Costa Rica News Digest, Sept. 28

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Costa Rica News Digest
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TODAY'S CONTENTS
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*Scandal Widens: Second Vice President Implicates President


*News Digest


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FEATURE ARTICLE
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*Scandal Widens: Second Vice President Implicates President

The Fischel-Caja scandal appears to have opened the proverbial
"Pandora's Box".

ALCATEL Contract Payoffs

A report by the daily Spanish newspaper La Nación yesterday told
the story of how the wife of former Instituto Costarricense de
Electricidad (ICE) - the state owned monopoly on telecommunication
and power - José Antonio Lobo, received US$2.400.000 dollars from
ALCATEL, the French firm that was awarded the contract to install
GSM service in Costa Rica.

According to the La Nación, the money was transferred from an account
held by Jean Philp Gallup and paid to the wife of the former ICE director.

La Nación says it has banking documents to back up it's claim, as well
as other banking documents that shows a transfer of US$1.200.000 dollars
paid to Bosques del Olimpo, held by another former ICE director, Joaquín

Alberto Fernández Alfaro. Again, the transfer came from ALCATEL.
Fernández received US$26.000 personally.

The transfers were made from the Cuscatlán International Bank in
the Bahamas from an account held by Servicios Notariales Q. C.

That account, according to the banking documents, had received
deposits in March, June and October of 2003, for a total of
US$9.600.000 dollars, all coming from the Alcatel CIT en el Banco
ABN Amro, in New York.

La Nación was able to confirm that ALCATEL and Servicios Notariales
Q. C. signed a contract to bid on the public tender for GSM service
in Costa Rica.

The La Nación report says that Luis Fishman, second vice president
of Costa Rica, confirmed that he received US$100.000 from ALCATEL as
a contribution to President Abel Pacheco's political campaign.

Fishman told La Nación that he co-ordinated the arrival of the funds
with Luis Gabriel Castro, who is president of the Porter Novelli company.

Castro admitted to La Nación reporters that he did meet with the
manager of ALCATEL and Pacheco at Fishman's house, however, he could
not recall if the political contribution was ever completed.

The Instituto Costarricense de Electricidad (ICE) awared the French

telecommunications giant, ALCATEL, a contract for US$258.000.000
dollars over the past three years.

In August of 2001, ALCATEL was awarded the contract to install 400.000
GSM cellular telephone lines, in a contract that was worth
US$149.000.000 dollars.

According to Pablo Cob, president of ICE, ALCATEl was awarded another

contract in May of 2002 to install a fixed line telephone station in a

contract valued at US$109.000.000 dollars.

According to Cob, José Antonio Lobo and Joaquín Alberto Fernández,
were members of the board of directors that approved the ALCATEL
contracts.


"Spanish Loan" Being Questioned

Yesterday, Channel 7 news "Telenoticias" reported that some in the
medical profession are now asking authorities to investigate the US$40

million dollar loan by the Banco Bilbao Vizcaya and the government of
Spain.

Many heads of departments at several public hospitals have complained
about problems with the equipment purchased with the Spanish loan.

Doctors at the Hospital México as well as the Hospital San Juan de
Dios have complained that they were not asked them their opinion on
the type of medical equipment their hospital needed and the equipment
that was installed, and that they had problems with the equipment
functioning properly.

According to the Telenoticias reports, Dr. Longito Soto, a surgeon at

Ophtalmology is complaining that "it was a long and bitter experience.

Nothing came for a long time and then we were never asked what we
needed...".

Another doctor, Dr. Dorado, tells the story at Ophtalmology at the

Ophtalmology where the equipment received by the hospital was faulty,
of poor quality and broke down easily and not due to abuse.

The news channel included many other similar stories told by
doctors at various CCSS hospitals about the equipment purchased with
the Spanish loan.


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NEWS DIGEST
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*Dalai Lama's Message of Peace

Costa Rica supports the values of peaceful conflict resolution,
spiritual renewal and harmonious coexistence preached by the Dalai
Lama, President Abel Pacheco told Tibet's spiritual leader.

"We Costa Ricans feel honoured and touched by your presence," Pacheco
said during a lunch the two shared yesterday - the second day of the
1989 Nobel Peace Prize winner's visit to Costa Rica.

Present at the luncheon was former Costa Rican president and 1987 Nobel
Peace Prize winner Oscar Arias, and religious leaders.

This is the second time the spiritual leader of the Tibetan Buddhist's
has visited Costa Rica where he will hold talks and workshops for four
days.

Costa Rica shares a very special ideological vision with Tibet.

Just as Tibet gave up warfare as a national policy centuries ago,
Costa Rica today is the only nation on the planet that is totally

demilitarized, thanks to the vision and initiatives of its former
president Oscar Arias.


*Constitution court asked to settle dispute

The minister de Obras Públicas y Transportes took the unusual step
Monday of asking the constitutional court to resolve a conflict with
the Contraloría General de la República.

A spokesperson for the Poder Judicial characterized the action as not
very common but allowed under the jurisdiction of the court, the Sala IV.

Ovidio Pacheco is the minister of Obras Públicas.

The filing says that a conflict exists between the criteria that the

Contraloría issued earlier this month and the ministry. Alex Solís, the

contralor, said that there were unconstitutional aspects to the contract
that the ministry had with Riteve S y C, the vehicle inspection company.

Monopolies are illegal in Costa Rica, and Solís said that Riteve
approached a monopoly. However, he stopped short of trying to void the

contract.

In another development related to Riteve, the company said that its
Nicoya inspection station would be closed today because the local power

company is doing some line work.


*ICE Board Members Who Went to Prague Fired


The Constitutional Chamber of the Supreme Court (Sala IV) on Friday
rejected an injunction filed by former Costa Rican Electricity
Institute (ICE) board members José Antonio Lobo and Hernando Pantigoso,
which sought to overturn a decision by President Abel Pacheco to fire
them from ICE's board.

As a result of the ruling, the Lobo and Pantigoso have stepped down.

The board members, along with Alvaro Retana, who recently stepped down
from his post as head of ICE's telecommunications division, have been at
the center of a controversy that started last October when they traveled
to Prague, Czech Republic, with Ricardo Taylor, the top Costa Rican

representative for Swedish telecom firm Ericsson, when they were
scheduled to attend a global telecommunications conference in Switzerland.

At the time, Ericsson was involved in and later won a $130 million
public bid to provide ICE with 600,000 new GSM cellular telephone lines.
The contract was signed in June.

In July, the Comptroller General's Office rejected the contract,
citing 28 objections to it (not including the trip). Last week,
Comptroller General Alex Solís ordered the bidding process to be
started again from the beginning.

After legislators from the Libertarian Movement Party denounced the
trip to Prague, the Executive Branch, the Legislative Assembly and
ICE all began investigating the matter.

On July 20, Pacheco fired Lobo and Pantigoso because of alleged

irregularities connected to the trip (TT, July 23). A week later on
July 27, he named engineers Jorge Gutiérrez and Francisco Lay to ICE's
board of directors.

On Aug. 3, a day before ICE was to announce the results of its
investigation, Retana resigned as ICE's head of telecommunications.

Lobo and Pantigoso, however, filed an injunction before the Sala IV,
claiming the President's Cabinet lacked the authority to investigate
and fire them.

The Sala IV agreed to study their case, thereby suspending the decision
to fire them.

Friday's court ruling resulted in the immediate firing of Pantigoso
and Lobo and gave Pacheco the authorization to reinstate his previous

appointments. The new board members will likely be sworn in during
today's weekly Cabinet meeting.


*Monsanto Says it Left To Increase Efficiency

A representative of genetically modified organism (GMO) and
agrochemical giant Monsanto confirmed yesterday the company has
closed its offices in San José and moved its Central American
operations to Colombia and Mexico.

The closure, which happened in April, was announced and championed
last week by environmental groups as a victory in their battle against
GMOs. However, Manuel Rivas, Monsanto's manager of product development
in Central America, said yesterday the decision to leave was made to
increase efficiency - not in response to pressure from anti-GMO groups.

Rivas also confirmed the U.S.-based company has withdrawn its
request from the Costa Rican Ministry of Agriculture and Livestock
(MAG) for permission to plant genetically modified corn in Costa Rica.

"It is not a priority market, because of the small size of the
cultivation," Rivas said. He said the company would instead look to
Honduras and Guatemala for cultivation of modified corn.

However, Rivas said Monsanto officials may in the future resubmit
their request to grow the controversial crop in Costa Rica. He also
stressed normal Monsanto business continues in Costa Rica, primarily

distribution of the company's herbicide Roundup.

GMOs are crops that are genetically modified by scientists to exhibit
certain traits, such as disease or herbicide resistance. Many of
Mansanto's genetically modified products are "Roundup Ready," meaning
they are resistant to the herbicide the company produces.

Opponents say GM crops have unknown health risks and could contaminate
the genetic material of nearby crops through the natural spread of
seeds from gene-modified plants. They claim genetically modified corn
has already severely contaminated crops in Mexico.



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