The Tico Times Online Daily Page

Daily Edition: San José, Costa Rica, December 18, 2002

MR. THRIFTY: Pacheco announces new spending-control plan.
photo/AFP

Prosecutors Raise Questions About 'The Vault'
By Tim Rogers
The Prosecutor's Office for Financial Crimes told The Tico Times this week it is looking into allegations that Chicago native Roy Taylor, president of The Vault Holding Company, may be running an unregulated personal loan business that offers 3.5% monthly interest on dollar investments.
(Click for more)

December 18

Class on Room Decoration
At 3:30 p.m. at Librería Internacional. Info: 800-55442-7374.

Antique Music
By Garcimuñoz, at 7 p.m., at Spanish Cultural Center, Av. 13, Ca. 31. Info: 257-2919.

Money and Coin Exchange
All weekends in December, 11 a.m.-6 p.m., at Real Cariari Mall, 3rd Floor, 239-4717, 383-6388, www.mipyme.com/micrositios/reliquias2000/

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Prosecutors Raise Questions About 'The Vault'
By Tim Rogers
trogers@ticotimes.net

The Prosecutor's Office for Financial Crimes told The Tico Times this week it is looking into allegations that Chicago native Roy Taylor, president of The Vault Holding Company, may be running an unregulated personal loan business that offers 3.5% monthly interest on dollar investments.

Financial Crimes Prosecutor Warner Molina said he was clued in to The Vault's alleged financial intermediation operation while interviewing victims of the recently folded high-yield investment schemes known as "The Brothers," run by Luis Enrique Villalobos, and "Savings Unlimited," formerly operated by Cuban-born Luis Milanés.

Both Villalobos and Milanés, now considered fugitives from justice, offered clients 2.8 to 4% monthly interest on dollar loans before closing up shop and disappearing last October and November, respectively (TT, Oct. 18, 25, Nov. 1, 15, 22, 29, Dec. 6, 13).

"We are worried that The Vault, if it is capturing investments, could run into the same problems as Savings Unlimited and the Villalobos," Molina told The Tico Times Monday.

Although the Prosecutor's Office for Financial Crimes has never received a formal complaint against Taylor or The Vault, it recently requested the help of the Judicial Investigative Police (OIJ) to investigate an anonymous tip sent to Costa Rican authorities earlier this month, Molina said.

SUGEF, Costa Rica's financial regulatory agency, has also started a file on The Vault, which regularly takes out two-page color ads in The Tico Times advertising itself as a "development company."

Taylor, during an interview with The Tico Times last month, said he does not have investors, but "partners" in his many companies.
Read Friday's TT print edition for full exclusive story

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President Announces New
Spending-Control Plan For 2003
By Fabián Borges
Tico Times Staff

President Abel Pacheco and his top economic advisors yesterday announced a new plan aimed at limiting the growth of government spending in 2003.

The spending regulations, combined with the Emergency Tax Plan approved by Congress Monday, will lower next year's fiscal deficit from the current estimate of 6% of the GDP to a more-manageable 3%.

The spending controls will consist of cuts in unnecessary spending, a temporary delay of at least a year on all non-essential investments projects and a restriction on the hiring of new employees at public institutions. All government institutions will be required to limit the growth of their expenditures in 2003 to no more than 5.9% more than what they spent in 2002.

The executive president of each institution will be charged with balancing its budget and prioritizing spending. When an institution overspends, its head will be required to send a letter to Pacheco, explaining the situation and will have one month to resolve the matter - or else.

According to Finance Minister Jorge Walter Bolaños, the spending controls will make it possible for Costa Rica to accomplish its long-term goals of reducing poverty and increasing economic growth. He cited the spiraling fiscal deficit as the economy's greatest weakness and the cause of the high interest rates that stifle its growth.

To finance the fiscal deficit, the government issues bonds. To be attractive to investors, the bonds must have high-yield interest rates. However, the high interest rates are bad for the economy as a whole, since they raise the cost of investment. Less investment means less growth, which makes reducing poverty more difficult, Bolaños argued.

Central Bank President Francisco de Paula Gutiérrez applauded the new spending controls, considering them a major step towards making the economy more competitive and attractive to investors.

In his opinion, the Emergency Tax Plan and the spending controls will help eliminate the biggest weakness of the country's otherwise sound economy. He argued that the measures send a clear message to international investors that Costa Rica is a safe and profitable place to do business.

The spending controls are only part of a larger plan to increase government revenues and reduce the deficit. Pacheco announced that, in early 2003, he would submit an emergency budget to Congress, to set aside funds to modernize customs agencies, improve tax collection and grant more power to fiscal police.

New bills to update the country's current tax laws will also be top priority in the government's agenda for next year.

The results of the program will be analyzed and discussed once a month during government cabinet meetings. The reports will be made available to the public and will be presented before Congress every two months.

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Five Cubans Detained for Drug Trafficking

Police confiscated two kilograms of cocaine and detained five Cubans who allegedly belong to a drug trafficking ring that tried to smuggle more than 100 kilograms of cocaine to the United States in November, Security Minister Rogelio Ramos announced yesterday.

Yesterday's sting operation was part of an investigation that began last November, when the U.S. Drug Enforcement Agency (DEA) notified the Costa Rican Drug Control Police of the Cuban smuggling ring operating here.

The DEA notified Costa Rican authorities about the group Nov. 26, when customs agents in Miami found 100 kilograms of cocaine hidden inside a false compartment of a shipping crate's pallet.

Drug police here claim they are continuing to investigate several other members of the group who are still thought to be operating in Costa Rica.
-AFP

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