The Harry Stonehill Story

Harry Stonehill

In 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 still exist today. From tobacco to glass manufacturing, to cement production and publishing, Stonehill was an 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 subjected to a congressional investigation on alleged tax evasion charges. What happened next in the following years was a series of events falling into place, exposing Stonehill's alleged illegal business activities. Allegations of bribery, influence peddling, and economic sabotage surfaced. Known government officials and media men were alleged to have received money from Stonehill in exchange for favors. The scandal even reached the president and some of his cabinet members. Sensing a fallout in the case, President Diosdado Macapagal ordered Stonehill's sudden deportation without trial. Macapagal also 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 he settled in Manila. Consumer goods in the Philippines were scarce after Liberation, which gave the young Stonehill a hint of where to focus his entrepreneurial drive. He first started selling essential items such as needles and thread in Chinatown, supplied by his mother from Chicago. Then he went into marketing 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, together with his U.S. Army friend ex-Sergeant Ira Blaustein, established one of his first corporations—the Universal Trading Company. But it was in the tobacco industry that he had his first big hit.

Tobacco King

Harry Stonehill introduced a cigarette brand called "Puppies" to the market. It became a hit, outselling competitors and confirming his reputation as the new Tobacco King of the Philippines. He achieved 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 farmers, and then buying back their crops.

By the end of the 1950s, Stonehill's business empire comprised well-established 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, and Far East Publishing for media and publishing. He also ventured into low-cost housing projects and other enterprises. His companies were leading the industrial sector while attempting, as he claimed, to give new economic power to the Filipino middle class. Then came the 1960 congressional 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 lawmakers being unable to pin down the American mogul. It seemed 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, the former general manager of the Philippine Tobacco Corporation, accused the two men of beating him almost to death. In filing the charges, and in fear of his life, Spielman revealed the tobacco company's shady dealings to the National Bureau of Investigation (NBI). 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 also produced notable Filipino industrialists. One such individual was the late Geronimo Velasco, who served as Minister of Energy during the Marcos era. In his book, Velasco recounted how he was tapped in the late 1950s by Stonehill to build a glass plant in Pinagbuhatan, Pasig, a place he described as a "duck farm." The plant became known as Republic Glass Corporation (RGC). Velasco led the plant in its early years and became President after Stonehill was deported (Stonehill allegedly sold his stocks to Castle and Cooke in 1962). The plant is still operational. It was also on the grounds 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.