The Marcos family and Lucio Tan

Two separate stories have recently become headline news. The first is the story about how PMFTC, an affiliate of Philip Morris International and co-owned and chaired by Lucio Tan, Sr., succeeded in its mighty lobby to have both Houses of Congress approve the vaping bill. Health advocates have opposed this bill. The second story is about the cases pending in the Commission on Elections asking for either the disqualification of Ferdinand “Bongbong” Marcos, Jr. as a candidate for President or the cancellation of his certification of candidacy.

They are two separate stories, but this essay will show how the Marcoses and Lucio Tan are connected.

“Millionaire’s Empire Under Siege: Marcos Ally — Plunderer” This was the headline of the Los Angeles Times’ archived article involving the businessman with the largest tax evasion case that was directly filed at the Supreme Court of the Philippines. Lucio Tan, Sr., one of the country’s richest businessmen, stood accused of evading more than P25.6 billion or $1 billion in taxes. But the Supreme Court, with a controversial 3-2 vote, dismissed the case. The New York Times reported the dismissal as “a move that was greeted with a public uproar and accusations of payoffs to the justices.”

Lucio Tan’s success started with his major venture in the cigarette business, founding Fortune Tobacco in 1966. (This became PMFTC, after its affiliation with Philip Morris International.) Fortune Tobacco got tax breaks from the late dictator Ferdinand Marcos, which gave Mr. Tan a near-monopoly license to dominate the Philippine tobacco industry.

In 1977, Lucio Tan and a group of Filipino-Chinese businessmen pooled their resources and acquired a bank, General Banking and Trust. Lucio Tan changed the bank’s name to the Allied Banking Corp. Three years after Lucio Tan’s bank investment, the late dictator Ferdinand Marcos gave him a license to open Asia Brewery, Inc. According to Edward Gargan of The New York Times (1996), “Wiseacres at the time suggested that the new beer would be called Lucifer, a contraction of the first names of Lucio Tan and Ferdinand Marcos.”

Lucio Tan and the late dictator Ferdinand Marcos had a symbiotic relationship, in which the former gained business favors while the latter received large donations and contributions for his political or electoral campaigns. According to the documents obtained by the Los Angeles Times, Lucio Tan gave Marcos $11 million in cash, allocated for his campaign contributions, and was reciprocated through priority treatments in the operation of his brewery, his pig farm, his bank, and hotels.

However, this was denied by Lucio Tan in an interview with the Los Angeles Times as he stated: “Add one zero, maybe two. President Marcos will not ask directly. Maybe indirectly. Maybe a project, disaster, earthquake. Always asking for money for projects. So many projects, too many projects. Always projects, projects, more projects. But when I give a check, I cannot know what portfolio, what folder, what pocket it goes into. They ask, and I just give them the money.”

But as we shall see, the business relationship between Mr. Tan and the Marcos family is not simply between two parties. It is more intimate, more intertwined.

According to Gargan of The New York Times: “For years Lucio Tan has refused to disclose financial data on his companies to the government. As per New York Times discussions with financial analysts and competitors, Lucio Tan’s Fortune Tobacco’s were about $670 million in the year 1995, and that Asia Brewery’s were coming up to a total of $215 million, about 20% of the beer market. In the beer and cigarette business, he was given open-ended tax breaks that allowed him a big competitive advantage.” The tax breaks made Lucio Tan and his own businesses more profitable.

After the Marcos family fled the country, Lucio Tan’s government protection, particularly the preferential tax status, was removed. Lucio Tan also faced a series of investigations into accusations of corruption and tax evasion. Sadly, the Supreme Court dismissed the cases not really because of substance but because the government ignored due process of law by failing to give adequate notice in pursuit of its cases.

More than 10 years after the Supreme Court’s dismissal of Lucio Tan’s cases for tax evasion, new information and evidence surfaced that showed the true link between Marcos and Tan’s business. In 2007, Bongbong Marcos, the dictator’s son, testified that Lucio Tan, Sr. and Ferdinand Marcos were business associates, asserting that some assets owned by Tan, Sr. belonged to his father. This contradicted Lucio Tan’s statement in the year 1987 when asked about the late dictator Ferdinand Marcos being his business associate. Tan, Sr. denied that Marcos had any ownership interest in any of his companies, and he only acknowledged that he and Marcos were friends. According to the Presidential Commission on Good Government, Bongbong Marcos discussed the formation of Shareholdings, Inc. The holding company was formed in November 1979 by the late dictator Ferdinand Marcos and Lucio Tan to acquire and consolidate the shares of stock in Lucio Tan companies such as Fortune Tobacco, Foremost Farms, Asia Brewery, and Allied Bank. Marcos was supposed to own 60% of Shareholdings, Inc., and Lucio Tan owned 40%.

Needless to say, the advantage and success of these companies owned jointly by Tan and Marcos resulted from government incentives and other forms of protection and, worse, from unscrupulous practices like accusations of corruption, money laundering, and tax evasion.

Mssrs. Marcos and Tan grew an empire with riches, while millions of Filipinos were denied government revenues and expenditures for basic necessities such as healthcare, education, and food. During the Marcos dictatorship, poverty incidence and economic distress was severe, while Marcos strategized how to hide plundered riches through using his cronies’ companies and laundering money.

Intolerable corruption and cronyism must not be repeated. Never should this country allow the dictator’s son to continue his father’s corruption and cronyism. Never again should we allow the shameless and egregious acts of the Marcoses to resurface.

We say never again. Our country deserves much better than another Marcos president.

Ella Iellamo, a political scientist, is a policy analyst of Action for Economic Reforms.