By Thelma Mejía
TEGUCIGALPA, Dec 10 1996 (IPS)

The end of civil wars in Guetemala and elsewhere, the signing of peace agreements and a reduction of U.S. military aid has forced the armies of Central America to look for new methods of staying in business.

And its to the business world where they have gone — using their vast pension funds as investment capital as part of the strategy to keep the generals in power.

Logos of companies boosted by military money – including banks, funeral parlours, advertising agencies, radio stations, credit cards and hotels – tend to give them away but details of army-backed enterprises generally remain a “military secret.”

An investigation by the Arias Foundation for Peace, based in Costa Rica, revealed that although the military now had an obvious economic presence in Central America the exact form in which they do business still is something of a mystery.

This document, entitled “Military Businesses in Central America,” is the first of its kind in the region and was drawn up by a team of researchers and reporters from the Central American “Corn Men” Association, which produces a magazine promoting human development.

Miguel Diaz, a coordinator on the reassearch, told IPS the authors had managed to “rub salt in the wound on something which will provide a lot to talk about in Central America.”

According to the Latin American Banks Federation, Honduras and Guatemala are the two Central American nations with most banking corporations.

The Federation said there were 106 banks on the isthmus in 1995, with a total of 14.65 billion dollars in assets.

The Army Bank (BESA) in Guatemala came in 36th on the list, with assets worth 116 million dollars, while the Bank of the Armed Forces of Honduras (BANFA) came in at 57, with 64 million dollar assets.

BESA is above 69 other regional public and private banks in the listing, while BANFA is above 49. And while the Guatemalan army first pioneered this type of transactions, it is Honduras which has taken the lead, offering its consultancy services to a similar movement in Nicaragua – its ideological enemy of the eighties. In El Salvador, politicians, the business sector and even some members of the military agreed the sector doing most to promote investments was a group known as the “Big Gang,” a group of high ranking military officers.

According to the report, there are now more than 55 military companies in the area, without including those not registered as exclusive army property but as “limited companies,” some with the participation of both active and retired officers.

Even if there is no precise evaluation of how much capital they are moving around the region, it is believed to be a “very substantial amount.”

In Guatemala, BESA constitutes the spearhead of the military business action, having 20 branches, six withing the capital, three in the north east, three in the south west and others in the centre, north and west of the country. BESA includes credit cards amongst the services it offers through its financial, investment and insurance companies.

All the military institutions are basically centred on the Military Provision Institutes (IPMs), created as retirement pension funds for ex-soldiers.

By law , there should be civilian representation on the Boards of the IPMs as they are created with State funds.

In Honduras there are no civilians in the IPM board, and to date, despite welfare laws demanding them, there has been no State auditing or fiscal control over the funds or the profits made from them.

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