ARGENTINA: Cavallo Arrested in Arms Smuggling Affaire

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Apr 3 2002 (IPS) - Argentina’s former economy minister Domingo Cavallo was arrested Wednesday in connection with the Ecuador-Croatia arms-smuggling scandal that led to ex-president Carlos Menem being held under house arrest for five months last year.

Cavallo, the architect of Argentina’s currency board system that tamed four-digit hyperinflation in the early 1990s and was scrapped earlier this year, served as economy minister under both Menem (1989-1999) and his successor, Fernando de la Rúa (1999- 2001).

Cavallo is being held in a military jail in Buenos Aires, where he will be allowed to receive visitors once a day. His cell phone was taken away, and he asked his secretary to bring him clean clothes and books.

The offence of which he is accused, “aggravated contraband”, is punishable by four to 12 years in prison. The former minister could be held under preventive detention until the end of the year, when the courts should rule on the appeal filed by Cavallo’s lawyers Wednesday.

Commercial Court Judge Julio Speroni’s decision to order Cavallo’s arrest took the former minister and those accompanying him by surprise after he showed up for a deposition before the scheduled date, due to his plans to travel to Washington later this week.

Although the former minister knew the case could give rise to an arrest warrant, he was confident that the judge would not reach a decision until the 10-day deadline to do so was looming.

Cavallo’s arrest triggered rejoicing in the streets in Argentina, which is caught up in its worst economic crisis in history.

Cavallo’s last stint as economy minister began just over a year ago, at which time he enjoyed the support of 50 to 60 percent of opinion poll respondents.

However, he was forced to resign abruptly on Dec 19 in the midst of a profound political, economic and social crisis marked by looting and rioting, having been unable to find the key to recovery of the Argentine economy or new international financial backing.

The next day, de la Ruá stepped down, giving way to a vacuum of power that lasted until Jan 1, when Congress designated Eduardo Duhalde to complete the presidential term.

Cavallo’s lawyer, Rafael O’Gormann, filed an appeal of the arrest order, which he said had “no explanation,” and described as merely “a ridiculous piece of nonsense from some judge.”

Cavallo is under investigation in connection with more than 10 legal proceedings, including a case involving supposed irregularities in a public debt swap operation carried out last year.

Another case involves Cavallo’s order that banks ignore court rulings overturning a freeze on bank accounts for some savers. Restrictions on cash withdrawals were put into place by the de la Rúa administration in early December to prevent a run on banks.

The trafficking of arms to Ecuador and Croatia came to light in a scandal that broke out in the 1990s, and was investigated in two separate legal cases.

In one of the cases, federal Judge Jorge Urso ruled that Menem headed a smuggling ring.

The former president was put under house arrest on charges of illicit association, and his former brother-in-law and adviser Emir Yoma was also held in custody until the Supreme Court dismissed the charges and ordered their immediate release on the grounds of insufficient evidence, in a verdict that sparked loud controversy.

Judge Speroni, meanwhile, was investigating the crime of “aggravated contraband” in relation to the same scandal, because the weapons passed uninspected through customs, which falls under the Economy Ministry.

In November, when the Supreme Court ordered the release of those detained on charges of illicit association, it also asked the two judges to merge their cases. Thus, the proceedings that led to Menem’s arrest passed over to Speroni’s jurisdiction.

Lawyer Ricardo Monner Sans, who brought the original lawsuit on arms smuggling charges in 1995 after investigative journalists unearthed evidence of the illegal weapons sales, said Wednesday that when Judge Speroni took over Urso’s case, he may have obtained new information implicating Cavallo and perhaps other former government officials.

“It could be that the case that did not prosper in connection with the charge of illicit association could do so in connection with the charge of aggravated contraband,” said Monner Sans.

“If Cavallo tells the whole truth, a new complex scenario could open up for former officials, including a former president,” said the lawyer, referring to Menem.

Monner Sans said that in one of his books, the ex-economy minister held Menem responsible for the arms sales which according to the sales documents were to go to Venezuela and Panama, but actually ended up in Ecuador and Croatia.

At that time, both Ecuador and Croatia were involved in wars, and were subject to international embargoes on weapons sales.

Menem as well as Cavallo and several other government ministers signed the decrees ordering the weapons exports, which named false destinations.

Cavallo was to testify before Speroni on Apr 9, but the former minister himself asked to move his testimony forward to Wednesday due to travel plans. To his surprise, he was arrested an hour into the deposition.

According to sources with the legal system, Speroni had a list of 65 questions for Cavallo, who kept his cooperation to a minimum, answering merely “yes” or “no.” The judge then decided to have the former minister taken into custody immediately.

Monner Sans, who expressed deep disappointment when the Supreme Court ordered Menem’s release, said Wednesday that Cavallo’s arrest marked “an important moment” in the investigation and “the possibility of substantial progress in the case.”