ENERGY MINISTER ON HIS WAY OUT?

UNCLAS QUITO 001218

SIPDIS

SENSITIVE

DEPT PASS TO USTR BENNETT HARMAN

E.O. 12958: N/A
TAGS: EPET ENRG PGOV ECON EINV ETRD EC
SUBJECT: ENERGY MINISTER ON HIS WAY OUT?

REF: QUITO 1115


1. (SBU) Elder statesman and self-professed man of integrity,
Energy Minister Fausto Cordovez may not be long in his job.
Two weeks ago, he reportedly tendered his resignation to
President Palacio when Palacio insisted on appointing Palacio
confidant Robert Pinzon as the new president of state-run oil
company PetroEcuador, instead of one of Cordovez's inner
circle. More worrisome, Cordovez, who claimed he had the
integrity and stature (reftel),if not the sector knowledge,
to run the crucial oil and energy ministry, has turned out to
be a bit of a deadbeat. Approached last week by a newspaper
about alleged delinquent debts, Cordovez sought a several day
delay for the interview. In the intervening days, Cordovez
miraculously came up with over $100,000 to pay off the debts,
some of which had been lingering for 8 years. He said he got
the money from his children.


2. (SBU) Cordovez's payment problems were front-page news in
Sunday's papers, but President Palacio has not yet accepted
his resignation. The Friday before his delinquent payment
history became public, Cordovez was crowing about his
integrity to a group of private oil and energy company
executives (whom the GOE owes millions),never mentioning
that he was also going to pay off his own delinquent accounts
that day. The failure to pay debts is nothing new in Ecuador
and the laws greatly favor debtors over creditors, but
Cordovez's seeming hypocrisy could damage his credibility.
That could make it harder for the Ecuadorian public to accept
any settlement Cordovez must approve with Occidental
Petroleum (should it ever come to pass),or any of the other
pending private oil and energy sector company disputes.
Chacon