PARAGUAY: Turning the Screws on Corruption – but Not Too Tight

By IPS Correspondents Reprint | | Print |

Alejandro Sciscioli

ASUNCION, Sep 11 2003 (IPS) - The fight against corruption was one of the main campaign pledges of Paraguay’s new President Nicanor Duarte, and several measures indicate that he has begun to rigorously crack down on graft.

However, the appointment of controversial individuals to key posts has raised doubts as to how far the anti-corruption offensive will go.

Among Duarte’s first steps after he took office on Aug. 15 were measures aimed at cleaning up the customs and tax systems.

For example, in a move designed to uproot the all-too common practice of demanding bribes, the government eliminated many of the highway controls carried out by public inspectors.

The measure encompassed the activity of inspectors from the ministries of the interior, industry and trade, and agriculture and stockbreeding, as well as the national administration of navigation and ports, and the national customs administration.

Inspections carried out along roads by the national office of transportation, the highway police, and the national anti-drugs secretariat were also removed, although police and customs inspectors will continue manning checkpoints along the borders.

”It is paradoxical, but in Paraguay it is necessary to eliminate controls to prevent corruption from becoming even more widespread,” political and economic analyst Félix María Lugo commented to IPS.

”That is because the more controls there are, the more opportunities there are to add links in the chain of demands for bribes.

”When there are many controls and extensive red tape, it is not clear who is responsible. But if the agencies that are to carry out inspections are clearly specified, it is easier to identify acts of corruption,” he added.

Lugo said it is also necessary to establish mechanisms guaranteeing the constant rotation of those in charge of the inspections.

”From now on, since less public bodies will be involved (in the inspections), it will be possible to identify the corrupt officials and agents,” he said.

Duarte also annulled several important public tendering processes, in order to launch a new call for bids. The highest-profile case involves the concession contract awarded by the state-run oil company Petropar for the river transport of crude oil and fuels.

Under the newly awarded concession contract, Petropar will pay 1.39 dollars less per cubic metre in freight costs, which will lead to savings of more than 1.3 million dollars a year.

The secretary of public functions, César Talavera, said his office has registered around 800 new cases of investigations of public functionaries.

But while the new government has taken measures to clamp down on corruption in some areas, several controversial appointments have been made to key posts.

Minister of public works and communications José Alberto Alderete was forced to make a financial disclosure last June, after Duarte announced that he would form part of the cabinet.

According to documents in the possession of the auditors of the Multibanco financial institution, Alderete withdrew nearly 300,000 dollars in deposits from one of the bank’s branches in the Cayman Islands before Multibanco went under.

The minister says he withdrew the funds when he suspected that the bank was involved in illegal operations, an explanation that was accepted by the office of the comptroller-general. But the economic crimes prosecution unit has opened an investigation of Alderete, who is accused of illicit enrichment.

Alderete, a former adviser to the social security institute and to the giant Yacyretá Paraguayan-Argentine hydropower dam, also served as treasurer and member of the governing council of the Colorado Party, which has governed the country since 1954.

”There are several angles to the Alderete case. But since the office of the comptroller-general accepted the explanations he gave on how he obtained and administered his money, I really doubt that the legal investigation will go anywhere,” financial analyst Félix Agüero told IPS.

”There are too many political interests involved, and I don’t think it’ll go anywhere, even though Alderete’s youngest son is implicated in the disappearance of Multibanco documents,” he added. ”When Alderete pulled his money out of the bank, as a public official he should also have reported his suspicions of illegal financial manoeuvres.”

Another controversial figure appointed to public office by Duarte is civil engineer Guillermo Sánchez Guffanti, a former presidential candidate for the National Union of Colorados party headed by former general Lino Oviedo, a former coup-leader whose followers left the ruling Colorado Party.

Sánchez Guffanti was named president of the Fondo Ganadero (stockbreeders fund), which grants government loans to ranchers.

But a source from the agribusiness community who spoke to IPS on condition of anonymity said Sánchez Guffanti had defaulted on a loan he received from the Fondo Ganadero.

Sánchez Guffanti’s designation ”was more a gesture of political reconciliation between the Colorado Party and ‘Oviedismo’ (the Oviedo faction) than a technical decision,” analyst and business consultant Carlos Vera remarked to IPS.

Walter Bower, a former interior minister who has been prosecuted for his alleged responsibility for cases of torture and is under investigation for illicit enrichment, was about to be named to the Petropar board of directors until the decision was blocked by the pressure of public opinion.

Then there is the case of Vice-Admiral Julio César Báez Acosta, the new navy commander, who was convicted of arms dealing while serving as a captain on a merchant ship owned by the Paraguayan state and handed a five-year suspended sentence and a 2,000 dollar fine in 1986 by a United States court.

”A close look should also be taken at other people in the armed forces,” investigative journalist and analyst in military issues Julio Benegas said in an interview.

He cited the example of the third army corps, whose officials rented out the grounds for private uses.

”When General José Key Kanazawa, the current chief of the armed forces, became commander of that unit (from 2000 to 2002), the illicit activities continued undeterred,” said Benegas.

He also mentioned the case of the current head of the presidential guard, Colonel Heriberto Galeano, a personal friend of Duarte.

In 2001, Galeano bought a car in Chile on which he paid no taxes, taking advantage of his diplomatic status as military attache at the Paraguayan Embassy in Santiago.

But when it came time to return to Paraguay, he put the vehicle up for sale as private property in the Chilean capital, which ”triggered a reaction by the Chilean Foreign Ministry against the Paraguayan Embassy,” he said.

Although the armed forces opened an investigation of Galeano, ”it went nowhere,” Benegas noted.