Interim Directors Take Over Social Security

June 11, 2004

FILLING the void left when a penaljudge ordered the suspension of the ninedirectors of the Social Security System(Caja) for suspected misuse of funds (TT,June 4), the government Cabinet appointeda temporary directorship this week.The move circumvented the normalprocess of selecting directors through anew law created the day before theirappointments. Under normal circumstancesthe decision would be publicized inthe government newspaper La Gaceta togive workers and sponsors the opportunityto voice opinions. It usually takes onemonth.The previous directors were suspendedfor six months on June 2 for investigationsinto suspected crimes and, accordingto La Nación, just one month withouta directorship could be “a synonym forcrisis” in the Caja.THE Cabinet announced its decisionon Tuesday, and named the new heads ofthe various divisions of the Caja who werechosen according to the guidelines submittedby each of the sectors in the Caja’sdomain. Pediatrician Alberto Sáenz willpreside as head of the Caja.The Prosecutor’s Office explained theapproval of the law that allows for thequick replacement of the directorship is a“temporary and exceptional” measure,given the duty of the government to take“reasonable and proportional measures thatsupport the lending of public service,” hetold La Nación.Cabinet members reported they willappoint another temporary directorship ina “maximum” of two months. PresidentAbel Pacheco clarified, however, thatthose of the current directorship assumeall the responsibilities accorded to thosein their positions.“These people are not limited in theirfunctions,” he said.In its first day, the interim Board ofDirectors brushed shoulders with a scandalwhen one of the interim directors,Cesar Jaramillo, resigned after NationalLiberation Party deputy José MiguelCorrales challenged his selection, accordingto the daily Al Día.Corrales said Jaramillo is the financialmanager of the Plastic ProductsCompany, which owes the Caja morethan ¢300 million ($690,000) in insurancepayments for its employees.A replacement to the interim board isexpected to be announced at Tuesday’sCabinet meeting.THE nine suspended directors,including new Caja executive presidentHoracio Solano, are under investigationfor the suspected use of public funds forpersonal gain, La Nación reported. Theytook out ads in four major newspapersthat supported former Caja presidentEliseo Vargas.The board of directors authorized thepurchase of the ads the day after La Naciónreported a business deal between Vargas anda former executive of the pharmaceuticalcompany Corporación Fischel.The paper reported that the Fischelexecutive, Olman Valverde, was renting aluxury home to Vargas at half its value.Vargas resigned just hours after the reportwas published, and Valverde followed suit(TT, May 14).The advertisements cost ¢1.9 million(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.”IN the wake of reports on the houserental, government investigators beganpeering into an exclusive contract withFischel and a hefty loan from the Finnishgovernment for $32 million.The so-called Finland Project wasdesigned to bolster medical service and outfithospitals with the equipment they needed.Eliseo Vargas helped approve the deal whenhe was a legislative deputy in 2001.Later, when he headed the Caja, a companythat Fischel represents was contractedas the sole supplier of the equipment.According to a statement from theCaja’s board of directors last month, “thepieces of hospital equipment purchased…were not those outlined as priority needsby the directors of clinics and hospitals inthe country” (TT, May 14).SHORTLY after the suspension of thedirectorship, police arrested Walter Reiche,executive president of Fischel, and RandallVargas, the corporation’s lawyer (TT, June4). They were questioned and ordered tothree months of preventive detention.Police conducted a surprise raid ofReiche’s home on June 3 after a witness,whose name was not released, tipped themoff to the alleged destruction of documentsthat linked one of Reiche’s companies withthe financing of Eliseo Vargas’ home. Thewitness supplied a copy of the destroyeddocument and charged that he had “sufferedpressure for over a month” at thehands of Reiche and Randall Vargas.The two are now being investigated forcoercion, “grave” threats, ideologicalfalseness, bribery and suppression, concealmentand destruction of documents.The witness claimed that he receivedcalls at midnight, verbal pressure andthreats of condemnation, visits to hishome, had the hard drive of his computerdeleted and saw mysterious cars stakingout his home, according to La Nación.RANDALL Vargas presented aninjunction against government prosecutorsfor prohibiting him from representingReiche, which they said they did becausehe is a subject of the investigation.Eliseo Vargas and Olman Valverdeboth abstained from commenting to prosecutorsand to members of the press.Vargas’ lawyer Vinicio Zamora Chavestold La Nación that his client intended tomake a statement when “they finished processingthe file.”According to the lawyer, prosecutorshaven’t yet determined what chargesVargas will face.La Nación reported that Fischel is one ofthe principal pharmaceutical providers of theCaja and that the business in 2003 sold ¢1.1billion ($2.5 million) worth of medicines tothe Caja, increasing the company’s sales by¢800 million ($1.8 million).

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