San José, Costa Rica, since 1956

Corruption Case Gets International Attention

THE French press and the U.S.Securities and Exchange Commissionturned up the heat this week on Paris basedtelecommunications giant Alcatel,the alleged source of illegal payments toCosta Rican officials in one of the twolargest corruption cases in history underinvestigation by the Prosecutor’s Office.Meanwhile,the preventivedetention orders oftwo high-profilesuspects in theother major case,involving a $39.5million governmentcontract witha Finnish companyto provide medicalequipment to thenation’s pubic hospitals,were eased.Eliseo Vargas, former head of theSocial Security System (Caja), wasreleased from prison Wednesday afternoonin exchange for agreeing to sign in withprosecutors every 15 days, stay in thecountry and not talk to the press or suspectsin the case. Vargas is alleged to havereceived illegal payments and gifts for hisrole in securing the contract for the equipment,which was distributed by the CostaRican firm Corporación Fischel S.A.FORMER President Rafael ÁngelCalderón (1990-1994), founder of the rulingSocial Christian Unity Party (PUSC),also implicated in the Caja case, was originallyordered to nine months detention inprison while under investigation oncharges of illicit enrichment and conspiracy,but after a judge’s decision this weekhe may go home for Christmas.Vargas accused Calderón before prosecutorslast month of masterminding thedistribution of $9.2 million in “commissions”connected to the medical equipmentcontract, which was partially funded witha $32 million loan from the government ofFinland (TT, Oct. 29).Calderón had appealed his detentionorder two weeks ago, and San José judgeDidier Mora ruled Wednesday to reduce theorder to two months, meaning that unlessthe order is extended by another judge,Calderón will leave La Reforma Dec. 22.Calderón, 55, was admitted to the privateClínica Católica hospital on Nov. 4after an episode of tachycardia – an acceleratedor irregular heart beat – during ahearing to appeal his preventive detentionorder. He was transferred back to LaReforma Sunday.Calderón’s wife, Gloria Bejarano,was summoned to testify before prosecutorsWednesday, and briefly declared shedid not remember two checks totaling$93,900 made out to her in March, 2003.However, she said it is possible she hadendorsed at least one of the checks,according to information leaked to LaNación. The money allegedly came froman account belonging to Walter Reiche,president of Corporación Fischel.ALSO this week, the ConstitutionalChamber of the Supreme Court (Sala IV)declared without cause a writ of habeascorpus filed by former President MiguelÁngel Rodríguez (1998-2002), who hasbeen implicated in the Alcatel corruptioncase, that objected to his transfer lastmonth from house arrest to preventivedetention in La Reforma.Rodríguez returned to Costa Ricafrom Washington D.C. last month after heresigned from his post as secretary generalof the Organization of American States(OAS), amid allegations of corruption. Hewas arrested at the airport (TT, Oct. 22).Rodríguez, 64, is being investigatedon charges of corruption and illicit enrichmentfor allegedly accepting 60% of a$2.4 million “prize” in association with alucrative contract the Costa RicanElectricity Institute (ICE) awarded totelecommunications firm Alcatel duringhis administration, according to theProsecutor’s Office (TT, Nov. 5).Rodríguez, who became President ona Unity Party platform, is also being investigatedfor allegedly accepting $400,000from the government of Taiwan, and morethan $1 million from a Taiwanese business,to help fund his campaign for OASchief.RODRÍGUEZ is being held a fewmeters away fromCalderón, in a similarcell at LaReforma, a medium-security prisonin Alajuela, northwestof San José,freshly painted bythe former head ofstate himself.According to thedaily Al Día, when aworker arrived topaint the cell as partof regularly scheduledmaintenance, Rodríguez asked theworker to bring him a brush so he couldhelp, since he had nothing else to do.A prison official told the daily the ex-President spent the afternoon, brush inhand, painting the cell – and, in the process,his shorts and T-shirt – aquamarine.The Costa Rican Post Office hadstopped selling stamps commemoratingRodríguez’s appointment to the OAS position(TT, Oct. 29), but put them back onthe market this week, La Nación reported.Post Office officials said the decision tosell the remaining 35,000 stamps, whichcost ¢120 ($0.27) each, was motivated bythe need to recover the $2,000 it cost toprint them.THE ICE and Caja scandals haveimplicated 12 consecutive years’ worth offormer Presidents, caused a flurry of highlevelresignations and arrests, and causedanalysts to predict the demise of thenation’s two major political parties, bothof which have seen some of their mostprominent figures questioned or imprisoned(TT, Nov. 5).On Tuesday, President Abel Pachecosent a letter to a third former Presidentimplicated in the scandals, José MaríaFigueres (1994-1998), of the oppositionNational Liberation Party (PLN), whoreceived $900,000 for providing consultingservices to Alcatel.Pacheco reiterateda requestmade by the LegislativeAssemblythat Figueres returnto the country toexplain himself.Figueres, whorecently resignedfrom his post asdirector of theWorld EconomicForum and continuesto reside inSwitzerland, has admitted to receiving thepayments, but claims they are perfectlylegitimate (TT, Oct. 29).Figueres had offered to testify viavideoconference, but legislators rejectedthe possibility and asked him to appearbefore a legislative commission here nolater than Dec. 9.OUTRAGED citizens took to thestreets Nov. 5 – for the second time in lessthan a month (TT, Oct. 15) – to protest corruptionand demand jail time for thosefound guilty.Both Calderón and Figueres are thesons of Costa Rican political legends.Calderón, who founded the SocialChristian Unity Party (PUSC), is the sonof former President Rafael ÁngelCalderón Guardia (1940-44), credited withthe institutionalization of the country’snational public health-care system andother social guarantees. The SocialSecurity System (Caja) provides cradle-togravecoverage for most Costa Ricans.Figueres is the son of formerPresident José “Pepe” Figueres (1948-49,1953-58, and 1970-74), often referred toas the father of modern democracy here.He abolished the nation’s army in 1948,wrote the country’s current Constitution in1949, and founded the Liberation Party.A complaint against a fourth ex-President is being evaluated by theComptroller General’s Office. The officeannounced this week it will analyze acomplaint of questionable contractsbetween ICE and Ingenio Taboga S.A., abusiness in which former President OscarArias (1986-1990)and members ofhis family areshareholders.The allegationthat ICEawarded Tabogacontracts withoutfollowing properprocedures wasfiled by theInternal WorkersFront (FIT), whichgroups together allof ICE’s workers’unions, AFP wire service reported.The former President, and presidentialhopeful for the 2006 elections, cameunder scrutiny last week after La Naciónreported alleged payments of $1.3 millionto The Arias Foundation for Peace andHuman Progress from the government ofTaiwan.MEANWHILE, on Nov. 5, theAlcatel scandal, which until that point hadescaped the notice of the French press,took up a full page in the daily Le Monde.According to Le Monde, Alcatel representativesin France maintain they were“swindled” by Alcatel representatives inCosta Rica. Alcatel administrator DanielLebégue told Le Monde the company’sEuropean management is not at fault in thecorruption cases.In an odd convergence of roles,Lebégue is also president of the Frenchbranch of Transparency International, ananti-corruption organization, according toLe Monde. Costa Rica’s branch ofTransparency International has requestedthat the government of France investigateAlcatel (TT, Nov. 5).Last month, Alcatel fired ÉdgarValverde, Alcatel’s manager in Costa Rica,and Christian Sapsizian, vice-president ofAlcatel for Latin America (TT, Oct. 29).Alcatel was involved in two previouscorruption cases in Taiwan and Africa,according to Le Monde. In 1997, afterthose cases, the company adopted a codeof conduct that prohibits bribery of governmentofficials where the companynegotiates contracts.THE U.S. Security and ExchangeCommission has announced it has undertakenan informal investigation of Alcatelbecause of the alleged payments to CostaRican officials.The U.S. commission indicateddepending on the results of the informalinvestigation, it may launch a formalinvestigation, La Nación reported.

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