San José, Costa Rica, since 1956

Finnish Foreign Ministry: The Loan Wasn’t Ours

Though President Abel Pacheco has said the government of Finland should forgive its $32 million loan to Costa Rica because of corruption allegations related to how the funds were spent here, Finland’s Foreign Ministry told The Tico Times he’s asking the impossible – because a private company, not the government of Finland, made the loan.


In an e-mail to The Tico Times, Juhani Toivonen, Deputy Director General for the Finnish Foreign Affairs Ministry, said the private Sampo Bank, not the government, granted the loan in 2001.


“The government of Finland has only agreed to pay an interest subsidy making the loan interest-free for the government of Costa Rica,”Toivonen said in the e-mail. “It is not possible for the government of Finland to forgive a loan granted by Sampo Bank.”


Toivonen added that according to the terms of the loan, the lender was Sampo Bank, the borrower was the Costa Rican Social Security System (Caja) and the guarantor was Costa Rica’s Finance Ministry. The Tico Times contacted Costa Rica’s Foreign Ministry and Casa Presidencial regarding Toivonen’s statement, but did not receive a response by press time.


The loan was used for a medical-equipment purchase from the Finnish company Instrumentarium, and is at the heart of the corruption scandal involving the Caja and ex-President Rafael Angel Calderón, Jr. (1990-1994). Calderón is accused of masterminding the distribution of a $9.2 million “commission” on the equipment purchase, including $500,000 for himself.


A study by Swiss audit firm SGS, commissioned by Finland’s Foreign Ministry, showed Instrumentarium overcharged the Caja for the equipment by up to 80%; the company also sold the Caja equipment Costa Rican hospitals didn’t need, according to the study.


Under Investigation

As a result of the report, Finland opened an investigation into the loan and equipment purchase; in Costa Rica, investigations were already under way to determine who is responsible for the alleged channeling of kickbacks related to the purchase. Pacheco said during a BBC radio interview late last year, and again at a press conference Jan. 3, that Finland should not collect on the loan for these reasons (TT, Jan. 6).


However, Edgar Mohs, Costa Rica’s ambassador to Switzerland, told The Tico Times Costa Rica will take no further action until Finland completes its investigation. Toivonen confir-med that the investigation is under way, and said there is no established time frame.


“We have requested that the police of Finland investigate (whether) any Finnish institution has been involved in any unlawful activities related to this purchase,” the e-mail from Toivonen said.


The Tico Times first contacted the Finnish Foreign Embassy earlier this month in an attempt to speak with Inger Hirvelä, Finland’s former ambassador to Central America. Hirvelä said last year that Pacheco’s request for loan forgiveness was “pathetic” and an attempt to garner favor in an electoral year. She criticized Pacheco for “asking us to forgive a debt when they (Costa Ricans) have been fooling us.”


However, the ministry told The Tico Times she retired early in January (TT, Jan. 6). Toivonen declined to comment further on Hirvelä’s statements, saying, “I am not fully aware of the content of these comments.” Pacheco’s comments to the BBC – which, according to Mohs, were not preceded by any official communication about loan forgiveness between the two countries – and the Finnish reaction have been the first news some time for the Caja scandal, which dominated headlines here for months in late 2004.


Today, the scandal’s protagonists have been released from house arrest, and the Costa Rican Prosecutor’s Of-fice has kept mum while it continues its investigations.


As in Finland, no time frame has been established for the investigation’s conclusion here, and since judge’s reasons for releasing suspects for preventive prison or house arrest are sealed, the progress of the investigation has remained under wraps. However, lawyers have speculated that judges may have released suspects from house arrest in part because prosecutors have already collected most of the necessary information, reducing the need to keep suspects constrained so they can’t tamper with data.


Calderón, released in October of last year (TT, Oct. 21, 2005), lost little time in returning to the political scene, namely his Social Christian Unity Party.He reunited with party leaders at a San José restaurant in November and, asked whether he would consider a return to the presidency, said he “of course does not rule out” such a possibility (TT, Nov. 25, 2005). This week, he announced he plans to run for President in 2010.


The Legislative Assembly approved the now-infamous Finland loan in 2001. Under its terms, Costa Rica was required to spend at least 50% of the funds on equipment from Finland. As the only eligible company with representation in Costa Rica – Corporación Fischel was its intermediary here – Instrumentarium won the entire contract as the only bidder.


In mid-2004, the daily La Nación revealed that a company owned by Corporación Fischel President Walter Reiche was paying for rent on a luxury home for former Caja director Eliseo Vargas. When questioned by authorities, Vargas accused Calderón of pocketing funds and masterminding the distribution of the $9.2 commission from Fischel (TT, Oct. 22, 2004).


Another scandal, revealed at approximately the same time and also under investigation by the Prosecutor’s Office, involves alleged kickbacks on a contract between the Costa Rican Electricity Institute (ICE) and global telecommunications firm Alcatel. In that case, ex-President Miguel Angel Rodríguez (1998-2002), like Calderón, was arrested in late 2004 for alleged corruption and was released from house arrest this past October – though he has maintained a lower profile than Calderón

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