Ex-leader tied to intricate schemes

  BY JUAN O. TAMAYO

  MANAGUA - In one of the poorest nations in the Western Hemisphere, government investigators are accusing former President Arnoldo Alemán of
  misspending $96 million -- an amount equal to the entire annual budget of Nicaragua's Health Department.

  In the process, they have uncovered a bewildering maze of transactions and payments that they say provide a rare glimpse into how government
  corruption -- on a grand scale, in this case -- actually works in a Latin American country.

  Canceled checks show that part of that money went to five Alemán associates, his daughter and sister, said investigators for the attorney general's
  office as they continue to delve into the various scandals linked to Alemán.

  Millions also flowed through a web of companies owned by an Alemán ally -- one of them apparently controlled in part by former Miami-Dade
  Commissioner Pedro Reboredo, who denied any link to the company.

  If the charges are proved, they would be a powerful blow to a country that has long felt the pain of official corruption. Half of Nicaragua's five million
  people live in poverty.

  The attorney general's chief investigator, Iván Lara, spent last week in Miami meeting with 20 U.S. Customs and two Panamanian officials to exchange
  evidence and sniff for Alemán assets in Florida that could be seized.

  U.S. Ambassador Barbara Moore on Monday turned over $800,000 in U.S. aid for anti-corruption programs ``to support the efforts by President Enrique
  Bolaños toward a new era of honesty and prosperity for Nicaragua.''

  The strong U.S. cooperation underlined a campaign by the U.S. assistant secretary of state for Western Hemisphere affairs, Otto Reich, to crack down on
  corruption in Latin American governments.

  Reich visited Managua last month to support Bolaños, who has been leading the drive to prosecute Alemán, the man he served as vice president from
  1997 to January.

  Alemán says the charges are all lies fabricated by a resentful Bolaños and his enemies in the Sandinista Front, former Marxists who threw him in jail for
  seven months in 1989 for his staunch anti-communism.

  Alemán has vowed to fight the charges.

  But he also has fought fiercely to retain the immunity from prosecution he now enjoys as a member of the National Assembly.

  `I WILL NOT FLEE'

  ''Even though I have no faith in our justice system. . . . I will not flee the country. I will fight the charges and even go to jail if necessary,'' the 51-year-old
  Alemán vowed last week.

  Corruption is nothing new in Nicaragua, the poorest nation in the Western Hemisphere after Haiti, but if the current accusations can be proved in court,
  they would represent a new level of avarice, even by local standards.

  For openers, there was $45,000 for a party at the Biltmore Hotel in Coral Gables in 1999 to celebrate his engagement to Miami teacher María Fernanda
  Flores, $26,000 for their Italian honeymoon and $103,000 for a trip to India last year -- including the $10,656 tab at one restaurant.

  Alemán has given several explanations for the charges -- that they were all government-related, that they were personal but legal, that his secretaries
  handled the bills and might have made a few mistakes.

  But Attorney General Francisco Fiallos said the Amex bills pale in comparison to other cases in which Alemán looted state coffers in big and small
  quantities, ``in ways sometimes brazen, sometimes super-sophisticated.''

  KIN, ALLIES INDICTED

  A judge indicted a dozen Alemán relatives and former members of his government last month on fraud and money-laundering charges but left out Alemán
  and daughter María Dolores because they enjoy immunity as lawmakers.

  According to investigators, there are a half-dozen separate scandals linked to Alemán. Two have a Miami connection. These are the other four:

  • By far the biggest, Fiallos said, is what President Bolaños nicknamed La Huaca, after the Nicarao Indian word for a buried treasure.

  During Alemán's term, the Central Bank of Nicaragua and other government agencies transferred $153 million in unbudgeted funds to the presidency
  after Alemán argued that he needed more money for special projects, said attorney general investigator Raymundo Romero.

  Alemán has said most of that money went to pay extra salaries for his government's officials -- a secret but traditional practice here -- including $7,500 a
  month to Bolaños. Bolaños stopped the practice two months ago.

  But documents in the presidency explain only how one-third of that money was spent, Romero said, adding that Alemán's presidential secretary has
  claimed to know nothing about the remaining $96 million. Auditors reviewing some 10,000 checks written from a dozen presidential accounts have found
  many payments to five ''Alemán friends'' as well as his daughter María Dolores and his sister, Amelia, Romero said.

  • More directly linked to Alemán is a scandal over the $1.3 million that the presidency-run Channel 6 TV station paid to two Mexican firms, CASCO and
  SINFRA, that provided the channel with equipment and publicity services.

  CASCO and SINFRA in turn deposited $500,000 to a bank account in Panama opened in the name of the Fundación Democrática Nicaragüense (FDN) but
  controlled solely by Alemán, his daughter and sister, said Fiallos.

  Alemán has described the FDN as a nonprofit foundation he created eight years ago to collect and redistribute donations for pro-democracy projects and
  the political campaigns of his Liberal Constitutional party.

  Asked why the Mexican firms would donate almost 40 percent of their income from their government contracts to the FDN, a clearly irked Alemán said,
  ``Ask them. There are thousands of people who want to help democracy.''

  • Investigators said they are just starting to look at Materiales y Construcción (MAYCO), a government construction agency suspected of handing out
  juicy contracts to friends of Alemán's before it was privatized last year.

  One MAYCO check for $40,000 went to the FDN account, Lara said, and one FDN check for $350,000 went to pay a MAYCO debt this year, a sign that
  Alemán may now own part of the privatized company, Lara explained.

  Investigators said there is evidence that some money from Alemán's FDN account did go to members of his Liberal party, perhaps even to finance part of
  Bolaños' campaign last year as Alemán has claimed. .

  Among MAYCO's pre-privatization projects was paving the dirt road that runs past Alemán's Los Chile farm west of Managua, justified as a way to unclog
  the main road from the capital to the Pacific coast, Lara added.

  • Another possible scam in the auditors' sights: the state-owned Banco Nicaragüense, which allegedly made unsecured loans to Alemán buddies. It went
  bankrupt after it was sold to foreign investors that included Hamilton Bank of Miami.

  Panama has frozen $7 million found in Alemán-linked bank accounts in Panama and found another $23 million transferred from there to U.S. and Costa
  Rican banks.