Former officials padded pockets with impunity

Marcela Valente
Inter Press Service (IPS)
May 10, 2005
Buenos Aires: Former Argentine government ministers, lawmakers and judges who benefited from hundreds of millions of dollars in graft payments throughout the 1990s could be punished by little more than a slap on the wrist if the current administration refuses to revoke the “secret laws” that permitted this colossal corruption.

The practice of paying “supplementary wages” to government officials was an open secret during the administration of Carlos Menem (1989-1999).

When the former president left office, isolated accounts came to light through testimony heard in a number of different trials. But in recent weeks, the situation has taken on the proportions of a major scandal.

The accusations point to former high-ranking officials from the executive, legislative and judicial branches in Argentina.

A federal court is now investigating the alleged existence of a mechanism through which the funds set aside by virtue of secret laws meant to serve intelligence and security purposes were in fact used to pad the pockets of officials and finance other illegal operations.

The court has summoned former ministers Domingo Cavallo, (Economy), Oscar Camilión (Defence) and Raúl Granillo Ocampo (Justice) to testify between May 17 and 20, along with a number of other officials believed to be responsible for these financial manoeuvres.

Between 1991 and 1999, the Menem administration handed out 466 million dollars in secret payments to high-level officials, according to a report commissioned by the Attorney General’s Office and carried out by corporate fraud expert Alfredo Popritkin.

But Popritkin also noted that the amounts involved could be much higher.

The current administration of President Néstor Kirchner has expressed outrage over the corruption scandal, but has nonetheless been reticent in seeking the revocation of the laws that allowed this graft to take place, or to publicise their contents.

Kirchner, who represents a centre-left faction of the Justicialista (Peronist) Party to which Menem also belonged, has merely pledged that his own government will never engage in the practice of secret payments to officials.

Nor are Justicialista Party legislators interested in repealing the secret laws.

For his part, Interior Minister Aníbal Fernández has openly spoken out against overturning the secret laws as a consequence of the scandal, and added that even if the legislation is reformed, some degree of secrecy must be maintained for security and defence expenditures.

Fernández also denied that there are officials who benefited from the corruption of the 1990s still serving in the current cabinet, despite allegations made both in the courts and elsewhere.

In the meantime, however, the current president of the Central Bank, Martín Redrado, has been accused by his former private secretary and personal friend, Adrián de Santis, of collecting “supplementary wages” when he headed up the National Securities Commission during the Menem administration.

In a May 6 radio interview, Fernández said that if the same laws are in force today and were in force at the time of the graft payments, “there will be no legal sanctions or punishment of any kind; all that is possible is a heavy moral sanction.”

Justice Minister Horacio Rosatti has recommended carrying out “an investigation to determine if the way the money was channelled was legal or not, beyond any ethical questions,” and indicated that unless any laws were broken, no real punishment is possible.

In fact, many of the officials involved had actually admitted to receiving the payments, in their sworn financial disclosure reports.

Legal experts have pointed to a wide range of actual crimes that the implicated parties could be charged with, yet many are sceptical that the scandal will eventually lead to prison sentences. In fact, it is believed that some of the judges who should be investigating these wrongdoings were recipients of “supplementary wages” themselves.

The criminal attorneys consulted by IPS, including Daniel Sabsay and Ricardo Monner Sanz, said that a number of punishable crimes were involved in this practice, such as embezzlement, misappropriation of state funds, abuse of power, and illicit association.

Sabsay, a constitutional law specialist, condemned the very existence of the secret laws that have served to shield the former officials involved from legal prosecution. “Secrecy is a category that the Argentine constitution neither provides for nor allows, because public knowledge of the acts of government is a basic principle of the rule of law,” he told IPS.

Moreover, even if the laws are acceptable, “the money was wrongfully acquired,” he argued. Secrecy can be justified by the need to ensure the country’s security or defence, but in this case it was used to fatten the wallets of government officials behind the backs of the people they govern, he added.

But secrecy did not solely serve to cover up these grossly padded salaries. There are currently 11 cases before the federal courts involving crimes committed by virtue of secretly adopted laws and decrees.

One involves the illegal sale of weapons to Ecuador and Croatia in the mid-1990s, while another pertains to the payment of a bribe to a defendant to coerce him to incriminate third parties in the 1994 bombing of the AMIA Jewish community centre.

An investigation is also underway into the use of secret funds to bribe senators into approving highly contested labour reforms during the Fernando de la Rúa administration (1999-2001).

The first high official to admit to receiving “supplementary wages” was former environment secretary María Julia Alsogaray, who is currently serving a prison term for illicit enrichment.

At her trial, Alsogaray confessed to being paid seven times her actual monthly salary in 2003, through the misuse of secret funds, while other former officials from the same government agency also testified to receiving these payments.

The next to publicly acknowledge this widespread practice was Roberto Martínez Medina, an aide to former justice minister Granillo Ocampo, who has also been charged with illicit gain. Martínez Medina told the court that he visited the office of the chief of cabinet every month to pick up 100,000 dollars for the minister.

These funds, which amounted to ten times the minister’s official salary, were used for “personal expenses.” Martínez Medina also reported that every month, he would run into aides working for other senior officials, sent to the office of the chief of cabinet for the same purpose.

Former defence minister Camilión also confessed to being paid “supplementary wages,” when questioned in court about a Swiss bank account containing millions of dollars.

In February, the chauffeur of the Menem administration’s coordinator of social action, Eva Gatica, stated that he had been sent to pick up hundreds of thousands of dollars from the State Intelligence Secretariat (SIDE) for his employer and other high officials, including former interior minister Carlos Corach and Menem’s former chief-of-staff, Eduardo Bauzá.

More recently, the witness reported that unidentified individuals had attempted to push him out of a train.

A former Defence Ministry treasurer also described the use of a similar mechanism. Between 1994 and 1999, he said, the ministry received millions of dollars monthly from the Ministry of the Economy, paid into an account in the state-owned Banco Nación. But in addition to these funds, there was an extra monthly disbursement of 100,000 dollars that he went to pick up personally “for the minister.”

Last month, Alsogaray provided more details of this practice, noting that ministers received 100,000 dollars, secretaries 40,000, and so on, all of which was done with the full knowledge of the legislative and executive branches.

Speaking from prison, she also provided the names of individuals involved, and added that when Cavallo was still the minister of the economy, he urged his colleagues at cabinet meetings to declare their “supplementary wages” as part of their income.

Last week, a former adviser to the board of Banco Nación, Enrique N’Haux, released a supposedly fictional novel that recounts the mechanisms through which such payments were passed to top officials of the state-run bank. N’Haux also testified in court against Cavallo.

The Argentine newspaper Página 12 reported that Cavallo diverted one million dollars a month to SIDE under the cover of secret resolutions, a practice that was continued by his successor, Roque Fernández.

According to former Economy Ministry officials, the money was clandestinely channelled back to the ministry and used to pay the “supplemental wages” of the minister, secretaries, undersecretaries, directors and advisers, and to finance political campaigns and pay bribes to lawmakers reluctant to vote in favour of bills that the government wanted to push through Congress.

Former members of the Supreme Court have also been implicated in the scandal, and judicial authorities have apparently been provided with the name of the individual responsible for picking up and distributing the envelopes stuffed with money to the magistrates.

Alsogaray has also singled out a number of legislators who allegedly benefited from similar payments.

Luis Zamora, a former Trotskyite congressman, maintains that he denounced the practice in the 1990s, but that the courts failed to investigate.

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