Swiss Threaten Retaliation Over L.A. Judge's Order in Marcos Case

By HENRY WEINSTEIN

Feb. 11, 1996 12 AM PT

TIMES LEGAL AFFAIRS WRITER

The Swiss government has threatened retaliatory action against U.S. interests in a dispute over a Los Angeles federal judge’s decision ordering two Swiss banks to turn over about $475 million linked to former Philippine dictator Ferdinand E. Marcos.

The threats--contained in diplomatic letters from Swiss officials that are attached to briefs lodged in the U.S. 9th Circuit Court of Appeals in San Francisco--indicate that a decade-old human rights lawsuit filed by 9,540 victims of the Marcos government is not likely to be concluded soon.

The U.S. State Department and Justice Department have taken steps to pacify the Swiss, drawing a sharp rebuke from the lawyer for the human rights plaintiffs.

The diplomatic incident was precipitated in December, when U.S. District Judge Manuel Real ordered the banks to turn the money over to him in partial satisfaction of a $1.9-billion judgment against Marcos’ estate by a federal jury in Hawaii last year. The jury found that Marcos, who died in exile in 1989, was responsible for major human rights abuses--including torture, murder and “disappearances”--of fellow Filipinos.

“We emphasize that the banks may not comply with [Real’s] order without directly violating Swiss law,” Michael Andre Fels, head of the Swiss federal office for police matters, wrote in one of the diplomatic notes.

“Any effort by the United States courts to enforce the order through the imposition of sanctions on the banks would conflict with Swiss sovereignty, international law and Swiss criminal law,” he added, saying that the letter should be viewed as “an early warning.”

The letter goes on to say that unless Real’s order is reversed it could have a “negative effect” on a cooperative legal assistance treaty between the two countries. The letter urges U.S. officials to “take all appropriate steps to avoid further unilateral compulsory measures.”

A legal brief filed by the Swiss states that all Marcos assets in Switzerland were frozen in 1986 and that “Swiss law does not provide discretion to lift the freeze in reaction to the order of a U.S. court.”

A Swiss court issued the freeze in response to a request from the Philippine government after Marcos and his wife, Imelda, fled their native country in 1986 in the wake of the “People Power” uprising.

Philippine officials said they were trying to recover about $1.5 billion the Marcoses reportedly looted from their country and stashed in other countries, including the United States and Switzerland.

Criminal proceedings against Marcos’ widow stemming from those allegations are still pending in the Philippines. Nonetheless, she was elected to the Philippine House of Representatives last year.

The U.S. State Department and Justice Department have strongly sided with the Swiss government in the thorny case, saying that Real’s order “improperly threatens important interests of the United States, Switzerland and the Philippines.” A brief filed by U.S. lawyers asserts that unless Real’s decision is reversed, it could threaten cooperative relations between the United States and Switzerland in investigating criminal matters.

In recent years, Swiss officials have loosened their bank secrecy laws to some degree in response to requests from U.S. law enforcement officials seeking to recover the hidden booty of narcotics chieftains and other criminals who use numbered Swiss bank accounts.

U.S. government lawyers also argue that Real’s order undermines the sovereign interests of Switzerland and the Philippines. Citing the Swiss freeze order, they note that if officials of Credit Suisse and Swiss Bancorp comply with Real’s ruling, they would be subject to criminal charges in Switzerland.

Moreover, the government lawyers contend that “the assets and conduct at issue in this case have no substantial connection to the United States.”

The lawsuit that led to the $1.9-billion judgment was brought under the Alien Tort Claims Act. Enacted in 1789, the statute enables victims of torture and other human rights violations to sue for damages in this country if a U.S. court has jurisdiction over the defendant. Several U.S. judges have ruled that they had jurisdiction over the Marcoses after the couple settled in Hawaii in 1986.

Several lawsuits have been filed. Many human rights advocates believe the statute gives individuals who had been wronged by foreign officials a better chance at redress in U.S. courts than in their native countries, where the violations occurred.

The Swiss banks were not defendants in the human rights case. But evidence was introduced at the Honolulu trial that they were holding an estimated $475 million in Marcos-linked funds under the names of dummy Lichtenstein foundations, Marcos cronies and aliases used by Marcos and his wife.

Since the jury awarded the massive judgment last year, there have been several attempts to settle the case for a smaller amount of money. In January, a high-powered bargaining session--under the supervision of a former U.S. State Department official--was held in Hong Kong, but those efforts failed, according to several sources.

Robert Swift, the lawyer for the human rights plaintiffs, said that the Philippine government and the human rights plaintiffs have agreed on how to allocate the money but that Imelda Marcos has balked at the deal, leading to the current impasse.

Swift decried the Swiss threats and what he called the U.S. government acquiescence to them.

“Apparently nothing is too shameful for the Swiss government in protecting Swiss banks,” Swift said. “They’re trying to intimidate the appeals court.”

Secretary of State Warren Christopher and Atty. Gen. Janet Reno “should be equally ashamed to have subjugated the compensation of human rights victims to Swiss banking interests,” Swift said.

He added: “Legal assistance between two countries on criminal matters is completely different from whether or not those two countries will honor the rights of human rights victims. Both countries [the U.S. and Switzerland] are parties to treaties acknowledging the right of human rights victims to compensation. In effect, the U.S. is exalting its needs in criminal investigations over the internationally protected rights of human rights victims.”

But Edwin M. Smith, an international law professor at USC, sharply disagreed. “I think the positions of State and Justice are entirely defensible,” Smith said.

Swift must file his reply brief by Feb. 27, and an oral argument is expected to be held in March.