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The Harry Stonehill Story





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 his original idea.

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 was a series of events falling into places exposing Stonehill on his alleged illegal business activities. Allegations of bribery, influence peddling, economic sabotage surfaced. Alleged to be receiving money from Stonehill in exchange for 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, President  Diosdado Macapagal ordered Stonehill's sudden deportation without trial. Macapagal dismissed his justice secretary Jose W. Diokno who was heading the government investigation on the Stonehill case.

Lieutenant Harry Solomon Stonehill

Harry Steinberg (aka Harry Stonehill) was born in 1918 in Missouri USA to a hard-working immigrant couple who traced 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 a hint to where to focus his entrepreneurial drive. He first started selling essential items such as needles and threads in Chinatown, supplied by his mother from Chicago. Then he went on the marketing of all things, American Christmas cards. Afterward, he moved on to more significant 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 first 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 1950s, 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, allegations 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 always had a ready answer. The hearing itself became a media event, 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 seized about two truckloads of documents, and the raid also revealed Stonehill's wiretapping activities on several 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 the money in exchange for favors and information. The then-Senator Ferdinand Marcos was said to be on the list and even President Diosdado Macapagal himself, having received 3 Million 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 out of the Philippines." Macapagal was criticized with this action,  Stonehill and Brook's legal woes continued in the US, with almost the same charges ranging from tax evasion, unfair business practices, illegal dollar export, economic sabotage.
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 Stonehill's longing to return to the Phillippines, which he considered home.
Who really was Harry Stonehill? How was it possible that in two decades he became a powerful man in the country? Did the CIA really play 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. In March 2002, Harry Stonehill died in a hospital in Malaga, Spain. He was 84.


               
                                      POSTSCRIPT


 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 115 million 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 April 24, 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 the Stonehill empire continued to flourish in Manila, run by ten dummies of  Stonehill.

II. The corporations he started where are they now?

Geronimo Z. Velasco's book published 2006
The Stonehill ventures had also produced known Filipino industrialists. One such was the late Geronimo Velasco, Minister of Energy, during the Marcos era. In this book. Velasco related how he was tapped in the late 1950s 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. It was also in the ground of the plant in 1974 that Velasco while riding his horse "Lightning," received the news of his appointment to the Marcos cabinet. 


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 caused by the  Harry  Stonehill case,  people would go on associating him with it for years. Stonehill's matter 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 the hero in this case, and it did define his career as a public official. When he was dismissed as a Justice secretary, he openly questioned the president's decision allowing Stonehill to go with these 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 remember "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.

Comments

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

    ReplyDelete
  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

    ReplyDelete
  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....

    ReplyDelete
    Replies
    1. This comment has been removed by the author.

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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.

      Delete
  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.

    ReplyDelete
  5. This blog shows how graft and corruption had started in the Philippines after the American colonization era and it was a shame to know that the high ranking government officials themselves including the president was involved in this shameful and disgraceful crime that to this day still continues to thrive leading to the poverty of the Filipino people

    ReplyDelete
  6. My grandfather was then NBI Deputy Director Serafin P. Fausto. He would talk about the Stonehill Case but I could not appreciate it then as I was too young and frivolous. Thanks for posting this. I really appreciate it.

    ReplyDelete
  7. I was a small boy when Iheard about the Stonehill saga and corruption of our govt officials. This article made me understand more about him and his adventures in another country. He was late bloomer Al Capone, i would say. Thanks.

    ReplyDelete
  8. Canada and Stonehill are still intertwined,check k.o
    Gronsdahl

    ReplyDelete

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