SAN FRANCISCO — The Justice Department has begun an investigation into whether Philippine Defense Minister Juan Ponce Enrile diverted U.S. funds to his personal use during the regime of former President Ferdinand E. Marcos and illegally laundered money here, U.S. Atty. Joseph Russoniello said Friday.
Russoniello said that the FBI is investigating the sale of Enrile's property here.
"I have been given the go-ahead to conduct a criminal investigation," he said.
Such an inquiry could have important implications for the embattled government of Philippine President Corazon Aquino, who has been severely criticized by Enrile in recent weeks for ineffectiveness in fighting a communist insurgency.
If an indictment is sought against Enrile, it could be perceived in the Philippines as U.S. intervention to aid Aquino.
The Washington Post quoted one federal law enforcement source as saying that an indictment would present "a very big national security problem" for the United States and could be "disastrous" for Aquino, who would appear to be using the United States to discredit her opponent.
Sources said the Justice Department would not seek an indictment against Enrile without consulting the White House, the State Department and other agencies, and it is possible that the case could be dropped on national security grounds, the Post reported.
But Russoniello said it is "premature to consider such subjects" as an indictment of Enrile. Agents still have "miles to go" in the investigation, he said.
"Do we really have a hot potato? I don't have the foggiest idea," a Justice Department source said, emphasizing that the investigation remains in the very early stages.
The investigation is believed to be focused on two condominiums owned or once owned by Enrile's wife, Christina, in a fashionable area near Russian Hill.
In an interview with American journalists in February, a few days after Marcos was overthrown, Enrile acknowledged that he and his wife bought a San Francisco condominium in 1979. But he denied that he had any other hidden wealth.
According to real estate records, the Enriles owned two condominiums, one of which they sold in 1982 to Renatsac Inc., the San Jose Mercury News reported. Enrile has said that Renatsac--which, when spelled backward, is his wife's maiden name--was used by his wife for business purposes, the newspaper said, and the company bought a $1.8-million house in San Francisco in 1982.
"It was bought by a company and has been sold," Enrile was quoted as saying at the time.
But, in a memo to the Justice Department, Russoniello said he suspected that the transaction might have been used to funnel money out of the Philippines.
Although it is unclear what crimes might be involved, there is a chance that federal capital gains taxes might have been evaded if the property was in fact sold to a dummy corporation controlled by the Enriles, Russoniello said.
Additionally, money used to pay for the property initially could have come from U.S. aid to the Philippines, thus raising the possibility that federal funds were misused. However, if the money used to buy the property came from Philippine sources, no U.S. crime would be involved.
(An aide contacted by Times reporter Mark Fineman at Enrile's house in Manila today said that the minister would not comment on the investigation because it is All Soul's Day, an extremely important religious holiday in the Philippines.
(The aide quoted Enrile as saying, "Let's have some respect for the dead.")
The investigation dates to March, when Russoniello responded to a Justice Department request that various U.S. attorneys' offices enumerate investigations involving people involved in the Marcos regime. Enrile was also Marcos' defense minister.
Russoniello discussed the transactions in a memo to the Justice Department and requested authorization to investigate.
The memo remained in Washington until very recently, when the Justice Department authorized the investigation. Russoniello would not discuss the delay, except to say that he did not believe the Justice Department was trying to kill the investigation.
In Washington, a senior State Department official said that he was unaware of the investigation and that, to his knowledge, his department was not involved in it.
The official added, however, that he did not believe any such investigation would be linked to the current turmoil in the Philippine cabinet, despite the timing of its disclosure.
Enrile was one of the key military figures who brought Aquino to power in February after Marcos was declared the winner of a contested election. In recent weeks, however, Enrile and Vice President Salvador Laurel have repeatedly criticized Aquino on her dealings with communist rebels and other matters, raising questions about their possible defections from her coalition government.
Enrile served in Marcos' government for two decades and became one of his wealthiest "cronies," eventually assuming the presidency of the United Coconut Planters Bank.
If an indictment is sought, extraditing Enrile to face trial would be difficult if not impossible because there is no extradition treaty with the Philippines.