EAVESDROPPING SCANDAL DRAGS ON, BUT NO SMOKING GUN

C O N F I D E N T I A L LIMA 000182

SIPDIS

E.O. 12958: DECL: 02/12/2019
TAGS: PGOV PREL PINR PE
SUBJECT: EAVESDROPPING SCANDAL DRAGS ON, BUT NO SMOKING GUN

REF: A. LIMA 1639

B. LIMA 1651

Classified By: Amb. P Michael McKinley for reasons 1.4b and d.


1. (C) Summary: In part two of the scandal that toppled Prime
Minister Jorge Del Castillo's cabinet in October 2008,
Peruvian National Police (PNP) recently arrested the
employees of a "security" company called Business Track for
illegally recording the private telephone conversations of
private sector and government officials. The release in late
January of 82 new audios reinvigorated the scandal while also
suggesting that illegal wiretapping activity was widespread
and largely in private "commercial" hands. The tapes and
relentless media scrutiny have so far revealed no evidence of
major corruption, but the scandal has nonetheless rekindled
public suspicions that corruption remains widespread. Much
speculation has focused on whether future information could
yet reveal a "smoking gun" and cause the government further
problems. While who requested the eavesdropping is not yet
known, the government may seek to contain the damage by
pinning blame on a single culprit. End Summary.

Eavesdroppers Identified
--------------

2. (C) In October 2008, the cabinet of Prime Minister Jorge
Del Castillo was toppled after the public release of audio
tapes implicating public officials and APRA-party insiders in
an "oil lots for financial kickbacks" scheme -- although to
date no incriminating information has surfaced on the
replaced Ministers (Refs A & B). At the time, most attention
was focused on the content, rather than the origin, of the
tapes. Part two of the scandal began in January, when the
GOP announced the arrest of several employees of Business
Track, a commercial security company that had allegedly
produced these and other illegal recordings of private
telephone and e-mail communications involving high-profile
Peruvians. Those arrested included Business Track CEO, a
former Navy Admiral named Ponce Feijoo, and two active and
two retired Navy intelligence personnel, as well as one
civilian company employee. Two other civilians reportedly
remain at large.

New Recordings, Privatized Eavesdropping
--------------

3. (SBU) Nothwithstanding the arrests, the scandal has
refused to fade. The late January public release by
journalist Pablo O'Brien of 82 additional recordings
reinvigorated the media hunt for government corruption. The
seemingly endless supply of confidential recordings has also
fed the impression that illegal eavesdropping had grown
rampant, that Business Track and other similar private oufits
had proliferated, and that nobody's secrets -- personal or
professional -- were therefore safe from potential public
revelation. Some analysts explained that "business
intelligence" firms like Business Track were creatures of the
post-Montesinos era. That is, sophisticated intercept
equipment that formerly belonged to Peru's once powerful
national intelligence services had passed -- by sale or theft
-- into private hands as the Fujimori-Montesinos regime began
to collapse in 2000. As a result, according to analysts,
illegal eavesdropping has become a predominantly commercial
enterprise today.

No Evidence of Major Corruption
--------------

4. (C) The tapes and the relentless media scrutiny have so
far revealed no compelling evidence of outright criminal
activity (apart from the illegal wiretapping itself) or
serious corruption. Many observers acknowledge that, however
distasteful the actions and manner of Romulo de Leon and
Alberto Quimper (arrested for influence trafficking when the
scandal first broke),their activities did not constitute
overt corruption or legally actionable crimes. Neither is
there evidence of real malfeasance on the part of any
government officials, including former Prime Minister Del
Castillo or former Health Minister Garrido Lecca. Even
Daniel Abugattas (protect),the Nationalist Party (PNP)
congressman who headed the special congressional committee
that investigated the first round of "Petro-Audios," told us
he was unable to discover evidence of legally actionable
corruption. He said this was the reason he had concluded in
his controversial final report that lifting the immunity of
and initiating a legal process against any of the government
Ministers accused was not justifiable in light of the facts.

But "Impression" of Corruption Strong
--------------

5. (C) At the same time, the scandal has rekindled public
suspicions regarding the way business is done in Peru and
reinforced the impression that corruption remains widespread.
Some observers have compared the contents of the secret
recordings to lifting a rock and seeing the critters crawling
frantically for the shadows. Others point to the figure of
Romulo de Leon -- an APRA-party insider and Minister in
President Garcia's troubled first government (85-90) -- and
say his continued presence on the scene gives the impression
that nothing has changed. That is, that the way to get ahead
in Peru is by exploiting one's personal ties with government
officials, that those who have such ties win -- contracts,
deals, money -- and that those who don't, lose out. Some
analysts also see in the current scandal a kind of distant
echo of the infamous "Vladi-videos" (in which former SIN
spymaster Montesinos was taped handing bundles of money to
political and public figures, literally buying them off).
While observers acknowledge that no act even remotely as
brazen has been revealed in the current situation so far,
there is nonetheless the impression that "we have seen this
thing before" in Peru.

Few Facts, Many Rumors
--------------

6. (C) In this sense, rampant speculation -- not principally
about what is already known, but about what may yet be
revealed -- lies at the heart of the scandal. One rumor, for
example, suggests that additional tapes revealing corruption
reaching the top of government have so far been covered up or
withheld. According to some sources, journalist Pablo
O'Brien has such tapes but has not yet released them out of a
fear for his life. Another rumor suggests a possible
official (government or military) connection with illegal
activities. That Business Track CEO Ponce and his number two
are former Navy intelligence officers, and Ponce reportedly
has close personal relationship with Vice President Luis
Giampetri, helped spark these rumors -- and even led to wild
media speculation (fed by the public comments of an
opposition Congressman) about supposed coup-plotting by the
military. (Comment: These rumors have proved wholly lacking
in substance. End Comment.)


7. (C) An apparent failed assassination attempt on Peru's
Attorney General Gladys Echaiz February 1 sparked another
wave of speculation about a possible connection to the
Attorney General's continuing investigation of the
eavesdropping scandal. Echaiz herself acknowledged that
attack could be related to the case while emphasizing that
her office oversees a number of controversial investigations,
including several high-profile drug-trafficking cases. Even
the impression suggested by the media coverage that illegal
eavesdropping has become rampant, however, turns out not to
be borne out by the facts of the case. According to
Congressman Abugattas and others, all the audio tapes that
have come to public light in the case so far connect back to
only two telephone lines, both of them belonging to Romulo de
Leon -- a seemingly more limited terrain. (Comment: There is
anecdotal evidence that illegal eavesdropping is
significantly more widespread than that strictly revealed in
this case. End Comment.)

Containing the Blame?
--------------

8. (C) Meantime, a critical unknown in the case remains who
ordered the wiretapping. There are competing theories in
this regard, and no clear answer -- yet. One centers on
local cement interests which, worried about prospective
competition from a Mexican cement company (Cementos de
Mexico),allegedly sought to confirm reports that their paid
lobbyist, Romulo de Leon, was playing both sides. When the
wiretapping did confirm this fact, they released the tapes in
order to embarrass Leon but failed to foresee the broader
problems the rash act would unleash. Another allegation says
a petroleum company had hired Business track to spy on its
competition. Our GOP and APRA contacts have generally
promoted the idea of this company's responsibility without
any substantiation. This story has yet to play out.
MCKINLEY