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President orders probe of possible billion-dollar fraud

April 3, 1997

MANAGUA, Nicaragua (AP) _ President Arnoldo Aleman has ordered prosecutors and accountants to investigate possible massive fraud during the former government’s privatization program, a government official said Wednesday.

The loss to the government ``could reach more than $1 billion,″ said Rosendo Diaz, president of the National Corporations of the Public Sector, which oversees state-run companies.

Diaz on Wednesday released a long-suppressed report indicating that there was ``proof of evident fraud″ amounting to as much as $100 million in the sale of seven sugar refineries alone.

They were among more than 200 businesses sold during the six-year administration of President Violeta Chamorro, who left office in January.

The leftist Sandinistas confiscated many businesses and properties in the 1980s, creating property disputes that still hurt the government’s ability to attract business.

Under Chamorro, who took office in 1990, the government sold off most of those businesses _ at prices Diaz considered too low and to people who often had political connections.

Diaz said there was ``presumption of complicity″ on the part of the former president and other officials ``to favor their own interests and those of third parties.″

There was no immediate public response to the report from anyone in the previous administration.

Among other major institutions accused of involvement in the wrongdoing, according to the report, are the Central Bank, the Nicaraguan Investment Fund, the Economy Ministry, the National Sugar Corporation and several prominent politicians.

Aleman has ordered that the information be passed to the comptroller-general of the republic and the attorney general, Diaz said.

He said he had presented the report to the National Assembly’s anti-corruption committee in July, but legislators never openly discussed it, nor made it public.

The report cited ``deficiencies and incompetence and demonstrated lack of professional zeal″ by the former comptroller, Arturo Harding, and his successor, Agustin Jarquin.

Among cases cited in the report was the sale of 34,500 acres of land for 2 million cordobas, now worth about $230,000. The buyer immediately sold 9,880 acres of the land back to the government for 3 million cordobas, now worth about $345,000.

The sale also included cattle and machinery at half their value _ though Diaz said they were not mentioned in the documents of sale.

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