A Tolerance Worn Thin: Corruption in the Age of Austerity
Ellner, Steve
The impeachment of Venezuelan President Carlos Andr6s P6rez has made it clear that free-market neoliberalism has not served as a corrective to corruption. If anything, it has opened new avenues...
...This idea was taken up by AD leaders, who called P6rez' suspension a "political lynching...
...If anything, the sale of public enterprises and the dismantling of federal regulations-both hallmarks of neoliberalism-have opened new avenues for unscrupulous and illicit behavior...
...Subsequently, bombs have exploded in strategic areas of Caracas, including the national headquarters of the main business organization, Fedecimaras...
...Obviously, P6rez felt his personal charisma could pull the wool over the eyes of the entire nation...
...7. Alexis Rosas, "Las vueltas de un mundo de 250 millones," Zeta, No...
...155-198...
...Angel Rodriguez-Vald6s, La otra muerte de CAP (Caracas: Alfadil Ediciones, 1993...
...The same zeal to clean up govern- Anti-P ment led the Attorney General in July to pro- succes pose a plan which places the secret fund for national security under greater scrutiny, independent of the executive branch...
...it is a repudiation of P6rez the politician...
...3, 1984-1992 (Caracas: Consorcio de Capriles, 1993...
...In the face of accusations which nearly led to judicial proceedings against him, P6rez never lost his composure...
...His testimony was confirmed and amplified by Freddy Bernal, head of the Special Tactical Support Command (CETA), the now defunct special police squad which participated in the second attempted coup last year...
...26-27...
...Subsequently in Spain, the state-controlled Galerfas Preciados was sold to [the Venezuelan economic group] Cisneros at a price lower than that offered by a Colombian magnate....This deal became a national scandal in Spain...
...Ironically, several years ago, President Lusinchi used the same argument to dismiss Rangel's exposure of overpriced military contracts...
...Upon assuming office, P6rez surprised Venezuelans by announcing IMF-style austerity measures, which he baptized "el gran viraje" (the great turnabout...
...The major scandal of P6rez' first administration-a case of venal private interests feeding at the public trough--involved the government's overpriced purchase of a refrigerated container ship, the Sierra Nevada...
...Under considerable pressure during the process of selecting their replacements, Congress discarded the traditional practice of choosing judges closely identified with Venezuela's two largest parties, Acci6n Democritica (AD) and the social Christian Copei, on the basis of informal agreements...
...Congress committed itself to selecting independents, and even accepted nominations from lawyers' associations and law schools throughout the country...
...Some may have even admired his audacity and "machismo...
...In Organized Labor in Venezuela, 1958-1991: Behavior and Concerns in a Democratic Setting (Wilmington, DE: Scholarly Resources Inc., 1993), I argue that Venezuela's relative social stability until the mid-1980s was due to transitory factors, including the unpopularity of the guerrilla struggle of the 1960s, the oil boom of the 1970s, and the false expectation that the economic crisis of the 1980s would be short-lived...
...Perez was indicted by the Supreme Court on May 20...
...Flushed by the prospect of continuous economic expansion, many Venezuelans were willing to condone his unethical behavior...
...One theory, put forward by the magazine Zeta, is that rival factions of the governing AD party, headed by P6rez and Lusinchi, provided much of the evidence...
...El Nacional, June 30, 1993, p. D-1...
...Although most of the judges we chose," says Copei's national congressman Luis Guevara Le6n, "were really not 'independent'-that is difficult to be here in Venezuela-they were for the first time relatively independent of their respective parties...
...telecommunications giant GTE, the national airline VIASA to the Spanish Iberia, and several large hotels to a wide variety of international private interests...
...One alleges that P6rez was simply in it for the money, amassing a personal fortune from all his illicit dealings...
...His militant position as a Third World spokesman, which involved constant travel abroad, was a source of pride for many Venezuelans in the 1970s...
...In the November 1992 coup attempt, rebels targeted the purported locations of Cuban mercenaries in the service of Venezuelan security forces...
...Rangel has received veiled threats in the past from shady political and military figures closely linked to P6rez...
...According to Galdo, P6rez operates in the erez graffitti in the city of Mbrida: "when strength is unified, s belongs to all...
...Both Perez' minister of the interior, Alejandro Izaguirre, and his secretary of the presidency, Reinaldo Figueredo, are standing trial as well...
...One of the nine Supreme Court judges who voted to indict the president said in a confidential interview that he and his eight colleagues were responding not only to legal arguments against P6rez but also to the general chorus-70% of the population, according to surveys-favoring the president's exit from power...
...Six of the Supreme Court's 15 justices stepped down in the face of a national campaign calling for the resignation of the entire Court...
...For an additional account of the late 1980s, see Daniel C. Hellinger, Venezuela: Tarnished Democracy (Boulder CO: Westview Press, 1991), pp...
...Back in the 1960s, the fund for secret operations had helped finance a special police apparatus to combat Venezuela's guerrilla insurgency...
...During his first term, he aided Felipe Gonzdlez in his bid...for the presidency...
...Investigations into corruption have provoked a deadly backlash...
...1 And after P6rez' indictment and suspension from office this year for the Steve Ellner is the author of Organized Labor in Venezuela, 1958-1991: Behavior and Concerns in a Democratic Setting (Scholarly Resources, 1993) and the co-editor of The Latin American Left: From the Fall of Allende to Perestroika (Westview, 1993...
...The other views him as a political megalomaniac, who illegally used public money to extend his influence throughout the continent and harass his enemies at home...
...This book, which is a strong defense of Perez' neoliberal policies, consists of edited transcripts of presentations at a Wilson Center conference...
...Investigative journalists have played an important role in the campaign against corruption in recent years...
...4. Cecilia Matos, following the initial investigations into her financial operations, ordered the Republic National Bank of New York to transfer her deposits to a new account whose checks would not have her name and address printed on them...
...It was public discontent that forced the reshaping of the Supreme Court last year, an outcome that had a direct effect on P6rez' fate...
...Confidential interview, Urbaneja, Anzo6tegui, June 11, 1993...
...Among the most valuable are: Jose Guillermo Andueza, Jos6 Ignacio Arrieta, Tello Benitez, et al, La Corrupcibn en Venezuela (Valencia: Vadell Hermanos Editores, 1985...
...he two journalists who blew the whistle on P6rez have put forward two distinct interpretations of his persistent misappropriation of public funds...
...Freddy Muhoz, personal interview, July 15, 1993, Barcelona...
...At the time, the Supreme Court was handling not only the case against Perez but also similar charges against his predecessor, Lusinchi, for the illegal use of money assigned to the same secret funds...
...Following the leads of the data I have presented," says Dal6, "will allow us to arrive at the fortune accumulated in the Swiss accounts of P6rez and Mrs...
...10 Mufioz' position, however, is not shared by others who fear that reliance on such sources of information may involve ill-conceived deals, such as the concealment of the illegal activity of a competing group...
...Diario de Caracas, July 13, 1993, pp...
...Ex-President Rafael Caldera, for instance, one of the key voices calling for P6rez' ouster after the first abortive coup, congratulated the Supreme Court for grasping the prevailing popular mood...
...In mid-July, the two Supreme Court judges most identified as favoring P6rez' indictment received envelopes containing explosives, while another explosive device went off in the Supreme Court building, permanently injuring a court employee...
...Hector Malav6 Mata, Los extravios de poder (Caracas: Universidad Central de Venezuela, 1987...
...Nevertheless, when he took office in 1989, P6rez pledged to eliminate graft, and insisted that the 2 neoliberal model he embraced was a corrective to corruption in high places...
...Less than 10 years earlier, he had been censured by Congress for negligence in financial dealings and was spared condemnation on moral grounds by just one congres- sional vote...
...To blame P6rez' predicament on Lusinchi, or ascribe it to envy, as P6rez is prone to do, is simply absurd...
...9 Another likely source of information is the murky world of competing interest groups...
...P6rez' 1988 campaign was up-beat as he promised to reimplement the interventionist policies of his first administration which he claimed had made the prosperity of those years possible...
...Some discount the significance of whether or not informants have vested interests in the information they provide...
...style of Ferdinand Marcos-siphoning off dollars in the name of intermediaries, and investing in or buying up enterprises abroad without ever appearing as an investor or owner...
...The Left (which had been calling for a referendum on Perez' presidency ever since that coup attempt), various leaders of Copei, and even representatives of the Catholic Church and the business community hailed the Court's indictment of P6rez...
...After all, police detectives work with data supplied by criminal elements all the time in their investigations, and this is valid...
...May 26, 1993, p. D-3...
...9. Tarek Williams Saab, personal interview, July 2, 1993, Caracas...
...The P6rez camp argued that massive government intervention, in the form of business subsidies and support, lent itself to the rampant corruption of the Lusinchi years...
...They used this argument to justify the shift to the neoliberal model, which became the official creed in 1989...
...The clamor against P6rez following the first coup attempt showed how much Venezuela has changed over recent years...
...The anti-P6rez sentiment," he said, "goes beyond the issue of corruption...
...But P6rez' image and style, which had worked like a charm in the 1970s, now seemed to be out of tune with the times...
...The lion's share, however, went to the president's political allies in Central America and the Caribbean, bankrolling such (sometimes laudable) activities as the travels of deposed Haitian president Jean-Bertrand Aristide and the security protection of Nicaraguan president Violeta Chamorro...
...A Tolerance Worn Thin: Corruption in the Age of Austerity 1. Diccionario de la Corrupci6n, Vol...
...Even though the armed struggle subsided by the late 1960s and the country achieved political stability for the next two decades, large sums of money continued to be assigned to the secret fund of various ministries...
...He fears that the "dirty war"-ranging from slander to physical aggression-will continue, a process which he termed "Perecismo without P6rez...
...According to Rangel and Bernal, some of the $17.2 million helped pay off debts incurred in P6rez' 1988 campaign...
...Fernandez Dal6 has petitioned the Supreme Court to admit his documents as part of the case against P6rez, especially since they 14NACL& REPORT ON THE AMERICAS NACIA REPORT ON THE AMERICAS 14REPORT ON CORRUPTION show that Cecilia Matos made several deposits of $100,000 shortly after the purported misappropriation of the $17.2 million...
...947, p. 22...
...7 Indeed, one of Venezuela's principal muckrakers, MAS national deputy Orlando Fernandez, stated that much of his information in the corruption case originated from "one or another Lusinchista annoyed at Carlos Andr6s P6rez...
...In fact, the notion of a personalist campaign designed to malign P6rez predates the case of the $17.2 million...
...6. Freddy Muhoz, personal interview, July 15, 1993, Barcelona...
...1 3 The economic crisis of the 1980s had taken its toll on Venezuela as it had on the rest of Latin America, but the contrast with the oil-boom period of the 1970s meant that the shock was all the greater...
...4 A different explanation of Perez' motivation comes from the second major journalist in the corruption scandal, the three-time socialist presidential candidate Jos6 Vicente Rangel...
...Mois6s Naim, "The Political Management of Radical Economic Change," in Joseph S. Tulchin, ed., Venezuela in the Wake of Radical Reform (Boulder, CO: Woodrow Wilson Center and Lynne Rienner Publishers, 1993...
...The disclosure puts the lie to the president's flat denial that he has bank accounts abroad, and Matos' statement that her only source of income has been the series of modest-paying jobs she has held over the years...
...3. El Nacional, May 24, 1993, p. D-3...
...Bernal's declaration was subsequently admitted as court evidence...
...1988...
...Josd Vicente Rangel, in his TV program "Jos6 Vicente Hoy," asked Fernmndez Dal6 if his informants may be linked to Vol XXVII, No 3 NOVIDEc 199315 VOL XXVII, No 3 Nov/DEC 1993 15REPORT ON CORRUPTION firms interested in undermining business rivals which received government contracts of dubious legality...
...Galdo claims that the $17.2 million is just a drop in the bucket for P6rez who is one of the richest men in Latin America...
...Fernmndez Dal6 thinks the funds he has uncovered so far represent mere pocket money...
...Jos6 Agustin CatalI, ed., Blanca lbalhez y las miserias del poder (Caracas: Ediciones Centauro, 1991...
...When Carlos Andr6s Perez, Venezuela's president from 1974 to 1979, was elected to a second term in office in 1988, he was an unlikely candidate to lead a national campaign against corruption...
...The president, said Naim, was being scapegoated for the nation's pressing economic problems...
...Shortly thereafter, the bolivares were illegally converted into 17.2 million dollars at a special exchange rate...
...8. Nelson Chitty La Roche (president of the congressional commission that investigated the P6rez case), 250 millones: La historia secreta (Caracas: Editorial Pomaire, 1993), p. 67...
...Lusinchi, according to Zeta's thesis, avenged himself by playing the role of Deep Throat in the case of the $17.2 million...
...What has brought the issue to such prominence, however, has been the continuous expression of public discontent in local elections, demonstrations, spontaVOL XXVII, No 3 Nov/DEc 1993 13 VOL XXVII, NO 3 Nov/DEC 1993 13REPORT ON CORRUPTION neous unruly protests, and even quiet support for the two abortive coups, whose banner was opposition to corruption in the government and the armed forces...
...By extricating the state from the economic life of the nation, he argued, the o new laissez-faire approach would Impeached Preside eliminate opportunities to steal from happier days: camF the public coffers...
...Fernindez Dal6, apparently uncomfortable with the question, admitted to the possibility...
...The Supreme Court called P rez has always used public money to enhance his influence, which he in turn converts into personal gain...
...misappropriation of public funds, following two attempted military coups staged by "anti-corruption" officers last year, the issue of corruption is aboil like never before on the front burner of Venezuelan politics...
...The same role, however, even in a toned-down form, appeared bombastic and a waste of time in the context of the 1990s, when Third Worldism had lost much of its luster, and internal economic problems absorbed the nation's attention...
...There is an element of truth in his argument...
...We need not examine the motivation of those who provide anonymous information," says MAS' Mufioz...
...More disturbing is Rangel's allegation that some of the money financed a campaign against P6rez' Venezuelan adversaries...
...The photocopies show transfers of hundreds of thousands of dollars among the various accounts, as well as checks and deposits in the name of other Venezuelans also accused of corrupt dealings...
...The two principal suspects in the court bombings, a functionary and ex-functionary of the Direcci6n de Servicios de Inteligencia y Prevenci6n del Estado (DISIP), the Interior Ministry's secret police force, were apprehended in August...
...MAS' ethics commission voted to censure Tablante, although the resolution did not impede his nomination as the party's gubernatorial candidate and his electoral triumph in December, 1992...
...Growing concern over the issue of corruption is reflected in a number of well-documented books on the topic...
...The first interpretation is put forward by a former P6rez supporter, Andr6s Galdo, a columnist for one of Venezuela's leading dailies, El Nacional...
...The Court found itself greatly discredited because of its refusal to act on charges of corruption against former president Jaime Lusinchi (1984-1989) and others...
...According to this version, confidants of P6rez leaked clues in the case of Lusinchi in 1989 in an attempt to discredit the former president by attributing the nation's economic woes to his irresponsible fiscal policies...
...The issue was heatedly debated within MAS as a result of the disclosure that party member Carlos Tablante, presently the governor of the northern state of Aragua, had worked hand in glove with the Interior Ministry's police force, DISIP, during his investigation of corruption under the Lusinchi Administration in the 1980s...
...5 Actually, Galdo's explanation regarding P6rez' super-rich status and Rangel's regarding the president's political schemes are not at odds...
...1 4 With the greed of a few politicians magnifying the economic woes of the nation, the people's tolerance has finally reached a limit...
...Tablante, who was then vice-president of the Chamber of Deputies, received material favors from the DISIP in the form of paid personnel...
...Matos...
...What is important is the reliability of the information, not the motives of those who supply it...
...P6rez claims that he is being tried for his political behavior and not for any wrongdoing...
...The frequency with which Perez' money crisscrossed the world leaves the impression that a main bank account exists which feeds these smaller ones...
...Venezuelans are now questioning the undervaluation of assets in recent privatization sales: 40% of the state-owned telephone company CANTV to the U.S...
...Rangel claims Salvadoran mercenaries were hired whose hit list included Galdo, Rangel himself, and Attorney General Ram6n Escobar Salom, who had recommended proceedings against P6rez...
...12 The statements of diverse sectors of the Venezuelan public at the time of the Supreme Court's decision strengthen the view that the judges were swayed by political considerations...
...But 14 years and an economic collapse later, such behavior is no longer acceptable...
...In mid-July, Senator Crist6bal Fernandez Dal6 of the left-wing party Movimiento al Socialismo (MAS) handed over to the Attorney General's Office photocopies of bank transactions in accounts opened by P6rez and his long-time mistress Cecilia Matos in New York, Paris, Geneva, Buenos Aires, the Philippines and Hong Kong...
...Both P6rez and Lusinchi want people to believe that they are victims of personal animosities and rivalries, thus taking the focus off what they really did," says Tarek Williams Saab, a leading member of Venezuela's Foundation for Human Rights...
...But as P6rez' second term--without P6rez-grinds to an unhappy close, it is obvious that neoliberalism has not served as the corrective it was touted to be...
...Both claimed they received orders from Henry L6pez Sisco, the former head of the DISIP who is closely linked to former president Jaime Lusinchi...
...Freddy Mufioz, secretary general of MAS, points out the relationship between P6rez the millionaire and P6rez the politician: P6rez has always used Venezuelan money to enhance his international influence which he in turn converts into personal gain...
...8 Nevertheless, Zeta's theory, while correct in stressing the intense internal rivalry in AD, may overestimate the role of Lusinchismo and Perecismo as a source of information...
...The following day, the Senate decided unanimously to lift his presidential immunity, thus automatically suspending him from office...
...6 s in the case of Watergate, the origin of the information used by Rangel, Galdo, Fernmindez Dal6 and others who have denounced corruption has been the subject of considerable speculation...
...2 Five of these six new judges voted in favor of P6rez' indictment...
...3 As time goes on, Galdo's version of Pdrez' venal motivations has gained credibility...
...5. El Nacional, June 8, 1993, p. D-2...
...P6rez' development minister Mois6s Naim described the popular clamor for Perez' resignation, set in motion by the February coup attempt, as a "lynching mood...
...They all agreed that P6rez' suspension would put an end to the short-term political crisis-in which the corruption debacle was just one component-and would thus make it easier to restore domestic stability...
...Military officers are especially sensitive about the mercenary issue...
...Rangel as its first witness in the suspended president's trial...
...When these short-term developments ran their course, the disillusionment and sense of frustration among Venezuelans were particularly felt...
...P6rez is accused of misappropriating 250 million bolivares (the national currency) from a nt Pdrez in secret fund earmarked for national secu- paigning in rity...
...If anything, it has opened new avenues for unscrupulous and illicit behavior...
...On August 31, after the probe into P6rez' misdeeds had yielded increasingly incriminating evidence, Congress voted to remove him permanently...
...2. Luis Guevara Le6n, personal interview, June 12, 1993, Barcelona...
...P6rez allegedly transferred the 250 million bolivares from the Ministry of the Interior to the Secretariat of the Presidency, which is not authorized by law to handle such funds...
...In August, all six voted to press charges against Lusinchi, after the court had sat on the request for his indictment for two years...
Vol. 27 • November 1993 • No. 3
