacked)