Adnan Khashoggi’s Manhattan Grab

The Saudi arms merchant and de­veloper appeared on the scene last summer claiming an interest in three of the four buildings that symbolize the “hid­den wealth” of Ferdinand and Imelda Marcos


The four Manhattan commercial properties that symbolize the “hid­den wealth” of Ferdinand and Imelda Marcos have become the subject of increasingly acrimonious litigation in federal District Court. An agent for Saudi arms merchant and de­veloper Adnan Khashoggi who appeared on the scene last summer claiming an interest in three of the four buildings is denouncing the New York Land Compa­ny, Marcos’s managing agent, for “looting” the properties. The reply of New York Land principal Joseph Bernstein is that Khashoggi is engaged in a fraudu­lent attempt to seize the buildings. The Center for Constitutional Rights, which represents the Philippine government of President Corazon Aquino, says they’re both right: therefore, the court should place all four buildings in receivership.

The Khashoggi claims may represent an effort by Marcos to get around a pre­liminary injunction issued last May by U.S. Judge Pierre N. Leval. Any sale or transfer of the properties has been frozen under this landmark order, won by CCR attorney Morton Stavis, which is the first court recognition of a sovereign nation’s right to freeze U.S. assets stolen by an ousted dictator.

Karl Peterson, a business associate of Khashoggi’s, has claimed that the wealthy Saudi arms dealer and develop­er — who played a prominent role in the secret sale of U.S. weapons to Iran — ei­ther owns or controls the properties. For several weeks last fall, lawyers for the Aquino government and New York Land Company were engaged in three-way ne­gotiations with Peterson and New York land seeking a settlement disposing of the buildings, which are encumbered by mortgages and other liabilities and currently losing money. The chief evidence of Khashoggi’s interest is a “declaration of trust,” with a section whited out, dated August 8, 1985, and allegedly signed in Panama City by Gliceria Tantoco, a crony of Imelda Marcos.

Stavis, who was first approached by Peterson last summer, originally chose to deal with him because of uncertainty that the decision by Judge Leval prohibiting any transfer of the properties would be upheld on appeal. Had the properties been sold, they might have been lost to the Philippine government permanently. But on November 26, Stavis’s original victory was ratified by the Court of Appeals.

Peterson, meanwhile, has charged that New York Land “looted” the properties, mainly by siphoning off millions in inflated legal expenses through a law firm­ — Bernstein, Carter and Deyo — that includes Joseph Bernstein.

Before the negotiations ended, a tentative settlement was reached that would have paid about $56 million to the Philippine government, and almost $19 mil­lion to the various corporations that hold title to the buildings —40 Wall Street, 200 Madison Avenue, the Crown Building, and the Herald Center. The buildings themselves would have been acquired by New York Land, whose principals, Joseph and Ralph Bernstein, had concealed the Marcoses’ interest until a congressional investigation nearly sent them jail for contempt early this year.

According to court papers filed by New York Land, the settlement fell apart when Peterson demanded an “up front” payment of $5 million to Triad International, a Khashoggi company. Court papers filed by New York Land say that Citibank then decided to foreclose on 40 Wall Street, which has defaulted on a $39-million mortgage from the bank. Prompted by the foreclosure action, Judge Level placed 40 Wall Street in receivership last week.

Identifying himself as a longtime Khashoggi associate formerly based in Manila, Peterson has produced copies of documents purporting to show that he represents the owners of three Panamanian corporations which, through complicated holding and stock relationships, control the four buildings. Following the breakdown of settlement negotiations last month, Peterson filed suit to remove New York Land as the managing agent for three of the four buildings.

In a deposition taken last month, Peterson claimed to have met with Marcos himself four times this year in Honolulu, and said that Khashoggi indicated that he had obtained an interest in Herald Center sometime in 1985.

The Bernsteins, however, insist that Peterson and Khashoggi are not acting on authority of the Marcoses; and they add that a Marcos financial advisor, Rolando Gapud, and Marcos’s Washington attorney, Stanton Anderson, have so advised them.

In a December 2 affidavit, Joseph Bernstein accused Peterson and Khashoggi’s chief aide, Robert Shaheen, of suggesting a scheme last May in which Khashoggi would have been fraudulently portrayed in court as the properties’ real owner. This would have undermined the Philippine government’s claim to the buildings as ill-gotten gains of the deposed Marcos, and frustrated the injunction which the Aquino government had then just won. Bernstein said he declined to participate in the alleged fraud.

Since then, he charged, Peterson has “improperly transferred assets of the four building to a Khashoggi enterprise” through a complex set of transactions involving a Swiss bank, and “engaged in death threats” against the Bernsteins “to gain his ends.” Bernstein said he received messages from Peterson that Khassoggi “plays rough,” and that he would be receiving a visit from “a notorious hit man.”

What is Khashoggi up to? Stavis, the attorney for the Aquino government, believes that Khashoggi may be acting as some kind of “commission agent” for Marcos in an effort to clean up the problem over the New York properties. Marcos may have engaged Khashoggi’s assistance to get around the court orders forbidding sale of the properties, or negotiate a settlement that would produce some cash.

Stavis certainly doesn’t believe that Khashoggi acquired control of the building before the court order went into effect and insists that any transfer of the buildings into Khashoggi’s hands violated that order. But the squabbling of Khashoggi and the Bernsteins may no longer matter much. With the favorable appellate decision in his pocket, Stavis seems confident that the Philippine people will eventually recover much of the hidden wealth that the Manhattan properties represent. ❖

This article from the Village Voice Archive was posted on November 15, 2020