GOE DEMANDS DEBTORS' RESIGNATIONS

UNCLAS QUITO 001350 SIPDIS E.O. 12958: N/A TAGS: PGOV KCOR PREL ECON EC SUBJECT: GOE DEMANDS DEBTORS' RESIGNATIONS REF: A. QUITO 1340 ¶B. QUITO 1218 ¶1. Summary. On June 6, Secretary General of the Administration Luis Herreria called for the resignations of all senior public servants, including Cabinet ministers, who were delinquent in debt repayments before taking office. Herreria's announcement came two days after Congress published a list of Palacio Administration debtors, which included the ministers of energy, government, foreign affairs, economy, environment, and communications, among others. Two ministers already have tendered resignations, as has the president of oil parastatal PetroEcuador. Others have fought the allegations by presenting proof of payment. The debtor scandal represents the current GoE's first major crisis. End summary. ¶2. Article Six of Ecuador's Civil Service Law enumerates the following requirement for entering the civil service: "Subject may not be in arrears regarding loans of any nature..." Further, Article 122 of the Constitution demands that high-ranking public servants, before taking office, file affidavits documenting their assets and liabilities; not doing so inhibits them from assuming their functions. ¶3. The debtor scandal broke in late May, after Quito daily El Comercio began investigating alleged loan repayment problems of self-professed "man of integrity" Fausto Cordovez, the minister of energy (Ref B). Cordovez repaid his debt before the El Comercio piece appeared, but he was unable to outrun the scandal, eventually quitting June 8. Administration Communications Director Carlos Cortez, another Palacio elder statesman, was delinquent on two loans; he tendered his resignation June 7. PetroEcuador president Roberto Pinzon, state-owned telephone company Andinatel boardmember Cornelio Tamariz, and Presidential Advisor Roosevelt Chica resigned this week over similar accusations. ¶4. Congressional Oversight Committee Chair Guillermo Haro has presented a list of additional debtors to the state who currently hold public office. It includes Minister of Government Mauricio Gandara, Foreign Affairs Minister Antonio Parra, Economy/Finance Minister Rafael Correa, Minister of Environment Anita Alban, and Secretary of Planning Hector Espinel. These individuals have presented loan discharge papers and payment receipts as proof they are not bad debtors, however. The Palacio Administration has formed a special commission to investigate, led by Herreria and Presidential Legal Adviser Roberto Gonzalez, and should issue final determinations on the abovementioned five by June 13. COMMENT -------------- ¶5. Inexperienced in governance and taking office under extraordinary circumstances, it's no surprise Palacio failed to exercise due diligence in his Cabinet choices. Slow to react to the brewing crisis, his damage control skills have looked equally suspect. "Debtorgate" seems to have legs, and a handful more public servants likely will fall victim before it dies. We doubt Palacio will sacrifice Parra, Correa, or Gandara, however. END COMMENT. Kenney