URUGUAY: ALLEGATION OF VENEZUELAN FINANCING

C O N F I D E N T I A L MONTEVIDEO 000508 SIPDIS STATE FOR WHA/BSC MARY DASCHBACH E.O. 12958: DECL: 09/02/2019 TAGS: UY VE PREL SUBJECT: URUGUAY: ALLEGATION OF VENEZUELAN FINANCING TOUCHES PRESIDENTIAL ELECTION CAMPAIGN REF: A. MONTEVIDEO 437 B. MONTEVIDEO 468 Classified By: CDA ROBIN MATTHEWMAN, FOR REASON 1.4 (B) Summary: -------------- ¶1. (U) An Uruguayan judge has initiated an investigation into the sale of books at enormously inflated prices to Venezuela by a company with possible ties to ruling Frente Amplio (FA) presidential candidate Jose Mujica, leading to accusations by opposition politicians that the money may have been funneled from the Venezuelan government to fund Mujica's campaign. The investigation was publicized by opposition National Party Senator Ruperto Long two days before Venezuelan President Hugo Chavez cancelled a planned visit to Uruguay only hours before he was scheduled to arrive. The response of the Uruguayan public to the scandal has been muted, with media coverage now eclipsed by a variety of other politically based charges. End Summary. Venezuela: Using Books as a Cover for Campaign Funding? -------------- -------------- ¶2. (U) Graciela Gatti, a judge specializing in financial crime, began an investigation of the Uruguayan book manufacturer Apliser S.A after receiving an anonymous envelope with information concerning the company in early July. After its creation in January 2008, the firm went for a full year without international sales before suddenly becoming the 21st largest exporter in the country in the first half of 2009, with over USD 32 million worth of books sold to a Venezuelan buyer. In her investigation, Gatti found that the books, which are labeled as textbooks for a course on territorial zoning and marked with the logo of the Simon Bolivar Geographic Institute of Venezuela, were printed at a cost of USD 5.85 each, but sold for USD 498 per book. The official purchaser, Inversores Ganesa C.A., is a Venezuelan company involved in poultry imports and exports. ¶3. (U) Apliser S.A. is connected to the Frente Amplio presidential candidate through its former president, Alfredo Alvarez Saavedra, who is a first cousin of Mujica's wife, Senator Lucia Topolansky. Due to the suspicious nature of the purchases and the company's links to the Mujica campaign, National Party Senator Ruperto Long initiated a public investigation on August 26, alleging possible linkages between the $30 million gap between Apliser's costs and revenue and Venezuelan President Hugo Chavez's propensity to indirectly fund presidential candidates in various countries. Shortly after the investigation began, Long reported a break-in at his Senate office, alleging that intruders had rifled through his papers and binders. In response to Long's accusations, both Mujica and Topolansky denied any connections with Apliser, with Topolansky telling local media that she has 52 cousins and is not familiar with what all of them do. Associates of Alvarez Saavedra also reminded press that he left the firm in November 2008, prior to the sudden upsurge in trade with Venezuela. The Venezuelan Embassy pointed out that the company may simply have been one of many taking advantage of Venezuela's dual exchange rate regime. Chavez a No-Show in Montevideo -------------- ¶4. (U) Two days after the story first broke, Chavez cancelled a hastily arranged trip to Uruguay (hours before he was set to arrive in Montevideo). The Venezuelan president had been scheduled to inaugurate the Uruguayan Cancer Institute, to which his government had donated USD 3 million. Venezuelan Ambassador Franklin Gonzalez told media that Chavez had decided to postpone his visit until after October's presidential elections, so as to keep from being a focus of those who could try to reap political dividends from his presence. Does This Purported Scandal Have Legs? -------------- ¶5. (SBU) Media interest in the investigation has tapered off in recent days, with most recent stories ignoring the possible connection between Venezuela and the Mujica campaign and instead treating the matter more as a run-of-the-mill money laundering issue. This is largely because the connection to Mujica appears tenuous and few believe that Mujica needs money for his campaign. After an initial flurry of press coverage, the Apliser story has largely been replaced on the front pages of local newspapers by the case of the former mayor of the Department of Durazno, who the Vazquez government accuses of mismanaging funds designated for flood victims in 2007. Comment -------------- ¶6. (C) Since visiting Venezuela in mid-2008, Mujica has appeared to avoid public alignment with Chavez, both through his rhetoric and his schedule. He has made well-publicized visits with the center-left leaders of Chile and Brazil (ref B),but has no plans to travel to Venezuela or Ecuador and Bolivia. The National Party's pouncing on teh Apliser case, and the collective sigh of relief when Chavez cancelled his trip to Uruguay, indicate that it is a good political strategy. Matthewman