But the case against Marcos is one of the most sensitive federal investigations of the decade. It has boiled down to a question less of law than of policy: Should the United States indict a once-trusted ally, a deposed dictator the nation has granted sanctuary?
The question is undergoing an unprecedented White House review. Ultimately, the National Security Council will advise President Reagan on pursuing an indictment against a longtime personal and political friend.
The political argument against indictment is: What happens the next time the United States offers asylum to a corrupt and tottering ruler in the hope of averting a bloodbath? Would such a ruler be more likely to stand and fight if he thought his asylum might end in a U.S. prison?
Nonsense, said Severina Rivera, general counsel for the Philippine government commission that is suing Marcos in U.S. courts to repatriate his wealth.
"As far as we're concerned, the policy considerations seem minimal as opposed to the negative effects of setting aside a major criminal indictment against a corrupt dictator who's violated U.S. law," she said. "It would smack of a real double standard."
The case against Marcos described in this article is based on court documents and interviews with U.S. Justice Department and Philippine government officials.
The cast of characters includes:
* Marcos, who is widely believed to have taken roughly $5 billion from the Philippines before he was driven into Hawaiian exile by a popular revolt in February 1986.
* His wife, Imelda, whose shopping sprees for tens of millions of dollars' worth of paintings, jewelry and bric-a-brac created a paper trail for federal investigators.
* Adnan Khashoggi, the Saudi arms merchant who bankrolled Reagan's secret arms sales to Iran; Khashoggi is thought to have helped Marcos hide his wealth
from investigators by acting as a front, giving the illusion that Manhattan office buildings and works of art owned by Marcos were actually his.
* Gliceria and Bienvenido Tantoco. She was Imelda's favorite shopping partner. He was the Philippines' ambassador to the Holy See. Both now are international fugitives.
'AM I A SCOUNDREL?'
Marcos repeatedly has proclaimed he is innocent. "Today I am faced with the greatest crisis that has confronted me," he told celebrants at a Sept. 11 gathering in Hawaii to mark his 71st birthday. "Am I a scoundrel? A thief of ill-gotten wealth? I am no scoundrel."
The road that may end in Marcos' indictment began in 1972, when he declared martial law in the Philippines and began a long era of autocratic rule. Under martial law, investigators believe, Marcos siphoned billions of dollars from the Philippines by seizing control of its economy.
One example was his dominion over the islands' sugar plantations. He set up a government monopoly called the Philippine Sugar Commission, or Philsucom, and handed control of it to his old fraternity brother and golfing partner, Roberto Benedicto, who is now a target of the federal investigation.
Philsucom turned the plantations into a fiefdom by requiring planters to sell all their sugar to the government monopoly. The price paid the planters was less than half the world market price.
Marcos decreed that the difference was to be "paid to a special fund of the national government subject to the disposition of the president for public purposes" - in other words, paid to Marcos.
By skimming 4 cents a pound off the profits, Philsucom stole upward of $1.2 billion from the sugar-cane workers and planters from 1972 to 1985, according to independent audits by sugar industry executives. And it was only one of many such mechanisms that Marcos controlled.
PAPER LABYRINTHS
The plunder that began flowing out of the Philippines in the 1970s, a flow that became a flood as political tensions peaked in the 1980s, filled the ledgers of overseas shell corporations in Panama, the Netherlands Antilles and the Cayman Islands, places where financial laws grant anonymity. The Marcoses' transactions were handled discreetly by lawyers skilled at creating paper labyrinths.
As the pending case suggests, the Marcoses' elaborate attempts to hide their wealth may be their undoing.
In the early 1980s, Imelda Marcos and Gliceria Tantoco began an epic spree of free-spending shopping trips in Manhattan. Tantoco, who with her husband had been given control of the Philippine government's duty-free shops and owned Manila's most exclusive department store, often acted as Imelda Marcos' buyer.
In addition to millions of dollars' worth of jewelry and glittering gowns and the now-famous shoes, they bought art. Lots of art.
The two women snapped up hundreds of paintings at a cost of at least $30 million. Some were authentic. Some were expensive fakes.
A RESOUNDING MISSTEP
On one expedition, in September 1981, Gliceria Tantoco acquired a $6 million collection of art and artifacts for the Marcoses at a Manhattan estate sale. But she did not pay nearly $500,000 in sales taxes on the deal. The failure to pay would come to haunt them.
So would their acquisition of four Manhattan buildings worth roughly $350 million. One of them was the tallest building on the most famous street of New York's financial district: 40 Wall St.
Allegations in 1985 that Marcos and his cronies had hidden hundreds of millions of dollars in the United States had triggered a congressional investigation. In April 1986, six weeks after Marcos fell from power, the businessmen who managed the four buildings told a congressional committee how the real estate deals were structured to hide Marcos' ownership.
Joseph and Ralph Bernstein's testimony was a smoking gun. The former told of a 1984 midnight drive with Imelda through the narrow streets of the
financial district, of how she gazed up lovingly for 10 minutes at the 71- story pinnacle of 40 Wall. "She was kind of proud of it," Joseph Bernstein said.
He testified that Gliceria Tantoco had handled many of the business arrangements and that Imelda Marcos told him to do whatever Tantoco said.
Marcos' financial empire was threatened by the lawsuits and investigations. He allegedly sought help from a man whose finances were as far-flung as his: Saudi arms merchant Adnan Khashoggi.
Khashoggi and Imelda were good friends. A videotape confiscated by the Philippine government shows them dancing together at the private discotheque in the Marcoses' Manhattan townhouse in September 1985 and exchanging champagne toasts at dinner.
As Marcos was falling from power, Khashoggi was bankrolling the U.S. arms sales to Iran. He lent $30 million in largely borrowed money to the secret enterprise, hoping to gain an inside track in the weapons business and a potential bonanza.
Khashoggi needed a windfall badly. Despite his well-cultivated image as ''the richest man in the world," he was living on personal loans - $1 million here, $2 million there.
Sworn statements in civil lawsuits filed over the Marcos properties - which dovetail with evidence in the federal investigation - detail the following events:
In May 1986, a federal judge, acting on a suit by the new government of the Philippines, forbade sales or transfers of Marcos' Manhattan property and possessions. The judge also froze Marcos' Swiss bank accounts.
Shortly thereafter, Gliceria Tantoco, acting on orders from Marcos, traveled to Panama. There she backdated a declaration of trust to make it appear that two of the Manhattan properties had belonged to Khashoggi since August 1985.
Then works of art from the Marcos collection, including the Frans Hals painting that had hung in the Manhattan townhouse, began finding their way into Khashoggi's possession.
The Philippine government contends that Khashoggi planned to sell the art and split the proceeds with Marcos.
Tantoco had served the Marcoses long and well. But in August 1987, she was charged in a sealed indictment in New York with fraud and tax evasion, based on the $6 million purchase of art and artifacts for Imelda Marcos nearly six years earlier.
Federal investigators had pieced together many of the Marcoses' byzantine Manhattan real estate transactions. They wanted Tantoco to talk.
At the request of the U.S. Attorney's Office in Manhattan, she was arrested at the Rome airport after the secret indictment. She was jailed in Rome for nearly three months as she fought extradition to the United States. Then, suddenly, she was freed on bail after claiming she had a bad heart.
She fled Italy along with her husband, the former ambassador, who was facing a prison term in Italy after a weapons-possession conviction. Their whereabouts are unknown.
Federal prosecutors turned to Khashoggi for help in building their case against Marcos. His presumed knowledge of the secret transactions would make compelling testimony.
But the Saudi financier was consumed by other matters. His American holding company collapsed into bankruptcy in 1987. Creditors seized his lavish three- bedroom DC-8 and his 114,000-acre ranch in Kenya. His credibility and credit in the Arab world were destroyed by the disclosure that he had worked with U.S. and Israeli intelligence agencies on the Iran arms deal.
Khashoggi apparently lacked the time and the desire to cooperate. So the Justice Department, proceeding through French courts, searched his apartment in Cannes, France. The search led investigators to a Paris warehouse. There, fine art became criminal evidence. A number of paintings, the Hals among them, were taken to an evidence vault near the U.S. Courthouse in lower Manhattan, where they sit today.
It has been a paper chase to build a paper case, but the U.S. Attorney's Office in Manhattan is ready to make it, with or without the testimony of Tantoco or Khashoggi.
The case against Ferdinand Marcos is this: A great ally of the United States was corrupted by power. His corruption brought him great wealth. He brought his wealth to this country. When this country's laws threatened him, he tried to hide the wealth. And in hiding it, he might have ordered crimes committed, and he might have committed crimes.
But still, he was once a great ally. The President of the United States, an old friend, granted him safe harbor when he fell. In the White House, those
loyalties are being weighed against the laws of the United States.
