Peru's corruption runs deep

Chicago Tribune -- 18 April 2001

by Patrice M. Jones

The political drama currently unfolding in Peru is one part James Bond spy thriller, one part sleazy soap opera.

The star is Vladimiro Montesinos, Peru's fugitive spy chief, and by watching what are being called the "Vladivideos," Peruvians are being exposed, in fascinating detail, to the corruption that has infected the country in the last decade.

The scandal over the secret videos taped through the years by the meticulous former spy chief worsened early this week when Peru's top three military commanders and the national police chief offered their resignations.

The resignations came after Congress released videos recently showing the group signing secret pledges that supported near dictatorial powers for Peru's then-president, Alberto Fujimori, in 1992. Videos documenting blackmail and bribes have been broadcast on television for months as part of a widening corruption probe.

The scandal forced early presidential elections and ended with both Montesinos and Fujimori fleeing the country last fall.

It is by no means the only example of large-scale graft in Latin America.

Deeply entrenched

From Venezuela to Argentina, a growing number of corruption scandals have underscored how deeply entrenched corruption is in modern-day Latin America.

"This problem of corruption exists throughout Latin America. ... The only difference is that he [Montesinos] videotaped it all," said Dennis Jett, former U.S. ambassador to Peru.

"Impunity has been the rule here," added Jose Ugaz, Peru's special prosecutor, who has put almost 100 prominent figures--a virtual Who's Who of Supreme Court justices, congressmen, generals, former Cabinet members and top media executives--behind bars or under house detention as Montesinos' web of lies has unraveled.

"People are seeing all these things and being horrified that all this is possible," Ugaz said. "The major problem is that corruption is a part of our way of life. It is a cultural problem that we have to deal with."

Some analysts argue that the distribution of large parcels of land to the wealthy entrenched inequalities in the region, and the misdeeds of the powerful have long been easily erased with the help of friends in high places, compromised judges or well-connected attorneys.

There was great promise that the economic reform and democracy-building of the last decade would help curb corruption in the region.

But some experts argue that corruption has actually worsened in some nations as modernized economies and privatization, in particular, have brought a large infusion of cash to governments where graft has been a part of doing business.

Peru won U.S. praise throughout the 1990s for its economic changes and its success at crushing the drug trade. Yet during the Montesinos-Fujimori reign from 1990-2000, Peru earned a reputation for some of the worst human-rights abuses in the region and Montesinos allegedly amassed a fortune estimated in the hundreds of millions.

Investigators now describe Montesinos as half intelligence chief and half crime boss, entrenched in arms trafficking, drug running and money laundering.

While the government said he officially earned $370 a month, Montesinos had a fleet of cars, hundreds of expensive Italian suits, diamond watches and a beach house straight out of a James Bond movie, with a secret hatch under a pink bathtub leading to an escape tunnel.

Cameras hidden in loudspeakers filmed visitors near the pool.

Several generals now under house arrest or in prison drove shiny Jeeps and held fat offshore bank accounts.

Montesinos even used prostitutes to lure military brass into compromising encounters secretly taped on video, according to investigators.

Montesinos' story is similar to that of other Latin American regimes, such as Mexico, where former President Carlos Salinas de Gortari was praised for his economic reforms at a time when the strength of drug cartels soared in that country.

Argentine fraud

Former Argentine President Carlos Menem, who loved champagne and Ferraris, touted the country's privatization efforts as he oversaw one of the nation's most fraud-ridden administrations.

But investigators say Montesinos' exploits were deadly.

Investigators believe Montesinos used drug money to fund a death squad called Grupo Colina, which was responsible for two high-profile massacres. They also are investigating whether illicit money financed Fujimori's political stranglehold, including his re-election campaign last year.

Montesinos' legacy also has cast the spotlight on his longtime connections with the CIA and his support from U.S. officials.

A lawyer for Colombian drug dealers in the 1980s, Montesinos is believed to have used his connections in the early 1990s to orchestrate a protection racket for drug smugglers in exchange for kickbacks for himself and military officers.

By the mid-1990s, his focus allegedly shifted to arms and money laundering.

Investigators say much of the nearly $80 million in offshore accounts so far linked to Montesinos is related to arms trafficking, including Belarus- and Russian-made arms sold to the Peruvian government. The international arms deals were worth some $1 billion, according to Ugaz.

Daniel Kaufmann, a senior manager at the World Bank Institute in Washington, says corruption in Latin America is correlated to everything from lower per capita income to lower literacy rates and higher infant mortality.

"We can see in countries with a higher than average rate of corruption, the rate of growth is slower, the rate of return on investment is slower and their ability to repay their debts is hindered," Kaufmann said.

Peruvian Justice Minister Diego Garcia Sayan has said U.S. officials bear some responsibility for Montesinos' long reign in Peru because they supported him and ignored the danger signs.

But while officials bicker, average Peruvians voice disgust about the widespread waste.

"We have to ask, `How many schools could have been built, how many new hospitals or teachers' salaries paid with that huge amount of money lost in bribes and corruption?'" said Salomon Lerner, president of a Peruvian non-profit group that monitors elections.