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In re Doe

decided: October 19, 1988.

IN RE MR. AND MRS. DOE, WITNESSES BEFORE THE GRAND JURY. MR. AND MRS. DOE, APPELLANTS,
v.
UNITED STATES OF AMERICA, APPELLEE



Former President of the Philippines Ferdinand E. Marcos and his wife Imelda R. Marcos take this expedited appeal from an order of the United States District Court for the Southern District of New York, entered on August 11, 1988 (Walker, J.) holding them in civil contempt for failing to comply with grand jury subpoenas to produce exemplars and to execute bank consent directives. This Court stayed the district court's imposition of sanctions pending this appeal. We now affirm the district court's finding of contempt and vacate the stay.

Cardamone and Pratt, Circuit Judges, and Tenney, District Judge.*fn*

Author: Cardamone

CARDAMONE, Circuit Judge:

Ferdinand and Imelda Marcos appeal from an order of the United States District Court for the Southern District of New York (Walker, J.) finding them in civil contempt for their failure to comply with four federal grand jury subpoenas. Two of the subpoenas seek the Marcoses' fingerprints, palm prints, voice and handwriting exemplars, the other two order them to sign consent directives that authorize foreign banks to turn over to the grand jury their financial records. Appellants attempt to show cause for disobeying the subpoenas by arguing: first, that they retain head-of-state immunity; second, that 28 U.S.C. § 1782 (1982) affords them a privilege under the Philippine Constitution against self-incrimination before the United States grand jury; and third, that the grand jury lacks authority to obtain evidence through the use of compelled consent directives.

BACKGROUND

A brief background is helpful. For 20 years, from 1966 to 1986, Ferdinand Marcos served as president of the Philippines. In February 1986 a special Presidential election was held that eventually resulted in his replacement by the current President of the Philippines, Corazon Aquino. In the face of a rapidly deteriorating situation at the presidential palace that endangered the Marcoses' lives, they and their immediate family were evacuated by U.S. Air Force helicopters, carrying with them their personal papers, Philippine currency and jewelry. Eventually they were transported by U.S. military aircraft to the State of Hawaii, where their personal effects were seized by U.S. Customs officers. The 71-year old former president and his 59-year old wife presently reside in Hawaii, though they retain their Philippine citizenship. Appellant Ferdinand Marcos is not free to depart the jurisdiction of the United States without the express permission of the Attorney General of the United States.

Shortly after the occurrence of these events, a federal grand jury in the Southern District of New York commenced in June 1986 an investigation into allegations that the Marcoses had violated the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. Essentially the government believes that appellants -- and others acting in concert with them -- fraudulently diverted enormous sums of money that belonged to the Philippine government and the government of the United States, which money was intended for the benefit of the Philippine people. Among the alleged means employed were embezzlement of funds in both countries, a portion of which were then used to purchase personal and real property in the United States, and the remainder of which were transferred to secret Swiss bank accounts for the Marcoses' benefit. The grand jury has not handed down any indictments.

On June 11, 1986 the United States and Philippine governments signed an executive Agreement on Procedures for Mutual Legal Assistance, known as the "MLAA." The MLAA outlines procedures for the U.S. Department of Justice and the Philippine Presidential Commission on Good Government to assist each other in legal investigations of the Marcoses' activities upon the request of either government. It provides that the law of the country whose assistance is requested governs.

PRIOR PROCEEDINGS

The grand jury, as noted, issued four subpoenas, the first set of which were two subpoenas duces tecum, dated April 27, 1988, requesting former president Marcos and Imelda Marcos to provide voice and handwriting exemplars, and palm prints and fingerprints. The Marcoses initially agreed -- but later refused -- to cooperate in providing these exemplars and prints. The second set of two subpoenas, dated July 15, 1988, ordered the Marcoses to sign consent directives authorizing foreign banks to turn over to the grand jury financial records, which without "consent" might otherwise be confidential under foreign law. The Marcoses also refused to obey these subpoenas.

Judge Walker held a hearing on July 27, 1988 respecting this refusal to obey the subpoenas. Through counsel, appellants claimed they were entitled to assert their Philippine constitutional rights before the grand jury by virtue of 28 U.S.C. § 1782, which allows a witness to invoke "any legally applicable privilege" including a privilege bestowed by a foreign country which has requested assistance from American courts. The district court found that the grand jury had issued the subject subpoenas on its own initiative -- not on behalf of the Philippine government. It ruled that in the absence of a foreign governmental "request," § 1782 and the Philippine constitutional privilege were not applicable. Hence, it concluded that the Marcoses had failed to show good cause for their failure to obey the subpoenas. Appellants' motions to quash were denied and they were directed to comply with the subpoenas by August 8, 1988.

On August 4, 1988 appellants asked the district court to reconsider its contempt order, and for the first time asserted head-of-state immunity as a reason to resist the subpoenas. The government countered on August 10 by presenting a diplomatic note dated August 9, 1988 from the current Philippine government to the U.S. State Department which -- in response to the latter's request -- purported to waive any immunity the Marcoses might possess. The diplomatic note states:

The Embassy of the Philippines presents its compliments to the Department of State and has the honor to refer to the Embassy of the United States' note of August 8, 1988, on the intention of a United States Grand Jury to seek from former President Ferdinand Marcos and his wife Imelda Marcos voice exemplars, handwriting exemplars, fingerprints, palmprints and a directive authorizing the disclosure of all records of foreign bank accounts currently or formerly in the name of or accessible to Ferdinand and Imelda Marcos, in connection with the investigation being conducted in the Southern District of New York.

Taking note of the agreement on procedures for mutual legal assistance entered into between the Government of the United States and the Government of the Philippines, and other efforts of the parties to cooperate with respect to the investigation being conducted in the Southern District of New York, the Government of the Philippines hereby waives any residual sovereign, head of state, or diplomatic immunity that former Philippine President Ferdinand Marcos and his wife Imelda Marcos may enjoy under international and U.S. law, including, but not limited to, Article 39(2) of the Vienna Convention on Diplomatic Relations, by virtue of their former offices in the Government of the Philippines. This waiver extends only to provision of evidence, directives, and other material from Ferdinand and Imelda Marcos in the above Grand Jury investigation, and not to the Government of the Philippines itself or to any of its current or former officials. . . .

At a contempt hearing held on August 11, 1988, the district court relied on this diplomatic note in rejecting the Marcoses' contention that they were entitled to head-of-state immunity, and determined that the Philippine government had waived whatever immunity the Marcoses may retain as former heads-of-state, citing In Re Grand Jury Proceedings Doe No. 700, 817 F.2d 1108 (4th Cir.), cert. denied sub nom. Marcos v. United States, 484 U.S. 890, 108 S. Ct. 212, 98 L. Ed. 2d 176 (1987) (Doe No. 700).

Judge Walker refused to hold a hearing on the Marcoses' contention that alleged violations of grand jury secrecy in contravention of Fed. R. Crim. P. 6(e) constituted evidence that the U.S. and Philippine governments were cooperating in investigating them. The district judge found that the grand jury was not "acting as an arm of the Philippine government," but was pursuing its "normal business of gathering evidence with a view to a possible indictment in the United States of violations of U.S. law." It did direct the Justice Department's Office of Professional Conduct to look into the Marcoses' complaints of Rule 6(e) violations and, after making minor modifications to the consent directives it ruled, contrary to appellants' contention, that it not only had statutory authority to enforce the consent directive subpoenas under 28 U.S.C. § 1826(1982), but also that its own inherent supervisory powers over a grand jury gave it that power.

Thus, the district court concluded that the Marcoses were in civil contempt and ordered them to appear on August 18, 1988 for imposition of sanctions. A bench warrant was issued for their arrest, which the district court stayed until August 19, 1988. Appellants took an expedited appeal to this Court. On August 16, 1988 we stayed the order of contempt pending ...


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