Judge rebuked by panel over Ferdinand Marcos money

AP News
Posted: Nov 14, 2009 12:46 AM

A U.S. District judge's lax oversight of more than $30 million tied to the late Philippines President Ferdinand Marcos is "curious," a federal appeals court said in an opinion issued Friday.

A three-judge panel of the 9th U.S. Circuit Court of Appeals ordered that a new judge give a fresh accounting of the $33.8 million previously entrusted to Los Angeles-based U.S. District Judge Manuel L. Real.

The 85-year-old Real oversaw the millions for eight years as several U.S. courts attempted to decide who had rights to the money among various claimants, including Philippine government entities, banks and more than 9,500 of Marcos' human rights victims and their heirs.

The disputed money comes from Marcos' transfer of $2 million in 1972 to Arelma S.A., a Panamanian shell corporation that invested the money with Merrill Lynch, Pierce, Fenner & Smith Inc. in New York. By 2000, it had grown to more than $30 million.

Marcos fled the Philippines for Hawaii after a 1986 revolt and died there in 1989.

Real was serving a temporary stint in a Hawaii court when management of the assets fell to him after he ruled that Marcos' victims should get the funds.

In 2008 the U.S. Supreme Court sent the case to Philippine courts and ordered Real to give the money back to Merrill Lynch.

Real returned the money, which he said had grown to $34.7 million, but the appeals court criticized the vague, one-page document Real provided about his handling of the assets.

The notes include sums in the millions labeled only "other disbursements" or "total sales."

"The accounting is filled with cryptic notations," the decision says. "It doesn't give the reader even a basic understanding of the path by which $33.8 million worth of assets deposited in September of 2000 came to be worth $34.7 million today."

The decision said that when Real was asked for an oral explanation, he provided "barely more detail than the written accounting" and "contradicted the record on several points."

Two Supreme Court justices had recommended that Real be replaced on the case, and the 9th Circuit praised their "prescience" in Friday's opinion.

Real was the subject of a reprimand from the 9th Circuit in 2006 for improperly seizing control of a bankruptcy case of a woman whose probation he was supervising. A House Judiciary Subcommittee considered his impeachment but he survived the case.

(This version CORRECTS SUBS 3rd and 5th grafs to correct spelling of Philippines)