PRESIDENTIAL SECRETARY STEPS DOWN

C O N F I D E N T I A L QUITO 001680

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E.O. 12958: DECL: 05/24/2016
TAGS: PGOV PREL EC
SUBJECT: PRESIDENTIAL SECRETARY STEPS DOWN

REF: QUITO 1669

Classified By: PolOff Jarahn Hillsman, Reasons 1.4 (b&d)


1. (C) Summary: Presidential Secretary Jose Modesto Apolo
resigned on July 10. Apolo, who was viewed by many as the
power behind the power, said that his image had suffered
considerably from "unfounded allegations" launched by
ex-Minister of Economy Diego Borja. Apolo claimed to be
concerned that his continued service might further damage the
Palacio Administration and sully his own reputation. Palacio
accepted Apolo's resignation on July 10 and promptly replaced
him with Rafael Parreno. Apolo's departure is likely aimed
at redirecting criticism leveled by Borja over the weekend,
and averting further charges of corruption from dogging the
administration. End Summary.

Public Dispute Leads to Resignation
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2. (U) The Palacio Administration cabinet shakeup continued
on July 10 with the surprise resignation of Presidential
Secretary and Chief of Staff Jose Modesto Apolo. Apolo's

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resignation comes after a weekend-long public clash with
ex-Minister of Economy Diego Borja. Borja accused Apolo of
controlling the presidency, and said that Apolo was the real
manager of the energy and economy ministries, had proposed an
irresponsibly broad tariff liberalization (reftel),and was
also the primary author of the Hydrocarbons Law. Borja also
insinuated that his replacement as Minister of Economy,
Armando Rodas, was a close associate of Apolo's and was
placed there deliberately so that Apolo would have a closer
grip on government funds.


3. (U) Dismissing Borja's allegations, Apolo downplayed his
personal relationship with Rodas and said that Borja was
ineffective as Minister of Economy and had damaged the
Administration's credibility. Apolo said that his continued
service might further damage Palacio's presidency and ruin
his own name. Palacio accepted Apolo's resignation and named
Rafael Parreno Presidential Secretary on July 10.

Additional Changes
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4. (SBU) Minister of Government Felipe Vega stated publicly
on July 10 that he would also resign. Vega told the press on
July 7 that some wanted him removed for trying to address
narcotrafficking, organized crime, and police corruption.
Insiders claim the real issue was that Vega had become a
liability after public charges that he was demanding
kickbacks from the Guayaquil police chief, who recently quit.
Palacio has not yet named a successor.


5. (U) Presidential Secretary of Communication Enrique
Proano on July 10 also announced a number of undersecretary
level changes. Diego Regalado was named Undersecretary of
Public Administration as replacement for Armando Rodas who
was promoted to Minister of Economy; Guillermo Granja was
named Undersecretary of Energy, replacing Roberto Serrano;
Kleber Ollague was named National Undersecretary of Tropical
Medicine, replacing Arcesio Varas; and Victor Hernandez was
named President of the Corporation of National Finance,
replacing Galo Montana. Proano said that Palacio would
finalize all cabinet changes by 7pm on July 11.

Biographical Information: Parreno
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6. (U) Rafael Parreno, a figure with no public profile and
little-known even within the political class, received his
Law degree from the Central University of Ecuador, his
postgraduate degree at the University of San Francisco, Quito
in 1998, and completed his undergraduate studies in 1981 at
the National Institute of Higher Learning. He was named
Secretary General of SENATEL, the National Telecommunications

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Secretariat, in 2005. He also worked as President of the

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Consultancy Committee; Secretary General of the Vice
President of the Republic (2003); delegate of the Vice
President to the Directory of the Consultancy Committee
(2003); Coordinator and advisor of the National Child and
Family Institute (INNFA); Administrative Undersecretary of
the Ministry of Tourism (1998); and Parliamentary Advisor
(1992).

Comment
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7. (C) Apolo's surprising departure is likely aimed at
redirecting criticism leveled by Borja over the weekend.
Rumors today are that Borja was planning to go public with a
retaliatory set of corruption charges against Apolo. Apolo
will likely maintain considerable sway over Rodas and other
players within the Palacio Administration.

JEWELL