By THE NEW YORK TIMES

SANTO DOMINGO, Dominican Republic, May 15 — Three top executives of the Dominican Republic's second-largest commercial bank were arrested
Wednesday after authorities discovered a clandestine banking operation that resulted in the embezzling of $2.2 billion.

The country's central bank said that executives of the commercial bank, Banco Intercontinental, known as Baninter, had established an unsupervised
bank-within-a-bank in 1989 that used deposits to buy companies linked to bank officers and that forgave millions of dollars in bad loans.

As banking regulators and private auditors began to uncover irregularities this year on the eve of a proposed merger, Baninter officials ordered workers to erase any
records of bad or secret loans.

Dominican authorities said that the losses were grave — equivalent to two-thirds of the national government's entire annual budget — and that they were in talks with
international financial institutions about how to proceed. They said that Baninter's actions, which included huge cash withdrawals, were responsible for weakening the
Dominican peso, which has lost 40 percent of its value against the dollar in the last year.

"We are therefore set to face an unprecedented fraud, implemented by a small group of people that acted as an association of wrongdoers," said José Lois Malkum,
the governor of the central bank, who added that the government would ultimately have to make good on deposits.

The arrest of Baninter's president and chief shareholder, Rámon Báez Figueroa, has brought cries of political skullduggery because the government placed Mr. Báez
Figueroa's media properties under "administrative control" today. They include Listin Diario, the country's leading newspaper, which is seen as friendly to former
President Leonel Fernandez, who is seeking to regain the presidency in next year's election.

Mr. Báez Figueroa also owns 3 other newspapers, 4 television stations and 70 radio stations.

In a statement sent to reporters by fax before he was arrested, Mr. Báez Figueroa denied the government's accusations and said that the government was seizing his
media properties to help the re-election of President Hipolito Mejia. Listin Diario published a front-page editorial on Wednesday denouncing the government's
investigation of Mr. Báez Figueroa as a threat to press freedom.

Mr. Báez Figueroa said that the shortfalls in the bank's accounts arose from his contributions to political parties, the church, artists, journalists and nonprofit groups.

But Mr. Malkum of the central bank said the losses stemmed from sweetheart deals in which the bank bought businesses for several times their true value and forgave
loans to insiders. A central bank report said Mr. Báez Figueroa bought sport utility vehicles for both Mr. Fernandez and Mr. Mejia, and gave 10 Rolex watches to a
former chief of presidential security.

Dominican authorities said they had asked for help from the United States in recovering funds sent abroad by companies linked to the bank's officers.