By Neil Jerome Morales

MARAWI CITY, Philippines (Reuters) – Philippines troops found bundles of banknotes and cheques worth about $1.6 million abandoned by Islamist militants holed up in Marawi City, a discovery the military said on Tuesday was evidence that the fighters were increasingly penned in.

Fighters linked to Islamic State have been cornered in a built-up sliver of the southern lakeside town after two weeks of intense combat. The military said that over the past 24 hours it had taken several buildings that had been defended by snipers.

In one house they found a vault loaded with neat stacks of money worth 52.2 million pesos ($1.06 million) and cheques made out for cash worth 27 million pesos ($550,000).

“The recovery of those millions of cash indicates that they are running because the government troops are pressing in and focusing on destroying them,” Marines Operations Officer Rowan Rimas told a news conference in the town as helicopters on machinegun runs buzzed overhead.

Black smoke poured from an area near one of the town’s mosques and the lake after bombings by OV-10 attack aircraft and artillery fire from the ground.

The battle for Marawi has raised concerns that the ultra-radical Islamic State, on a back foot in Syria and Iraq, is building a regional base on the Philippine island of Mindanao.

Officials said that, among the several hundred militants who seized the town on May 23, there were about 40 foreigners from neighboring Indonesia and Malaysia but also from India, Saudi Arabia, Morocco and Chechnya.

The fighters prepared for a long siege, stockpiling arms and food in tunnels, basements, mosques and madrasas, or Islamic religious schools, military officials say. The Philippines is largely Christian, but Marawi City is overwhelmingly Muslim.

Progress in the military campaign has been slow because hundreds of civilians are still trapped or being held hostage in the urban heart of the town, officials have said.

“In a few days, we will we will be able to get everything, we will be able to clear the entire Marawi City,” armed forces Chief of Staff General Eduaro Año said in a radio interview.

‘MAYBE THEY WATCH WAR MOVIES’

Fighting erupted in Marawi after a bungled raid aimed at capturing Isnilon Hapilon, whom Islamic State proclaimed as its “emir” of Southeast Asia last year after he pledged allegiance to the group. The U.S. State Department has offered a bounty of up to $5 million for his arrest.

On Monday, President Rodrigo Duterte offered a bounty of 10 million pesos ($200,000) to anyone who “neutralized” Hapilon, and 5 million pesos for each of the two brothers who founded the Maute group, one of four factions that banded together to take the town.

Police on Tuesday arrested a man who identified himself as the father of the Maute brothers. He was in a vehicle along with other members of his family that was stopped at a checkpoint in Davao City, 260 km (160 miles) to the southeast.

“As a patriarch and the father of the Maute brothers … I guess he can still persuade his sons to stop the fighting in Marawi and once and for all surrender to the government,” regional military spokesman Brigadier General Gilbert Gapay told the news conference.

Armed forces chief Año said about 100 Maute militants were holding out in Marawi, and the military was checking a report that one of the brothers, Omarkhayam, had been killed in an air strike.

Duterte, who launched a ruthless campaign against drugs after coming to power a year ago, has said the Marawi fighters were financed by drug lords in Mindanao, an island the size of South Korea that has suffered for decades from banditry and insurgencies.

Jo-Ar Herrera, a military spokesman, said the discovery of the banknotes and cheques was evidence the militants had links to international terrorist groups. However, he said an investigation was needed to establish the facts.

It is possible that the money came from a bank that was raided on the first day of the siege. Herrera told Reuters last week that a branch of Landbank had been attacked and he had heard that one of its vaults was opened.

A four-hour ceasefire to evacuate residents trapped in the town was interrupted by gunfire on Sunday, leaving some 500-600 inside with dwindling supplies of food and water.

Officials say that 1,469 civilians have been rescued.

The latest numbers for militants killed in the battle is 120, along with 39 security personnel. The authorities have put the civilian death toll at between 20 and 38.

Asked to describe the fighting skills and training of the militants in the town, Major Rimas said: “They have snipers and their positions are well defended. Maybe they watch war movies a lot, or action pictures a lot so they borrowed some tactics from it.”

(Additional reporting by Karen Lema in MANILA; Writing by John Chalmers; Editing by Robert Birsel)