Stonehill scandal

The Stonehill scandal, named after American expatriate businessman Harry Stonehill,[1] was a 1962 bribery scandal in the Philippines which implicated high level government officials, including President Diosdado Macapagal,[2] future President Ferdinand Marcos,[2][3] former President Carlos P. Garcia,[3] and numerous other top Philippine officials, who were accused of accepting bribes to protect Stonehill's $50-million business empire.[4]

The scandal erupted when Jose W. Diokno, who was serving as Justice Secretary under the Macapagal administration at the time, raided the offices of 42 of Stonehill's business establishments on March 2, 1962 and arrested Stonehill along with a number of his associates. The raid resulted in the confiscation of phone-tapping instruments, jamming devices, and other espionage equipment as well as six army trucks worth of documents. [2] Stonehill was accused of tax evasion, economic sabotage, and various other charges, but among the documents were a letter from Stonehill addressed to Macapagal and a "blue book" which listed money given to various government officials, including Macapagal, Garcia, and Marcos.[3]

Macapagal ordered Stonehill to be deported in August 1962, which sparked outrage and accusations of a coverup, notably from Diokno, whom Macapagal had prevented from pursuing the prosecution and then sacked from the cabinet.[5][6] Diokno, in lamenting Macapagal's order to deport Stonehill, said, "How can the government now prosecute the corrupted when it has allowed the corrupter to go?"[4]

The scandal is reputed to have cost Macapagal his presidency, where he lost by a landslide to Ferdinand Marcos during the 1965 Philippine presidential election. Economic historians also note that it helped fuel a brand of economic nationalism which resulted in policies which slowed the growth of the Philippines' market economy for decades to come.[2]