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September 20, 1991


The opinion of the court was delivered by: Debevoise, District Judge.


This is an action brought by the Republic of the Philippines (the "Republic") and the National Power Corporation ("NPC"), the Philippine government agency responsible for electric power generation, against Westinghouse Electric Corporation, a Pennsylvania corporation, Westinghouse International Projects Company (herein referred to collectively as "Westinghouse") and Burns and Roe Enterprises, Inc. ("Burns & Roe"), a New Jersey corporation. Westinghouse and Burns & Roe have moved for summary judgment on Counts 3 and 8 of the complaint. For the following reasons, defendants' motion is denied.


This case arises out of the construction of the 600 megawatt Philippines Nuclear Power Plant Unit 1 ("PNPP") in Bagac, Bataan during a ten year period commencing in 1976. The fifteen count complaint alleges breach of contract, fraud, tortious interference with fiduciary duties, negligence, civil conspiracy, RICO violations, antitrust violations and various pendent state claims.

On May 18, 1989 I filed an opinion in which I concluded that: (i) with the exception of Count 3, which alleges tortious interference with fiduciary duties, and that part of Count 8 which sets out a claim for conspiracy to interfere with fiduciary duties, all counts against Westinghouse should be stayed under section 3 of the Federal Arbitration Act pending arbitration pursuant to Article 24 of the PNPP prime contract; (ii) Count 2 against Burns & Roe should be stayed under section 3 of the same Act pending arbitration in accordance with the terms of its consulting contract with the NPC; (iii) with the exception of Count 3 and Count 8, to the extent that the latter sets out a claim for conspiracy to interfere with fiduciary duties, all other claims against Burns & Roe should, in the interests of judicial economy, be stayed pending resolution of the arbitration proceedings involving Westinghouse; and (iv) Count 3 and the related portion of Count 8 would be permitted to proceed in this Court against both Westinghouse and Burns & Roe. See Republic of the Philippines v. Westinghouse Electric Corp., 714 F. Supp. 1362 (D.N.J. 1989).

After issuance of the 1989 opinion NPC and Westinghouse commenced, pursued and are continuing to pursue the contract and related tort and statutory claims in arbitration proceedings in Geneva, Switzerland. Meanwhile, the Republic and defendants engaged in extensive discovery proceedings directed to the claims which continued to be litigated in this court. The essence of those claims, as illuminated by discovery, can be very simply stated.

Beginning in the summer of 1973, Westinghouse sought the award of a turnkey contract for the PNPP project, and Burns & Roe sought first a consulting contract with NPC and later the architectural and engineering subcontract to be awarded by Westinghouse. At that time, and during the ensuing years pertinent to this case, Ferdinand E. Marcos, President of the Republic of the Philippines, held ultimate authority as the ruler of the nation. Both Westinghouse and Burns & Roe concluded that they could not effectively pursue the contracts with NPC unless they retained a special sales representative ("SSR") who had influence with the President.

Westinghouse and Burns & Roe retained Herminio T. Disini as their SSR under separate agreements. Disini was a well-known Philippine businessman and close friend of President Marcos. His wife was Mrs. Marcos' cousin and personal physician. The agreements provided for generous commissions to be paid to companies controlled by Disini.

The complaint alleges, and the facts developed on discovery substantiate, (i) that President Marcos intervened with NPC and its officials to ensure that Westinghouse received the turnkey contract, (ii) that President Marcos directed NPC to award the consulting contract to Burns & Roe and interceded with Westinghouse to grant the architectural and engineering subcontract to Burns & Roe, (iii) that during the contract negotiations President Marcos intervened with NPC to secure contract terms favorable to Westinghouse, and (iv) that from time to time during the performance of the contract President Marcos interceded with NPC on Westinghouse's behalf.

The Republic asserts that the defendants knew that to secure this favorable treatment all or a substantial part of their commission payments to Disini were paid over to President Marcos and that President Marcos was given additional financial benefits through Westinghouse's award of PNPP subcontracts to concerns in which President Marcos held an interest. In essence, the Republic claims that Westinghouse and Burns & Roe bribed the President to obtain their economic ends. Thus they caused (Count 3) and conspired to cause (Count 8) President Marcos to breach a fiduciary duty he owed to the people and to the Republic of the Philippines, by inducing him to intervene in the PNPP contracting process in derogation of the rights and interests of the Philippine people in a fair and open bidding process.

Westinghouse asserts three independent reasons to grant its motion for summary judgment. First, they contend there is no evidence of any Westinghouse bribe payments to President Marcos. Second, they argue that the civil causes of action for tortious interference with President Marcos' fiduciary duty and for conspiracy to so interfere do not exist as a matter of Philippine law. And, finally, they assert that New Jersey's six year statute of limitations is applicable to this case and bars the Republic's claims, and there are no facts to support non-application of the statute. In the alternative, Westinghouse moves for partial summary judgment limiting damages to the amount of any improper payments received by President Marcos.

The grounds for Burns & Roe's motion for summary judgment parallel those of Westinghouse: (i) There is no evidence that Burns & Roe paid a bribe to President Marcos; (ii) there is no evidence that payments to Disini caused President Marcos to use his influence to induce NPC to award the Phase I consulting contract to Burns & Roe; (iii) there is no evidence that President Marcos induced Westinghouse to award the Phase II architectural and engineering contract to Burns & Roe; (iv) the Republic's claims are barred by the applicable statute of limitations and there are no facts to support non-application of the statute; (v) the causes of action which the Republic asserts do not exist under Philippine law; and (vi) the action is barred by the act of state doctrine.

For the reasons which will be set forth below, I conclude: (i) There remain factual issues whether Westinghouse and Burns & Roe paid bribes to President Marcos and whether these bribes induced President Marcos to intervene in the administration of the PNPP in order to obtain favorable treatment for Westinghouse and Burns & Roe. (ii) The Republic's claims are not barred by the applicable statute of limitations, nor by the doctrines of laches or estoppel. (iii) The Republic has stated a cognizable cause of action under Philippine law, and neither the political question doctrine nor the act of state doctrine prevents this Court from hearing the Republic's claims. (iv) There is no basis for limiting damages to the amount of the bribes received by President Marcos. Therefore, I deny defendants' summary judgment motion in its entirety.



The standards for summary judgment are well established. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Elect. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). See also Lujan v. National Wildlife Federation, ___ U.S. ___, 110 S.Ct. 3177, 3188-89, 111 L.Ed.2d 695 (1990). Summary judgment

  "shall be rendered forthwith if the pleadings,
  depositions, answers to interrogatories, and
  admissions on file, together with the affidavits,
  if any, show that there is no genuine issue as to
  any material fact and that the moving party is
  entitled to a judgment as a matter of law." By its
  very terms, this standard provides that the mere
  existence of some alleged factual dispute between
  the parties will not defeat an otherwise properly
  supported motion for summary judgment; the
  requirement is that there be no genuine issue of
  material fact.

Anderson, 477 U.S. at 247-48, 106 S.Ct. at 2509-10 (emphasis in original). Where "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'" Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356. Summary judgment is appropriate where no "fair-minded jury could return a verdict for the plaintiff on the evidence presented," Anderson, 477 U.S. at 252, 106 S.Ct. at 2512. An issue of fact cannot be created by affidavits which are made on the basis of beliefs or personal opinions as distinguished from affidavits which are made on personal knowledge and set forth facts which would be admissible in evidence. Fed.R.Civ.P. 56(e); Williams v. Borough of West Chester, 891 F.2d 458 (3d Cir. 1990). On the other hand, in considering a motion for summary judgment, the Court must credit the evidence of the non-movant, and draw all reasonable inferences in its favor. Anderson, 477 U.S. at 255, 106 S.Ct. at 2514.

Before addressing Westinghouse's and Burns & Roe's reasons for arguing that there are no factual issues pertaining to the giving of bribes, it would be useful to provide a brief summary of the events in the context of which the alleged bribes were made.

In August 1973 President Marcos directed that a nuclear power plant be constructed. He designated the NPC as the utility responsible for the project. NPC had no prior experience with nuclear power and decided to hire a consulting engineering firm to advise it in connection with the contracting and ensuing phases of the project.

President Marcos had declared martial law in 1972 and thereafter ruled the Philippines for the next fourteen years, arrogating both executive and legislative powers to himself. On January 22, 1974, he issued Presidential Decree No. 380, placing the NPC directly under the control of the Office of the President. He, therefore, was the ultimate decision maker for the award of the PNPP contracts.

Recognizing President Marcos' decisive role in the PNPP project, Westinghouse sought an SSR who would have access to him. It selected Disini for this purpose and entered into a contract with his corporation, Herdis Management and Investment Corporation ("Herdis"). The initial SSR agreement with Herdis provided for compensation of three percent of the price "to be received by Westinghouse," with an initial payment of $2 million when Westinghouse received the down payment (of at least 10%), payment of $1 million a year later, payment of $1 million a year after that, and the remaining to be paid "as a percentage of the remaining payments to be received by Westinghouse." In addition Westinghouse agreed to pay a commission of 1/2% of United States-supplied goods and services to another entity — Asia Industries, a Herdis subsidiary.

There is very extensive evidence concerning the negotiations between NPC and Westinghouse. Westinghouse marshals this evidence to demonstrate strenuous, arms length bargaining which ultimately led to the award of a turnkey contract to it. The Republic marshals this evidence to demonstrate futile efforts by NPC to obtain sound contract provisions, efforts which were nullified at every turn by President Marcos who intervened continually to deliver to Westinghouse a contract satisfactory to it. There is no need to analyze this evidence in depth. Suffice it to say, there is a factual issue which precludes rejection at this point of the Republic's version of events. For the purposes of the motion for summary judgment I conclude that a reasonable jury could find that Westinghouse received the turnkey contract and favorable contract terms by reason of President Marcos' directions to the NPC.

Burns & Roe had a relationship with Disini similar to that of Westinghouse. It agreed to pay commissions to Disini via Technosphere Consultants Group, Inc., another Herdis subsidiary. The Republic contends, and it has assembled evidence tending to show, (i) that as a first step Burns & Roe sought the Phase I contract for consulting services to assist NPC in site selection studies, preparation of bid specifications for the project, and evaluation of supplier proposals; (ii) that by letter dated February 8, 1974 NPC awarded the Phase I contract to Ebasco Services, Inc.; (iii) that Burns & Roe entered into discussions with Disini, ultimately agreeing to pay him 10% of the value of the consulting contract and 10% of the architectural and engineering contract which it expected to obtain from Westinghouse; (iv) that Disini delivered to President Marcos an "Aide Memoire" prepared by Burns & Roe and Westinghouse personnel urging that the Phase I contract be awarded to Burns & Roe; and (v) that President Marcos directed NPC to enter into the Phase I contract with Burns & Roe. NPC rescinded the award to Ebasco and gave the Phase I contract to Burns & Roe.

Compared to the architectural and engineering subcontract the Phase I contract was a minor piece of business. But the evidence suggests a finding that it was Burns & Roe's intention from the outset to give up the Phase I contract and take over the architectural and engineering subcontract. There is evidence to support a finding that President Marcos brought pressure to bear upon Westinghouse to give the architectural and engineering subcontract to Burns & Roe.

There is evidence to show that Westinghouse paid approximately $14.3 million to Disini's company, Herdis, periodically in varying amounts from September 1976 to February 1985. At least one payment in excess of $800,000 still remains to be paid by Westinghouse to Herdis. The payments were kept off the Herdis books and were paid into various numbered accounts in Switzerland, Singapore and elsewhere. Westinghouse also paid more than $2.9 million from 1976 to 1983 to Asia Industries, a Herdis subsidiary.

Burns & Roe made payments of approximately $2.2 million to Technosphere Consultants Group, Inc. ("Technosphere"), another Herdis subsidiary. These payments were made during the period 1974 to 1980. There is evidence suggesting that they were diverted from Technosphere to numbered accounts in Swiss banks. Burns & Roe sent the checks to Switzerland, but also prepared and sent spurious cover letters purporting to send the payments to Technosphere in the Philippines.

It is the Republic's contention, of course, that these payments were remitted in whole or substantial part to President Marcos or his designee in exchange for his intervention on behalf of Burns & Roe and Westinghouse. The payment of these bribes in exchange for President Marcos' intervention in the PNPP project is at the heart of the Republic's Count 3 and Count 8 charges.

Whatever the intent, however, Westinghouse and Burns & Roe urge that there is absolutely no admissible evidence that President Marcos received any bribe payments, and that all the admissible evidence is to the contrary.

Westinghouse quotes the testimony or affidavits of a number of witnesses. Rolando Gapud, once the President's personal financial advisor, has listed all the companies in which President Marcos had an ownership interest. Neither Herdis nor Asia Industries were on the list. Rudolfo Jacob, President of Herdis from 1975 to 1982, denies that Herdis made any improper payments to any government officials in connection with the PNPP. Jesus Vergara, President of Asia Industries, denies that his companies involved in PNPP had made improper payments to anyone. Other Disini associates have testified that President Marcos had no ownership interest in Herdis and was not receiving payments in connection with PNPP.

Alejandro Melchor, President Marcos' Executive Secretary, testified that he had no knowledge of any business relationship between Disini and President Marcos and that he had no knowledge that any commissions paid to Herdis or Asia Industries were paid to the President. Other former Philippine or NPC officials testified to similar effect.

Westinghouse's employees involved in the PNPP project denied having any reason to believe that Westinghouse money was paid over to President Marcos on account of the project. Westinghouse asserts that there is no documentary evidence of any such payments. Westinghouse, quite properly, requests the Court to disregard the testimony of various witnesses who believed, understood or were of the opinion that the Disini commission payments were passed on to President Marcos. Such testimony, quite obviously, would not be admissible evidence that President Marcos actually received payments.

Burns & Roe's arguments are to the same effect. It contends that there is no evidence that President Marcos ever received the payments which it made to Disini's company in the form of commissions.

Notwithstanding the forceful and articulate manner in which Westinghouse and Burns & Roe present their argument, I find that there is ample evidence to permit a reasonable jury to find that the Disini commissions were intended to be paid in whole or in part to President Marcos and were in fact paid in whole or in part to him or upon his direction. It is not necessary that the Republic produce a witness who actually saw the payments being made, or to whom President Marcos acknowledged receipt of the bribes, or to whom Disini admitted paying bribes to the President. See United States v. Mammoth Oil Co., 14 F.2d 705, 717, 731 (8th Cir. 1926), aff'd, 275 U.S. 13, 48 S.Ct. 1, 72 L.Ed. 137 (1927) (unnecessary to have direct evidence of bribes); see also United States v. Sutherland, 656 F.2d 1181, 1186-89 (5th Cir. 1981), cert. denied, 455 U.S. 949, 102 S.Ct. 1451, 71 L.Ed.2d 663 (1982). Rather the facts which the Republic has assembled permit a reasonable inference that in one way or another the Disini commissions were transmitted to President Marcos or disposed of on his instructions in exchange for actions on behalf of Westinghouse and Burns & Roe.*fn1

First, there is evidence that by decree President Marcos had placed NPC directly under the control of his office.

Second, there is evidence that both Westinghouse and Burns & Roe believed that in order to obtain the PNPP contracts they sought, they would need the assistance of a powerful person having influence with President Marcos. Disini was the person they selected to fill that role and there is evidence that both Westinghouse and Burns & Roe expected and knew that payments they made to Disini would be passed on in whole or in part to the President or would otherwise be at his disposal.

Third, there is evidence that Disini communicated with President Marcos and obtained from him authority to handle the PNPP contracts.

Fourth, it is undisputed that both Westinghouse and Burns & Roe entered into commission agreements with companies controlled by Disini pursuant to which millions of dollars were paid to those companies. There is evidence that the amounts of the payments were far in excess of any amounts which similarly situated companies would normally pay in such circumstances and that the payments were not made in the normal course but were transmitted to Swiss and other foreign bank accounts and were disguised both by Herdis and Technosphere and by Westinghouse and Burns & Roe.

Fifth, there is evidence that President Marcos personally intervened in the PNPP project to ensure that Burns & Roe obtained the Phase I contract, to ensure that Westinghouse obtained the turnkey contract and that the terms were satisfactory to Westinghouse, to ensure that Burns & Roe obtained the architectural and engineering contract from Westinghouse, and to further Westinghouse's position from time to time during the course of the work on the project.

Sixth, there is evidence that both Westinghouse and Burns & Roe took steps to cover up the payments, suggesting guilty minds. Westinghouse sought to conceal the commission payments from NPC; Burns & Roe sought to withhold evidence of President Marcos' role in reversing the Phase I contract award. After 1977 reports in the press suggested that Westinghouse may have made improper payments to obtain the PNPP contract, Westinghouse burned the files in Manila relating to the procurement of the contract. Other records were destroyed and other efforts were made to avoid discovery of the Herdis agreement. President Marcos himself gave false and misleading accounts about the contracts, Disini and his companies.

This evidence is more than sufficient to create a jury question. It is sufficient to support a finding that President Marcos himself received a substantial portion of the Disini commissions, either directly or indirectly.

It is unnecessary to discuss at this time the evidence concerning the Republic's charge that additional consideration transferred to President Marcos consisted of the award of subcontracts to corporations in which he had an interest. Count 3 withstands a summary judgment motion simply on the basis of the Disini commission payments. Nor is it necessary to discuss at this time the evidence suggesting that there was a conspiracy between Westinghouse, Burns & Roe and Disini to bribe President Marcos. Suffice it to say that there is sufficient evidence of conspiracy to withstand a motion for summary judgment on Count 8. I need not address the evidential implications of a conspiracy finding, i.e., the extent to which the words and deeds of one co-conspirator can be used ...

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