GODR ATTORNEY GENERAL TARGETS VEHICLE SCAM

C O N F I D E N T I A L SECTION 01 OF 02 SANTO DOMINGO 006308

SIPDIS

DEPARTMENT FOR WHA/CAR (MCISAAC)

E.O. 12958: DECL: 11/19/2014
TAGS: KJUS PGOV DR
SUBJECT: GODR ATTORNEY GENERAL TARGETS VEHICLE SCAM
PARTICIPANTS

Classified By: Michael Meigs, Economic/Political Counselor, reasons 1.4
(b) & (d).


1. (U) Summary. On November 18 the Dominican Attorney
General filed charges against 12 former officials and members
of former President Mejia's party faction, all of them with
ties to El Plan de Renovacion de Vehiculos (Plan RENOVE),a
government program created in 2000 by the Mejia
administration to finance the modernization of vehicles for
public transportation. Of those implicated, two were
ministers in the Mejia administration and one was Secretary
of the Armed Forces under President Balaguer. Leaders of the
Dominican Revolutionary Party (PRD) met immediately to
denounce the arrests as politically motivated. End Summary.


2. (SBU) Dominican Attorney General Francisco Dominguez
Brito levied various charges of falsifying public and private
documents, fraud, embezzlement, bribery, and conspiracy
against 12 "friends of Hipolito" yesterday. The
investigation into the Plan RENOVE project established in
2000 by President Hipolito Mejia was led by the
Anti-corruption Department of the AG,s office, a department
that drifted into virtual nonexistence under Mejia but has
now reemerged in the second Fernandez administration as one
of its forward leaning entities in the fight against
corruption.


3. (U) The three most prominent figures charged in the
scandal are Pedro Franco Badia, former Minister of Interior
and Police under Mejia, Siquio Ng de la Rosa, former Director
of Migration and Minister without Portfolio under Mejia, and
retired Admiral Ramon Emilio Jimenez, Secretary of the Armed
Forces under President Balaguer. The former director of Plan
RENOVE, Fabio Ruiz Rosado, is also one of the named
defendants.


4. (U) All defendants are accused of profiting from a
program developed to upgrade the public transportation fleet.
Less than two weeks after taking office in August 2000,
President Mejia signed an executive order creating a program
of low interest loans for the purchase of vehicles to be used
for public transportation. The program was controversial
from the outset. In April of this year the Dominican
Comptroller General denounced serious irregularities in the
accounting practices and financial operations at Plan RENOVE,
and newspapers headlined accusations of fraudulent loans,
missing funds, and vehicles purchased for the personal use
of friends and family of Plan RENOVE officials.


5. (SBU) President Mejia was quoted at the time as saying,
"if there is an act of corruption, the (responsible
individual) will go to prison." Mejia later backed off
those statements and commented that the auditors of Plan
RENOVE should be the ones incarcerated. Mejia's attorney
general at the time, Victor Cespedes Martinez, said that the
audit must have been falsified; he maintained that if there
were sufficient evidence of this, the drafters of the audit
would be brought to trial. No charges were filed against the
auditors or any other parties. The story lost steam in the
press and Plan RENOVE was on the back burner until yesterday.


6. (U) The Attorney General's office had all officials
arrested yesterday and is requesting that the investigating
magistrate deny them bail. The accusation is that the frauds
perpetrated by the defendants resulted in a loss to the
government of one billion pesos (US $ 33.33 million). (Some
of these losses may affect foreign banks that loaned to the
program, including the Import/Export Bank of Korea, the Ing.
Bank of N.V. of Seoul, the Ing. Bank of Amsterdam, and
Nataxis Popular Bank.) A bail hearing is scheduled for
November 19, 2004. The AG,s office also charges that at
least 100 vehicles purchased with Plan RENOVE funds, with a
value of US $ 3.5 million, cannot be located.


7. (U) Leaders of the Democratic Revolutionary Party (PRD),
including former President Mejia, met immediately after the
charges became public. Mejia called the move "part of a
show," implying that the Fernandez administration is trying
to discredit Mejia's administration and the PRD. PRD
Secretary General Vicente Sanchez Baret accused the AG,s

SIPDIS
office of arresting the defendants without cause and
infringing on their due process rights. He said the PRD
would pay for the costs of the defense.


8. (U) Badia went one step further, asserting that
President Fernandez ordered his arrest in retaliation for his
months-old accusation that Fernandez had received checks from
the now defunct Baninter. "In an abuse, the President of the
Republic has ordered my arbitrary detention." Ruiz, in what
could be perceived as an admission of involvement in fraud,
told the press that although many have been implicated in the
case, those with ties to the current administration have been
excluded from the investigation.

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Comment
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9. (C) Our sources have long told us that Plan RENOVE was
corrupt, a source of graft and an easy means of putting cash
into the hands of PRD party faithful. The fact that credible
allegations of misappropriation of funds were made while
Mejia was still in power lends credence to the AG,s charges.
The Fernandez administration has made the fight against
corruption one of its pillars, and Plan RENOVE participants
were a logical choice to target for investigation. Early
indications are that the AG,s Department of Anti-corruption
has evidence that can be used to convict some, if not all, of
the named defendants. Whether a weak judicial system will
withstand political pressure in these high interest cases is
an open question.


10. (C) We expect continued posturing in the press by the
PRD as well as by officials of Fernandez's Dominican
Liberation Party (PLD). The PRD will call these cases
political prosecutions and the PLD will stress the importance
of these cases in the countrywide fight against corruption.
Each side has an element of the truth, but on this issue the
balance tips in favor of the PLD. The initiation of
prosecutions of Plan RENOVE participants may offer the
prospect of a long awaited break in the tradition of impunity
for Dominican politicians.


11. (U) Drafted by Angela Kerwin.


12. (U) This piece and others can be found at our SIPRNET
site
http://www.state.sgov.gov/p/wha/santodomingo/ along with
extensive other material.
KUBISKE