Smoke in Manila

Harry S. Stonehill resembles the kind of character that the late Sydney Greenstreet used to play in all the old Warner Bros, beaded-curtain thrillers. A blunt, beefy Chicagoan who changed his name from Steinberg in 1942 because "German names at that time weren't very popular," Stonehill built up a $50 million business empire in the Philippines. "Every man has his price," said Harry Stonehill, and in the Philippines after World War II he found that the going rate was fairly cheap; at one time he boasted: "I am the government."

Stonehill's activities in the Philippines were a major embarrassment to honest President Diosdado Macapagal, who swept into office last year, vowing to clean out the corruption that had proliferated under former President Carlos Garcia. Last March Macapagal had deportation proceedings brought against Stonehill, charging him with "economic sabotage, tax evasion, political interference, misdeclaration of imports, influence peddling, and corruption of public officials." But rumors persisted that Stonehill was tied up with top members of Macapagal's own Cabinet.

Last week, as government investigators continued to poke through some 300,000 seized Stonehill documents, Macapagal accepted the resignations of two Cabinet ministers; they were not guilty of any misdeeds, said the President, but they had been too closely associated with Stonehill; and members of the government, "like Caesar's wife, must be above suspicion."

Then Macapagal moved in in earnest to end Stonehill's career in the islands.

Bilko to Baron. That career began during his U.S. Army service in the Philippines in World War II, when he supplemented his lieutenant's pay with some off-duty wheeling and dealing that enabled him to drive a Cadillac. After discharge, Lieut. Bilko decided to stay in the Philippines, where the living was easy. He made a nest egg selling Christmas cards, soon graduated to army surplus. When import restrictions went up on U.S. cigarettes, Stonehill began growing Virginia tobacco in the hills, became the Philippines' biggest cigarette baron. His own brand: Puppies.

With his booming tobacco business as a base, Harry Stonehill expanded into oil, glass and, according to government charges, bribery. He lavished presents on government officials, the government case continues, and though foreigners are forbidden to make contributions to political campaigns, freely contributed money to the candidates of his choice. Stonehill also kept telephone wiretapping equipment handy, maintained a complete dossier on all his government contacts. Winking at Stonehill's illegalities became almost a governmental tic; investigators charge that he illegally imported cigarette paper into the country, declaring the shipments as "school supplies," and manufactured cigarettes illegally. Another charge: that he smuggled $34 million out of the Philippines when dollar exports were illegal without a license.

The Brothers Doe. What finally started the case against Stonehill was the testimony of a disgruntled former employee named Menhart Spielman, who last March filed a charge of attempted murder against his ex-boss and one of his cronies. A few weeks later, Spielman disappeared from Manila. The government alleges that he was bludgeoned to death on a motor launch on the Sulu Sea, is prosecuting for murder three Moro seamen, a business associate of Stonehill's, and "John, Robert, Richard and Peter Doe."

Last week, haggard and forlorn, claiming that his health would be impaired if the hearings continued, Stonehill, 44, offered to leave the Philippines voluntarily -a move that would permit his eventual return. But Macapagal wanted no part of Stonehill now or in the future. At week's end he ordered his arrest and immediate deportation as an undesirable alien.

Macapagal's political enemies charged that deportation was too good for Stone-hill. Said Jose Diokno, former Justice Minister who was dismissed in May by the President: "How can the government now prosecute the corrupted when it has allowed the corrupter to go?"

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