San José, Costa Rica, since 1956

Corruption Allegations Mushroom

While two former Costa Rican Presidentswere arrested in the past week in the corruptionhorror that has engulfed the country, accusationsand admissions of corruption are now comingfrom, and being made against, a wide groupof public employees in a growing number ofstate institutions.This week the National Insurance Institute (INS)and the National Training Institute (INA) joined theSocial Security System (Caja) and the Costa RicaElectricity Institute (ICE) in the circle of government-run institutions accused of corruption.Eight INS employees, including former executivepresident Cristóbal Zawadzki, have been forbiddenfrom leaving the country because of accusations theymisused public funds, to the tune of ¢798 million ($1.79million), La Nación reported Wednesday.The INS officials allegedly used public funds to pay the taxes of foreign private reinsurancefirms, used by INS to outsource insurance.The Prosecutor’s Office is investigatingthe case.IN the INA case, former executivepresident Carlos Monge admitted Sundayto Channel 7 news he received more than$100,000 in exchange for granting a governmentcontract to a private firm.Meanwhile, as more of the suspects inthe ongoing ICE and Caja corruption scandalstestify, and investigations dig deeper,the list of accused names grows longer andthe tangled web that ties many of themtogether grows ever more complicated.The number of businesses – manyEuropean – alleged to have paid governmentofficials “prizes” for multimillion-dollargovernment contracts also hasincreased.Eliseo Vargas, former Caja executivepresident, declared to prosecutors Tuesdaythat former President Rafael AngelCalderón (1990-1994), was the mastermindbehind the distribution of millions ofdollars in “commissions” paid to governmentofficials in connection with a governmentcontract to modernize the nation’spublic hospitals, using a loan from thegovernment of Finland, Channel 7 newsreported Wednesday (see separate story).Vargas is in preventive detention as theinvestigation continues.Yesterday, Calderón made a scheduleddeclaration to prosecutors, after which hewas arrested (see separate story).Before Vargas’s testimony, it was formerPresident Miguel Angel Rodríguez in thecorruption spotlight. Rodríguez returned toCosta Rica Oct. 15 from Washington D.C.where he had been serving as SecretaryGeneral of the Organization of AmericanStates until he resigned because of corruptionallegations that he took money in connectionwith a government contract with aFrench company.On Saturday, he was ordered sixmonths of house arrest (see separatestory).EARLIER this month, José AntonioLobo, former ICE board member toldprosecutors Rodríguez claimed 60% of a$2.4 million “prize” for awarding a $149million contract to the French telecommunicationsfirm Alcatel (TT, Oct. 8).Similar to the scandal in the Caja, this“prize” was also allegedly divided upamong ICE officials and high-rankinggovernment functionaries.Former Alcatel Costa Rica managerEdgar Valverde – arrested last week andserving a three-month term of preventivedetention in jail – told prosecutors Oct. 14Alcatel turned over commissions of $8million, the daily La Nación reportedSaturday.He said the “prizes” were almost “arequirement” in the contract negotiationsbetween Alcatel and ICE, La Nación reported.He also reportedly testified the prizesraised the $149 million price Alcatel offeredto ICE and alleged the payments wereauthorized by Alcatel’s vice-president forLatin America, Christian Sapsizian.According to La Nación, Valverde testifiedhe did not directly speak to Rodríguez.He said Lobo told him he (Lobo) wasbacked by the former President.AMONG the recipients of the Alcatelmonies Valverde cited were Lobo, formerICE director José Joaquín Fernández, formerICE advisor Guido Sibaja and formerCaja president Vargas, who allegedly wasincluded because at the time he was partyleader in Congress for the Social ChristianUnity Party (PUSC), to which formerPresidents Rodríguez and Calderón belong.Though involving two separate governmentinstitutions, the two scandalshave become intertwined, as many of thealleged “prizes” and “commissions” weremade through an intricate web of privatebusinesses using offshore, Panama andU.S. bank accounts and allegedly involvingthe same people, and, in many cases,their family members.WHILE fingers are seemingly beingpointed everywhere in the ICE and Cajascandals, in the INA case, former executivepresident Carlos Monge came forwardand voluntarily confessed to inappropriatelytaking money.“With respect and the sincere goal ofcorrection, I encourage any public functionaryor ex-functionary who, like me,has fallen before temptation, to take a stepforward and identify themselves, withcourage and repentance, so that we mayleave behind this sad chapter in the historyof our country,” Monge wrote in a letterSaturday to Chief Prosecutor FranciscoDall’Anesse.The economic crimes division of theProsecutor’s Office is now investigatingMonge, along with former INA directorRafael Robert, for allegedly receivingfunds from the Italian companyElecttronica Veneta, from which INA purchased$8.9 million worth of trainingequipment, according to La Nación.WHILE Monge apparently came forwardto the public Sunday on Channel 7TV News and admitted receiving morethan $100,000, Robert stepped downfrom his post on the INA board of directorsOct. 14 after receiving a call fromthe daily La Nación asking him about theaccount in which he allegedly receivedthe funds.Electtronica Veneta president AntonioRomano denied to La Nación having sentany money to public functionaries in CostaRica.Monge sent his letter, which was publishedin La Nación Tuesday, and gave theChannel 7 interview from China, where heis on business through the end of themonth. However, he said will return toCosta Rica and is at the disposition of theProsecutor’s Office.In Costa Rica, Electtronica Veneta isrepresented by Grupo Multitech, whosepresident is Rodrigo Méndez, formerICE engineer and apparently one of thelinks between the ICE and Caja scandals.Méndez, who is serving six monthspreventive detention after being picked upin Nicaragua, is alleged to have receivedmore than $132,000 in the two cases.ALLEGATIONS made in the ICEscandal go beyond Alcatel. Other companiesthat have allegedly given gifts orprizes for ICE contracts include: theSwedish telecom firm Ericsson, Spanishfirms Grupo Unión Fenosa andInstalaciones Inabensa, and the CostaRican company Condicel.In addition, in his testimony Oct. 15,Lobo implicated the company CibertecInternational, which he alleges paid giftsto ICE employees and board members inexchange for a $6.6 million contract foranti-phone fraud equipment, La Naciónreported.Lobo alleged the payments were madeby a company named Teletec, but does notknow how the companies are related,according to La Nación.(Tico Times reporters Steven J. Barry,María Gabriela Díaz, Robert Goodier andKatherine Stanley contributed to thisreport.)

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