Rafael Ángel Calderón, the first Costa Rican president ever convicted on corruption charges, received a reduced sentence Wednesday when the Supreme Court’s Appeals Tribunal issued a final verdict in a lengthy and complex embezzlement case. Despite the upheld conviction, Calderón is a free man, released on parole.
Appeals court judges this week reduced a five-year sentence handed down on Oct. 5, 2009 to three years against the former president, who served from 1990 to 1994. Calderón was originally declared guilty on two counts of embezzlement.
The Supreme Court’s decision also reduced the sentence of five other co-defendants involved in the “Caja-Fischel” case, involving one of the most controversial trials in the country’s history.
The case dates to Dec. 21, 2001, when the Legislative Assembly approved a $32 million purchase of medical devices from the Finnish company Instrumentarium Medko Medical. The purchase sought to provide the Costa Rica Social Security System (Caja) with better equipment.
However, an investigation by the daily La Nación, published April 21, 2004, revealed that the Caja’s executive president, Eliseo Vargas, lived in a house owned by Olman Valverde, chief financial officer of Fischel Corporation. This company was the representative of Instrumentarium-Medco Medical for Costa Rica (TT, Oct. 9, 2009, Nov. 7, 2008).
Such conflict of interests forced Vargas to resign the day after the publication. On May 7, 2004, prosecutors from the Public Ministry’ Financial Crimes Unit raided the Fischel Corporation building and Vargas’ house simultaneously, and by doing so, officially started a long-term investigation.
Preliminary investigations showed that Calderón had used his political power to influence lawmakers of the Social Christian Unity Party and have them approve the loan in Congress. He also played a vital role in helping the Finnish company win the $32 million dollar bidding. For these acts, Calderón served preventive detention from October 2004 to March 2005.
The Caja-Fischel trial started on Nov. 3, 2008. By Oct. 5, 2009, judges Teresita Rodríguez, Franz Paniagua and Alejandro López, issued a final ruling on the case and explained how since 2000, the Finnish firm and members of the Fischel Corporation devised a plan to bribe strategic public officials in order to win a contract that would allow them to sell million of dollars in medical equipment to the Caja.
The 2009 sentence shows that-in order to make funds untraceable, the Finnish firm utilized small businesses to deposit the bribes (see box).
On June 16, 2010, Calderón’s lawyers and other defendants began an appeals process at the Supreme Court, which ended with Wednesday’s final ruling.
“We have lost a battle, but another one will begin,” said Calderón during an improvised press conference at his home. “I will file a complaint before the Inter-American Court on Human Rights.” The court is located in San José.
During the entire judicial process, Calderón repeatedly alleged that any money received from the Finnish company does not constitute a bribe, but payments for consultancy services.
“My lawyers did a very good job with the appeal and it is clear that any income I received is legal,” he said.
Calderón is one of two former Costa Rican presidents brought to trial on corruption charges. On April 27, Miguel Ángel Rodríguez, who was president from 1998 to 2002, was sentenced to five years in prison for “instigating corruption,” a criminal charge in Costa Rica typically reserved for public officials. Rodríguez’s lawyers said they would appeal the conviction before the Supreme Court (TT, April 29).
The Caja-Fischel case implicated known Costa Rican politicians and businessmen, as well as important public and private institutions, including the Social Security System (Caja) and the Fischel Corporation.
Eliseo Vargas: Former Caja president. Vargas admitted receiving at least $105,000 from Fischel Corporation after the approval of a contract with Instrumentarium-Medko Medical. He was sentenced to three years in prison after appeal. He will remain free on parole.
Gerardo Bolaños: Former member of the Caja’s board of directors. He supported the approval of Instrumentarium-Medko Medical as a supplier of medical equipment. As a reward, he received $80,000 from the Finnish Company. He was sentenced to three years in prison after appeal. He will remain free on parole.
Juan Carlos Sánchez Arguedas: Former modernization and development manager at the Caja. He confessed he received $200,000 from Instrumentarium-Medko Medical after certifying the Caja’s need for new medical equipment. He was sentenced to three years in prison after appeal. He will remain free on parole.
Walter Reiche Fischel: Former Fischel corporation chairman. He was in charge of the three Panamanian companies utilized to administer and distribute the Finnish bribes. He authorized all payments for former President Rafael Ángel Calderón. He was sentenced to three years in prison after appeal. He will remain free on parole.
Marvin Barrantes: Former manager of the O. Fischel R. Company, a subsidiary of Fischel Corporation. He received $1.4 million from Instrumentarium-Medko Medical and was in charge of distributing the bribes to public officials by using ghost companies.
Randall Vargas: Fischel Corporation attorney. He was accused of destroying important evidence. He was sentenced to a two-year prison term and will remain free on parole.
Fischel Corporation: Owner of the biggest drugstore network in Costa Rica. They represented the interests of Instrumentarium-Medko Medical.
O. Fischel R. y Cía Panamá: Panamanian company controlled by Walter Reiche. $8.8 million from Instrumentarium-Medko Medical was deposited in this company’s bank accounts. From there, smaller amounts were sent to other firms.
Marchwood Holdings: Another Panamanian company controlled by Walter Reiche. This smaller company distributed $2.3 million dollars to several public officials.
Hartcourt Holdings: The third Panamanian company controlled by Walter Reiche. This firm distributed $4.5 million from Instrumentarium-Medko Medical. From there, $440,500 was wired to Sultana Panamá, a company controlled by former President Rafael Ángel Calderón.
Sultana Panamá: Calderón’s company that received $440,500 from Walter Reiche, via Hartcourt Holdings.
International Development and Outsourcing Corp. Panamanian company controlled by Eliseo Vargas. Walter Reiche deposited $105,000 in this company’s account. Vargas said former President Calderón advised him to open this company to receive the funds from Instrumentarium-Medko Medical.