COSTA RICA REPORTING ON OTHER FOREIGN BRIBERY

UNCLAS SAN JOSE 002787

SIPDIS

WHA/CEN
EB FOR WCRAFT, BLAMPRON
EB/IFD/OIA
EB/CBA
L/LEI
L/EB
WHA/EPSC FOR KURS, LGUMBINER
STATE PASS TO JUSTICE FOR M MENDELSOHN
STATE PASS TO SEC FOR INTERNATIONAL AFFAIRS
STATE PASS TO COMMERCE FOR K NICKERSON AND TBARLOW
STATE PASS SEC-ENFORCEMENT RGRIME

E.O. 12958: N/A
TAGS: KCRM KCOR BEXP ETRD EINV ECON PGOV CS
SUBJECT: COSTA RICA REPORTING ON OTHER FOREIGN BRIBERY
ALLEGATION

REF: A) SAN JOSE 02661; B) SAN JOSE 02679; C) SAN JOSE 03308


1. Summary. It has been a year since the story of scandal
broke out and there is no sign yet of any criminal charges.
On September 28, 2004, the influential daily, La Nacion
disclosed the details of a `bonus' paid by the French
telecommunications company Alcatel (see reftel A).
According to their investigative report, former President
Miguel Angel Rodriguez and Jose Antonio Lobo, then a board
member of the state electricity institute (ICE) had shared
the $2.4 million bonus between them. End Summary.


2. Former President Miguel Angel Rodriguez (1998-2002) was
recently released from house arrest and will not be allowed
to travel while an ongoing investigation of bribery and
corruption continues. In October 2004, he was arrested
after he resigned from his post as newly-elected Secretary
General to the Organization of American States (OAS) and
returned to San Jose to answer to charges that he had
received over $1 million in kickbacks from the French firm
Alcatel in connection with two contracts totaling $258
million awarded to Alcatel by the Costa Rican Electricity
Institute (ICE).


3. Lobo had admitted his responsibility and provided
details that were shared with the daily La Nacion. He
explained how one transaction was wired electronically to a
company Rodriguez set up in the U.S. called A y Z (see
reftel B). The first payment was made in cash directly to
Rodriguez in his office and subsequent payments were also
paid between Lobo's wife to Rodriguez' wife using a Florida
bank account.


4. Two other former presidents have also been accused of
corruption while in office (see reftel C),however
according to the Chief Prosecutor(Fiscal General) Francisco
Dall'Anese, only the Rodriguez case involved the use of
United States Bank accounts. Alcatel transferred the $2.4
million to an account in Panama under the name of Lobo's
wife. The trail began with Alcatel's accounts in a New
York branch of ABN Amro to an account in the name of
Servicios Notariales Q.C. with the Cuscatlan International
Bank in the Bahamas (see reftel A).


5. Comment: If wrongdoing is proved, Alcatel could face
the risk of fines from courts and U.S. financial watchdog,
the Securities and Exchange Commission (SEC) which
intervened because Alcatel's American depositary shares
trade on the New York Stock Exchange. This week, France,
which launched its own investigation last July, sent a
judge and two police detectives to conduct interviews with
the principals in Costa Rica.
LANGDALE