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Viewing cable 07BUENOSAIRES1351, ARGENTINA: TOILET-GATE, ENVIRO-GATE, AND OTHER
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| Reference ID | Created | Released | Classification | Origin |
|---|---|---|---|---|
| 07BUENOSAIRES1351 | 2007-07-13 20:16 | 2011-08-25 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Buenos Aires |
VZCZCXYZ0002
RR RUEHWEB
DE RUEHBU #1351/01 1942016
ZNR UUUUU ZZH
R 132016Z JUL 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 8634
INFO RUEHAC/AMEMBASSY ASUNCION 6348
RUEHBR/AMEMBASSY BRASILIA 6213
RUEHCV/AMEMBASSY CARACAS 1346
RUEHLP/AMEMBASSY LA PAZ JUL MONTEVIDEO 6577
RUEHSG/AMEMBASSY SANTIAGO 0576
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RHMFIUU/FBI WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
UNCLAS BUENOS AIRES 001351
SIPDIS
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: PGOV PREL AR
SUBJECT: ARGENTINA: TOILET-GATE, ENVIRO-GATE, AND OTHER
CORRUPTION TALES
REF: BUENOS AIRES 00844
¶1. (SBU) SUMMARY: The emergence of yet more corruption
scandals tied to the administration has President Kirchner on
the defensive. On July 11, Cabinet Chief Alberto Fernandez
publicly defended the actions of Environment Secretary Romina
Picolotti against charges of nepotism and irregular spending.
The administration has also had to publicly defend Economy
Minister Felisa Miceli against charges of corruption and tax
evasion after a bag of unexplained cash was found in her
private office rest room. First Lady and Senator Cristina
Fernandez de Kirchner's position as the front-runner of the
presidential race has not yet been affected by the mounting
corruption discoveries, but with an energy crisis on their
hands, a recent series of provincial election setbacks, and
now these emerging scandals, the Kirchner dynasty's aura of
invincibility is declining. END SUMMARY.
--------------------------------------------- ------------
Toilet-Gate: The Econ Minister and the Mysterious Bag of Loot
--------------------------------------------- ------------
¶2. (SBU) Economy Minister Felisa Miceli has come under
scrutiny after Perfil reporter Jorge Lanata reported that
during a routine inspection by the explosives brigade in the
Economy Ministry, a bag with US$241,000 had been discovered
in the closet of Miceli's private bathroom. A Ministry
spokesperson clarified that the amount was actually more like
US$60,000 and that the money had been declared in the
Minister's public declaration upon taking office. According
to Miceli's office, the money was intended for the
acquisition of property for one of her daughters. The press
and some opposition members are insinuating corruption, tax
evasion, and other violations. A private lawyer has filed a
complaint following the release of the story and opposition
legislators have requested information from the executive and
are calling for the Miceli's appearance in Congress to give
explanations on the case. A federal prosecutor is gathering
evidence in the case and may summon Miceli to make a
statement. The prosecutor may recommend charges be brought
against Miceli if there is sufficient proof against her.
This decision may take place in the weeks ahead.
¶3. (SBU) During the weekend of July 8-9, Cabinet Chief
Alberto Fernandez and President Kirchner came out in support
of Miceli. Fernandez has said that there are no plans for
Miceli to step down, that they believe her explanation
regarding the money, and that it was "just a lapse in
judgment, but not a crime." Miceli is claiming that there is
a dirty campaign against her by some in the Economic Ministry
allegedly linked to another possible corruption case under
investigation (the Greco case).
¶4. (SBU) After two weeks of silence from Miceli and the
story refusing to die, Fernandez and Kirchner called her in
for a meeting and reportedly told her to clarify the
situation. Her public statements have done little to dispel
suspicion of wrongdoing and have highlighted several
inconsistencies in her story. Sticking with the real-estate
story, Miceli says she had taken the money to her office
because she was expecting to buy an apartment for herself
(not her daughter). She added that the money found had been
loaned to her by her brother and that only a "little bit" was
her own (i.e. that it was not hers, perhaps because she knew
that she could not account for the money in her original
public declaration of funds.)
¶5. (SBU) The press reports other supposed anomalies such as
some of the money being in Central Bank "bundles." According
to the press, the Central Bank only provides money to banks
or financial institutions, not to individuals. Agendas that
were seized by the court did not show any indication that
Miceli had scheduled meetings with real-estate brokers, to
which Miceli responded that she had not yet found a house
and, therefore, had no sales contract or broker. (NOTE:
This highlights another inconsistency in Miceli's story: if
she had not yet identified a house for purchase, she would
not know how much money she would need for the purchase. END
NOTE.) While Miceli has said that she made a mistake with
the handling of the money, she has emphasized that she has
not committed a crime.
--------------------------------
Enviro-Gate: Lessons in Nepotism
--------------------------------
¶6. (SBU) In an article published in Argentine newspaper
Clarin on July 8, Environment Secretary Romina Picolotti was
accused of nepotism, misuse of public funds (for private
transportation to provinces), and the irregular routing of
international development funds through the Fundacion
ArgenINTA. According to the article, Picolotti, a former
activist who rose to prominence in the paper mill dispute
with Uruguay but with no political experience, has hired 350
new staff--including family and friends--since she took
office last year. The report added that the Secretariat had
been paying higher wages to Picolotti's inner circle, far
beyond the average wage ordinary employees receive.
Picolotti is also accused of using private jets for travel to
the provinces despite commercial airline availability and the
acquisition of new furniture and equipment that ended up
abandoned in hallways of the Secretariat. Apparently, the
money to fund the irregular spending was routed through
ArgenINTA, an entity under the Secretariat that reportedly
has fewer controls on spending.
¶7. (SBU) Cabinet Chief Alberto Fernandez asked Picolotti to
respond to the charges in writing to him. After a meeting
with her on July 11, Fernandez in a press conference
disregarded the accusations and expressed his and the
administration's confidence in Picolotti's capabilities as
the head of the Environment Secretariat. He defended the
employment of Picolotti's relatives and friends, who, he
said, were hired based on their qualifications as
environmental consultants and professionals. Picolotti was
also present in the press conference, but remained silent as
Fernandez defended her and denounced the accusations as part
of a "political operation" by fired Secretariat employee
Bruno Carpinetti. Carpinetti was reportedly abruptly removed
from his position as Undersecretary of Coordination and
Environment Policy after a confrontation with Picolotti's
brother Juan Picolotti, Romina's chief of staff. Fernandez
also used the press conference as the opportunity to
criticize the reporter, whom he called "a pseudo-journalist"
and a "self-proclaimed investigative journalist," spurring
criticism from local press associations.
-------------
Skanska Update
-------------
¶8. (SBU) The largest and most visible scandal of the
winter, the Skanska case (see REF) has been a regular feature
in the Argentine media and causing headaches for the Kirchner
administration. A tax-evasion investigation of the Swedish
company Skanska's involvement in a gas pipeline expansion in
the north of Argentina led to a criminal investigation for
alleged bribes after Congressmen Adrian Perez of the
center-left ARI party and Esteban Bullrich of the
center-right PRO party pushed for a corruption investigation.
Skanska has admitted to using 118 false receipts valued at
AR$17 million. The Criminal Court of Appeals in Economic
Matters split the case into two parts and among two judges.
Judge Javier Lopez Biscayart has jurisdiction over the
alleged tax-evasion, and Federal Judge Guillermo Montenegro
is in charge of the investigations for alleged bribery. The
tax-evasion case is now stalled as the court hear appeals
from the accused (no GOA officials). Montenegro will
continue to hear testimony from Skanska employees (both
current and former) and Argentine officials, two of which are
ex-president of Enargas Fulvio Madaro and ex-president of
Nacion Trust Funds (part of the National Bank) Nestor Ulloa.
Ulloa is suspected of knowingly allowing the diversion of
state funds for the pipeline project to pay bribes to
construction companies. Madaro is being questioned about
Enargas' management of the pipeline project and possible
knowledge of bribes. The case has also been loosely tied to
Planning Minister Julio De Vido, whose Ministry oversees the
pipeline project, although De Vido himself has not yet been
implicated in either tax evasion or bribes.
-------------------
Patagonian Pipeline
-------------------
¶9. (SBU) Congressman Carlos Lorenzo (Radical Civic Union
from Chubut) filed a complaint about the failure to follow
proper procedures and solicit bids in the awarding of a
public works project worth US$90 million to build a pipeline
in Chubut province. According to press reports, businessman
Alejandro Ivanisevich submitted a proposal to build the
pipeline, whose funding was to be shared among Engasud (a
construction and auditing company), the province of Chubut,
the National Bank, and the Federal Government. Apparently,
the job was awarded to Ivanisevich in an irregular way that
suggests corruption. Public works projects are subject to
requirements for bid solicitations and transparent
competition, both of which were apparently waived in this
case. The investigation of the corruption allegations is in
its preliminary stages and the prosecutor has yet to render
an opinion as to the status of the accused.
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Fake Invoices and other Irregularities
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¶10. (SBU) In the Viasso case, Roberto Viasso and his wife
are suspected of leading an illicit organization that created
front companies that sold fake invoices to different
companies and public entities. There are 3000 companies
under investigation for alleged tax evasion via false
invoices and 37 public entities--including labor unions--that
are suspected of having received bribes. Some of the public
offices under investigation include: the Congressional
Committee for the Oversight of Intelligence Agencies and
Activities, the Cabinet Chief's office, the Ministry of
Social Development, the Ministry of Health, and the Ministry
of Education. There is also a list of labor unions under
suspicion.
¶11. (SBU) As an offshoot of the Viasso case, six judges are
investigating AR$40 million in false billing for public works
completed by 12 construction companies. Judge Biscayart is
investigating 500 companies and public offices suspected of
involvement with false invoicing in another derivative
investigation of the Skanska and Viasso cases. On July 12,
45 companies were raided for documents related to the front
companies discovered in the Skanska case. Some of the raided
companies mentioned in the press include: Autopistas del Sol
(private toll road company), Banco Columbia, Baxterrica
Clinic, Easy Argentina (home-improvement company), Cencosud
(Chilean supermarket chain), and Wal-Mart.
----------------
Come Fly With Me
----------------
¶12. (SBU) In the Federal Airlines Company (LAFSA) and
Southern Wings airline case, the Secretary for Transportation
Ricardo Jaime is under investigation for mismanagement and
irregular accounting in the agreement between LAFSA and the
now extinct Southern Wings company. Federal Judge Daniel
Rafecas is also looking into irregular invoice payment by the
Federal government for fuel provided to Southern Wings and
for staff compensation.
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Fiddling with the Numbers
-------------------------
¶13. (SBU) Federal prosecutor Carlos Stornelli has asked
Federal Judge Rodolfo Canicoba Corral to summon Commercial
Secretary Guillermo Moreno -- the President's front man on
SIPDIS
keeping a lid on inflation -- to give a statement on the
alleged irregularities surrounding the inflation rate
measured by the National Institute for Statistics and Census
(INDEC). Moreno is being accused of abusing his position by
adulterating the monthly inflation and cost of living indexes
that INDEC measures and publishes. In fact, Moreno has no
statutory authority over INDEC, which falls under the
Minister of Economy.
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Comment
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¶14. (SBU) The corruption scandals tied to the Kirchner
administration continue to build and have led many analysts
here to speculate that President Kirchner now finds himself
in an uncomfortable position in the run-up to the October
presidential elections. Some analysts have cited this as a
possible motive behind Kirchner's decision to run his wife,
Senator Cristina Fernandez de Kirchner, as the Victory Front
(FPV) candidate in October. After the first snow in over 89
years fell in the capital of Buenos Aires in the middle of an
energy crisis, the mounting corruption investigations
highlight some cracks in the Kirchner dynasty but as yet have
not seriously affected his polling or that of Cristina. For
now, the polls still show Cristina as the front-runner, with
an increased projected intention of votes of approximately 48
percent (depending on the poll company), up from 45 percent.
¶15. (SBU) The wholesale effect of this grab-bag of scandals
and pressure on the Kirchner administration is, however, as
of now does not appear likely to result in a significant
change of the political status quo. Presidential candidates
Elisa Carrio (ARI, Center-left) and Roberto Lavagna
(Kirchner's ex-Economy Minister) have rejected center-right
candidate Ricardo Lopez Murphy's appeal to form a united
opposition to challenge the Kirchners in October. The
emerging Peronist alternative headed by former Presidents
Carlos Menem, Ramon Puerta, and Adolfo Rodriguez Saa also
remains fragmented and without a clear leader. However,
there have been a number of surprises in recent months and in
the time until the October 28 elections may well contain a
few more. END COMMENT.
WAYNE