Judge Suspends Nine Caja Officials

June 4, 2004

LAW enforcement officials made severalmoves this week in an attempt to getto the bottom of a scandal that hasenveloped the Costa Rican Social SecuritySystem (Caja) since April.Police yesterday arrested WalterReiche, executive president ofCorporación Fischel, and a penal judge onWednesday suspended the nine membersof the Caja’s board of directors, includingexecutive president Horacio Solano, LaNación reported.Fischel’s lawyer, Randall Vargas, wasalso arrested.The Caja purchased nearly $40 millionof hospital equipment fromFischel’s parent company in Finland,Instrumentarium-Medko MedicalCorporation, as part of a plan calledProject Finland designed to updateCosta Rica’s hospital equipment (TT,May 14).La Nación published a report in Aprilshowing a sketchy link between formerCaja executive president Eliseo Vargasand a former Fischel executive. The paperreported that the executive, OlmanValverde, was renting a luxury home toVargas at half its value. Vargas resignedjust hours after the report was published,and Valverde followed suit.The nine directors will remain suspendedfor six months and must presentthemselves before a judge every 15 dayswhile prosecutors determine whether theyused public funds for personal gain inpurchasing four ads supporting Vargas inmajor newspapers.The advertisements cost ¢1,989,350(nearly $6,000) and called Vargas “a manof moral integrity, pure ethical principlesand a long career of public service characterizedby the transparency of each one ofhis actions.”The directors made the decision topurchase the ads the day after La Naciónpublished its first report about Vargas,according to La Nación.

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