(C) ARGENTINA: RECENT UNSETTLING DEVELOPMENTS

C O N F I D E N T I A L BUENOS AIRES 000534

SIPDIS

E.O. 12958: DECL: 05/06/2029
TAGS: PGOV KCOR KDEM PHUM KFRD SNAR ASEC AR
SUBJECT: (C) ARGENTINA: RECENT UNSETTLING DEVELOPMENTS
POINT TO FRAYING ANTI-CORRUPTION FRAMEWORK

REF: BUENOS AIRES 0428



Classified By: CDA Tom Kelly for reasons 1.4 (b) & (d).




1. (C) Summary: Recent moves by the Government of Argentina

(GoA) undermine the independence and efficacy of Argentine

agencies with jurisdiction over corruption cases. In early

March, Manuel Garrido, Argentina's chief prosecutor for

corrupton cases resigned, claiming frustration over

perceived limitations placed on his authorities by Prosecutor

General Esteban Righi. From late 2008 through February 2009,

the head of the National Auditor General's Office (AGN),

Leandro Despouy, spoke out publicly against what he, the

press and the opposition characterized as GoA attempts to

limit his purview. Both Garrido and Despouy have

investigated and publicly reported findings implicating

irregularities by Kirchner officials and allies. President

Kirchner appointed a family friend, Julio Vitobello, to head

the Anticorruption Office (OA) and another ally, Carlos

Pacios, to replace Vitobello in the National Comptroller,s

Office (SIGEN). In the Kirchners' home province of Santa

Cruz, a Kirchner niece is in charge of the ""investigation""

into questionable land deals involving the Kirchners and

their circle. These developments point to a weak and

emasculated institutional framework in Argentina's

intermittent attempts to combat public corruption. End

Summary



GARRIDO'S RESIGNATION

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2. (U) In mid-March, Argentina's top District Attorney in the

National Prosecutor's Office for Administrative

Investigations (FIA),Manuel Garrido, resigned from the FIA

after five years as its head. Garrido, opposition

politicians, respected NGOs, local press, and blogs

criticized the GoA's treatment of Garrido and characterized

the forced resignation as a loss in Argentina's fight against

corruption. Garrido claimed his resignation stemmed from

Prosecutor General Esteban Righi's promulgation of Resolution

147/08 in early November 2008, which reduced the FIA's

powers. The FIA was created by law to investigate potential

criminal activity of national public officials. Righi's

resolution establishes that the FIA would no longer have a

direct role in cases that did not initiate with a criminal

complaint by the FIA, reflecting a restrictive interpretation

of the FIA's legal authorities and effectively constricting

Garrido's ability to intervene in cases against public

officials.




3. (U) Garrido sharply criticized Righi's measure, warning

that the FIA would cease to exist as an independent and

specialized entity to prosecute crimes committed by public

officials and requesting Congressional action. Garrido

further suggested that the lack of a specialized, independent

body investigating public corruption went against Argentina's

duties as a signatory to the United Nations Convention

Against Corruption. Righi retorted that Garrido should

abstain from ""self-promoting campaigns"" regarding his role in

the fight against corruption.




4. (SBU) Garrido had distinguished himself as the prosecutor

who filed or advanced the most high-level corruption cases

implicating administration officials. Garrido had an

important role in the following cases: the alleged

manipulation of the National Statistical Agency (INDEC) by

Secretary of Internal Commerce Guillermo Moreno; the Skanska

corruption allegations; the bag of money found in the office

of then-Economy Minister Felisa Miceli; the alleged illicit

enrichment of Nestor Kirchner and, separately, of the former

debt negotiator Daniel Marx; the overpricing of public works

contracts; the installation of electricity cables in southern

Argentina by Electroingenieria, a company with close ties to

the Kirchners which employs the son of Planning Minister De

Vido; the management of official GOA advertising by Press

Secretary Enrique Albistur; train repairs by Transport

Secretary Ricardo Jaime; and the decision process for

granting highway concessions. Press reports noted, however,

that although Garrido had launched over a hundred

investigations in five years (compared to four investigations

in nine years by his predecessor),he had not obtained any

convictions during his tenure.



A CHORUS OF COMPLAINTS

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5. (U) In announcing his resignation, Garrido complained he

had suffered ""infinite difficulties, setbacks, and trip-ups

and inexpressible episodes of resistance, administrative and

structural deficiencies."" Garrido told newspaper ""La Nacion""



he was convinced that Argentina offered impunity to

corruption. His resignation letter was reportedly a long

attack on Righi's resolution and the harm it produced to the

authorities of the FIA and to anticorruption efforts in

general. In his conclusion, Garrido asserted that, while

corruption is common to all countries, Argentine corruption

regrettably sets itself apart in its impunity and the lack of

commitment to confront it.




6. (U) From the opposition, Radical Party (UCR) Senate leader

Ernesto Sanz, the vice president of the Council of

Magistrates, sought to call attention to Garrido's

resignation. UCR National Deputy and bloc leader Oscar Aguad

claimed Garrido was mistreated and cornered by the

administration for being one of the few with the courage to

challenge its power. Civic Coalition National Deputy and

bloc leader Adrian Perez also joined the criticism,

explaining the resignation as a consequence of the

administration,s deliberate policies to weaken and destroy

the country,s institutions of control. Center-right PRO

National Deputy Esteban Bullrich accused the administration

of obstructing corruption investigations.




7. (U) Laura Alonso and Delia Rubio, of the NGO Citizen Power

(Poder Ciudadano),said the resignation was a setback in the

fight against corruption. Similarly, the Center for the

Investigation and Prevention of Economic Criminality (CIPCE)

denounced Garrido's resignation as an additional indicator of

Righi's unwillingness to investigate economic crimes. CIPCE

claimed ""the judicial system systematically fails in its

mission to clarify the penal responsibility of the

businesspeople and officials involved in such acts. And,

clearly, the Ministry of Public Prosecution has the primary

responsibility for this situation.""



THE DEFENSE

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8. (U) Righi denied all of the accusations against him and

said he would have preferred for Garrido to remain in his

position. At the same time, Righi accused Garrido of

damaging the reputation of the Prosecutor General's office by

filing highly publicized but poorly documented, premature

criminal complaints. Righi said he had not limited Garrido's

authorities.



PARTING SHOTS

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9. (U) Before he left, Garrido filed several more criminal

complaints implicating GOA officials. One accuses Claudio

Uberti, the former toll road regulator who was fired in the

""Valijagate"" scandal, and Jorge Simeonoff in the Planning

Ministry of administrative irregularities and presumed

collusion with the highway construction firm Coviares in

contract negotiations. The other two cases accuse the

Executive Branch of irregularities in the management of

campaign financing -- specifically regarding the broadcasting

of political events on a private cable network using public

funds -- and presumed irregularities and in another highway

concession with the firm Caminos del Valle SA. Garrido

presented the campaign finance complaint to the National

Electoral Chamber. Garrido also filed a criminal complaint

alleging overpricing in an electricity cabling project run by

Electroingenieria, a company with close ties to the Kirchner

administration.



TRANSPARENCY UNDER ATTACK

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10. (SBU) The Argentine National Accounting Office (AGN) is

at the center of a second set of debates about independent

voices in the Argentine government structure. The press gave

prominent coverage to a shouting match at a public meeting in

February of the AGN's governing board. The Congress set up

the AGN to be headed by someone, currently Leandro Despouy,

named by the opposition to audit the GOA. At the February

meeting, Despouy thwarted efforts by Kirchner allies to limit

his authority in setting the agenda for the AGN and impede

publication of the agency's reports. Despouy noted that not

a single AGN report had been refuted in seven years, but

warned the AGN was at risk of losing its credibility as had,

he claimed, the GOA's controversial statistics agency

(INDEC). He identified the AGN report on overpricing in a

public works project awarded to Electroingenieria as the

leading factor prompting the GOA's move against him. The

report was posted to the AGN website on December 3, 2008,

after being approved and signed by all seven General Auditors

in Resolution 199/08-AGN and being submitted to Congress, but

it was removed in January when the GOA denied its existence



and content. On February 10, ""Clarin"" published an editorial

piece by Despouy in which he defended the AGN's record and

called attention to the administration's attack on

transparency as represented by its attempt to limit the

publication of AGN reports. The AGN report on

Electroingenieria was reposted online and remained available

as of early May 2009.



KIRCHNERIST ALLIES ATOP SIGEN AND ANTICORRUPTION OFFICE

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11. (SBU) President Kirchner in January transferred Julio

Vitobello, head of the National Comptroller's Office (SIGEN),

to take over as head of the Anti-Corruption Office (OA) in

place of Abel Fleitas Ortiz de Rozas, who died in December.

The OA falls under the Ministry of Justice and has

jurisdiction to investigate any use of state funds.

Vitobello was brought into the Kirchner administration by

former Cabinet Chief Alberto Fernandez. From 2000 to 2003 he

served in the Buenos Aires city legislature for the Peronist

Party (PJ) and from 1993 to 1997 he served as chief of staff

to the Interior Secretary. ""La Nacion"" said Vitobello had

opened the lowest number of investigations ever during his

2008 tenure at the head of SIGEN, part of a chorus of

accusations that Vitobello as head of the OA would not

fulfill his mandate to investigate official corruption

proactively and effectively. Vitobello is reported to be

close to the Kirchners and joins in weekend soccer games

organized by former president Nestor Kirchner at the Olivos

presidential residence. Vitobello was replaced in SIGEN by

the former adjunct Comptroller General, Carlos Pacios,

another official reported to be close to the Kirchners and

former Cabinet Chief Alberto Fernandez.



REAL ESTATE GAMES: ALL IN THE FAMILY

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12. (U) In the Kirchners' home province of Santa Cruz, the

investigation of a case against members of the administration

and thir allies in the business sector remains stalled. The

case focuses on the preferential sale of large properties to

approximately 50 top administration officials, including the

Kirchners, and pro-administration businesspeople during the

final years of the tenure of Nestor Mendez, the mayor of El

Calafate from 1995 to 2007. The investigation is in the

hands of prosecutor Natalia Mercado, who is the daughter of

Minister of Social Development Alicia Kirchner and niece of

former president Nestor Kirchner. The case began with a

formal complaint filed by local UCR leader and former mayoral

candidate Alvaro de Lamadrid and it focuses on the purchase

of municipal land by the Kirchners and close associates,

including Rudy Ulloa, Lazaro Baez, Carlos Sancho, Fulvio

Madaro, Natalia Mercado herself, Romina Mercado, Julio Ciurca

and Ricardo Etchegaray. Nestor Kirchner reportedly re-sold

two hectares (20,000 square meters) to a Chilean investment

group for US$2 million -- forty times what he paid after less

than two years. Lamadrid also alleges that the municipality

promotes a public works policy designed to benefit these VIP

landowners. Mendez is at the center of the case, accused of

abuse of authority and influence trafficking. Now a

provincial congressional deputy for the Victory Front (FPV)

party, Mendez insists the sales were legit.



COMMENT

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13. (C) Argentina's corruption scandals frequently make a big

splash at the outset, only to dissipate into oblivion due to

the languid pace of the ""investigations"" and the endless

juridical ping-pong to which they are submitted. According

to the local NGO Center for the Study and Prevention of

Economic Crimes, corruption cases in Argentina took 14 years,

on average, to be resolved and only 15 out of 750 cases tried

resulted in convictions (see also Ref B). At the FIA,

Garrido kept up a frenetic level of activity in launching

over 100 investigations, but he did not obtain a single

conviction in over five years. At the AGN, Despouy gets high

marks for maintaining high standards of integrity, but

questions persist as to the AGN's efficacy and impact. At

the OA, Vitobello's cozy chumminess with the Kirchners

suggests a conflict of interest, as does the court decision

in Santa Cruz to have the Kirchners' niece investigate

questionable land deals. Glaring weaknesses in key

components of Argentina's anti-corruption architecture point

to an emasculated institutional framework incapable of

providing needed checks and balances. For these and other

reasons, Transparency International again named Argentina in

mid-April among nine countries in the region that failed to

implement established anticorruption practices.



KELLY


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