Thursday, September 29, 2011

The Harry Stonehill Story

From G.I. Joe to Tycoon
"History repeats itself,  first as tragedy, the second as farce"   
                                                                      -Karl Marx                                                                                                                                  
                                      
The Uncanny Businessman


Harry Stonehill courtesy of Lopez Museum
In the less than two decades of his stay in the Philippines, Harry Stonehill  was able to build a business empire reputedly valued at around 50 Million US Dollars. The 18 corporations  he started in the country were pioneering and high earning business ventures, some of which are still existing today.

From tobacco, to glass manufacture, to cement production and publishing,  Stonehill was the uncanny businessman never ceasing in his search for new ventures. Reclaiming parts of Manila Bay and turning it into an opulent district was said to be his original idea.

Indeed, Harry Stonehill was turning the country into his business playground when suddenly his luck turned sour. In 1960 he was  subject to a congressional investigation on alleged tax evasion charges. What happened next in the following years were series of events falling into places exposing Stonehill on his alleged illegal business activities. Charges of bribery, influence peddling, economic sabotage etc. surfaced. Discovered to be receiving money from Stonehill in exchange of favors were known government officials and media men . The scandal even reached the president and some of his cabinet members.  Feeling a  fallout in the case, then President Diosdado Macapagal  ordered Stonehill's sudden deportation without trial. Macapagal even dismissed his justice secretary Jose W. Diokno who was heading the government investigation on the Stonehill case.

Lieutenat Harry Solomon Stonehill


Harry Steinberg (aka Harry Stonehill) was born 1918 in Missouri USA to a hard working immigrant couple who traces their ancestry to Polish Jews.  The family then moved to Chicago where Harry Stonehill spent his formative years. In 1942 he changed his surname by translating it literally from its Germanic form to its anglicized version  thereby becoming Stonehill. He first came to the Philippines in 1945 with American liberation forces, (where he was a lieutenant) and settled in Manila. Consumer goods in the Philippines were scarce after Liberation and it gave the young Stonehill the hint to where to focus his entrepreneurial drive. He first started selling basic items such as needles and threads in Chinatown, (supplied by his mother from Chicago). Then he went on marketing of all things, American Christmas cards in the country. Afterwards, he moved on to bigger undertakings selling army surplus supplies, from boots and vehicles to chocolates and Spam. It was during this time that Stonehill established together with his US army friend ex Sergeant Ira Blaustein one of his early corporation - the Universal Trading Company. But it was in the Tobacco industry that he had his first big hit.

Tobacco King

Harry Stonehill  introduced in the market a cigarette brand called "Puppies". It became a hit, outselling competitors thereby confirming his reputation as the new Tobacco king of the Philippines. He did this by introducing Virginia tobacco to Ilocos, encouraging the farmers of the region to grow this kind of tobacco, hiring experts to help the tobacco farmer and then buying back their crops.

By the end of the 1950's Stonehill's business empire was made up of good standing companies such as Republic Glass Corporation for glass production, Philippine Tobacco Corporation for tobacco and tobacco curing, Philippine Cotton Corporation for cotton and textile, American Asiatic Oil Corporation, Far East Publishing for  media and publishing and other outstanding venture such as  low cost housing projects etc. His companies were leading the industrial sector and at the same attempting, as he claims,  to give new economic power to the Filipino middle class. Then came the 1960 congress hearing against Stonehill on  charges of tax evasion, charges which Stonehill simply labeled as "a campaign of vilification".


Stonehill with his lawyers in the congressional hearing 1960




The Empire Crumbles

The congressional hearing on Harry Stonehill resulted in the lawmakers unable to pin down the American Mogul. It seems like whatever they threw against him, Stonehill had always a ready answer.The hearing itself became a media event thus making Stonehill  a household name. Then in March 1962 events took an unexpected turn. Harry Stonehill and his business associate Robert Brooks were arrested on charges of frustrated murder. Meinhart Spielman,  former general manager of Philippine Tobacco Corporation accused the two man of beating him (almost to death). In filing the charges, in fear of his life,  Spielman then revealed to the NBI (National Bureau of Investigation)  the tobacco company's shady dealings .This prompted Justice Secretary Jose W. Diokno to order the NBI to conduct raids on the various offices of Stonehill.



The NBI was said to have seized about two truckloads of documents and the raid also revealed Stonehill's  wiretapping activities on a number of government officials. But the most damning piece of evidence against Stonehill was the discovery of the so called "Blue Book". It was where Stonehill listed the names of more than 200 public officials, businessmen , and media people who received money from him in exchange for favors, and  information. The then Senator Ferdinand E. Marcos was said to be on the list and even President Diosdado Macapagal himself. ( having received 3Million Pesos worth of campaign funds).


Deportation


Stonehill and Brooks were arrested on March 3 1962 on charges of tax evasion, economic sabotage, blackmail and corruption of public officials etc. On August 3 1962 five months after their arrest, President Diosdado Macapagal ordered that the two respondents be immediately "deported by the first available transportation from the Philippines". Macapagal would be criticized with this action,  Stonehill's and Brook's legal woes would continue in the US, where their own government would bring them to court with almost the same charges ranging from tax evasion, unfair business practices, illegal dollar export, economic sabotage etc.

Unable to take roots in the US, ( he was constantly hounded by the US government), Harry Stonehill and his family (he had four children with his second wife, a Filipina, Lourdes Blanco) would then wander from country to country. In 1963, Mexico deported him, the next year Canada deported him also. He briefly stayed in Japan, England and Brazil until finally settling in Switzerland and in Spain. Most  friends who visited him in his so called "exile"would attest to Stonehills longing to return to the Phillippines which he considered home.


Defining Harry Stonehill

One cannot help but ask again; Who really was Harry Stonehill? How was it possible that  in the span of  two decades he became such  a powerful man in the country? Did the CIA really played a role in his downfall?  Why did the US, his own government turned against him?


In 1987, a year after the Edsa I Revolution, Harry Stonehill made a brief visit to Manila and hinted on recovering his wealth. Nothing came out of it. On March 2002 Harry Stonehill died in a hospital in Malaga, Spain. He was 84.


                                                      POSTCRIPT

    I. What happened to Stonehill's Assets?

The Million Dollar question


In 1963 the Philippine Senate did a probe on Stonehill's asset.  
According to the BIR, Stonehill, Brooks and the Philippine Tobacco Corporation owed the government a total of 115 million Php in specific, corporate and income taxes from 1959 to 1961.  It was revealed later by the Senate Blue Ribbon Subcommittee headed that time by Sen Lorenzo Sumulong that the necessary liens were not issued until it was too late. As a result not a single centavo was collected from the 115million Php. It was also revealed that 10 million Php in Stonehill assets were transferred to four aliens and five Filipinos. The transfers were made from 4 to 24 of April 1962. They were transferring assets while under arrest? Confidential information received by the Senate Blue Ribbon Subcommittee  was to the effect that certain former government officials were among the transferees  of the Stonehill stocks. In January 1965 Senator Ganzon charged that Stonehill empire continued to flourish in Manila, run by ten dummies of  Stonehill.





II. The corporations he started where are they now?


Geronomo Z. Velasco's book published 2006
The Stonehill ventures had also produce outstanding industrialist . One of such was the late Geronimo Velasco, Minister of Energy during the Marcos era. In this memoir book. Velasco related how he was tapped in the late 1950's by Stonehill to build a glass plant in Pinagbuhatan, Pasig,( a place he described in his book as a 'duck farm"). The plant would be known as Republic Glass Corporation (RGC) Velasco would then lead the plant in its early years then becoming President when Stonehill  was deported  (Stonehill allegedly sold his stocks to Castle and Cookes in 1962. The plant is still operational but now under Japanese management). It was also in the ground of the  plant in 1974 that Velasco, while riding his horse "Lightning", received the news of his impending appointment to the Marcos cabinet. When this book was published people thought it would be a tell all revelation about the Marcos years but instead it was an outstanding study of the country's attempt to achieved energy sufficiency.  Velasco puts premium in energy self reliance as a prerequisite to industrialization and development. Much of Velasco's vision remains unfulfilled. History would prove him right with the global trend in the search for alternative power source .


III. What happened to some personalities involved in the Stonehill Case?



President Diosdado Macapagal

No matter how hard he and his government tried to remove the stigma cause by the  Harry  Stonehill case,  people  would go on associating him with it  for years. Stonehill's case would be openly discussed again with the allegation of corruption that hounded the administration of Gloria Macapagal Arroyo. (ZTE deal, Jocjoc Bolante Fertilizer Scam etc.) People could not help but draw the parallelism of the separate cases involving father and daughter. Diosdado Macapagal would seek a second term of office but was soundly defeated, in an ironic twist of fate,  by Ferdinand E. Marcos.
                                                                                                     

Jose W. Diokno
He came out as the hero in this case and it did define his career as a public official. When he was dismissed as Justice secretary he openly questioned the president's decision  allowing Stonehill to go with this words: "How can the government now prosecute the corrupted when it allowed the corrupter to go".  In 1963 he was elected senator. He was imprisoned when Marcos declared Martial Law. Released and was appointed Human Right Secretary during  Cory Aquino's term. He died in February 1987. Filipinos still remembers "Ka Pepe" and his valiant stand against corruption, abuse of power and dictatorship.
                                                         



Meinhart Spielman
Meinhart Spielman vanished, he was never seen again. Reports said that he was brought to Sulu and was murdered there. Unconfirmed  statements claimed he  was a CIA man.






9 comments:

  1. A bit sidelights of our Philippine history in the early 1960's.It was an awesome era of phil. politics and economy.

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  2. Wow Very interesting! as I was a young man of 18 when Spielman offered me a job at th US Tabacco factory in Port Area. Lasted 6 month. March 2, 1962 NBI raided the plant.....

    JJBT

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  3. Stonehill not only introduced the virginia tobacco in the Ilocos but improved if not changed the economic conditions of the area....I was a beneficiary to this fact as I was an employee of U.S. Tobacco Corporation (not Philippine Tobacco Corporation)....the rest is history....

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    1. Thanks for reading the blog. Yes of course...up to now there are people who attest that they were somehow beneficiary of Harry Stonehill's business ventures in PH. My late father for example was once an engineer at Republic Glass Corporation.

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    2. As Harry Stonehill's grandson I greatly appreciate the piece. There is still much to read on my grandfather's story..

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    3. A fine piece of history. No doubt, Harry Stonehill's legacy continues to date. Although his ventures in the Philippines are under different management now, they continue to be productive, contributing to the growth and development of the country. -W Palacio

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    4. @ Ryan Stonehill - I hope someone in your family writes a biography of Harry Stonehill.

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  4. Mr. Stonehill's businesses did contibute to the development of the country's tobacco export industry that continue to benefit the farmers and the tobacco industry to this day.The people that worked with him became the political and economic leaders of the country.

    The Stonehill boys did not only succeeded in the field of politics and economics but also produced offspring that are now very rich and educated locally and from top ranked universities of the world.

    It only proved that one can succeed in the Philippines with hardwork and entrepreneurship.

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