The Fight Against Corruption Is a Learning Experience

No one expected so many changes so soon. The battle against corruption has greatly altered the correlation of forces in favor of President Bolaños, and is turning into a major learning experience for everyone. It seems impossible, but it’s true. How far might it go?

Nitlápan-Envío team

March 21: Judge Gertrudis Arias charges former President Arnoldo Alemán with fraud against the state related to the Channel 6 case. April 23: The National Police captures former General Tax Division head Byron Jerez and takes him to jail in handcuffs to be tried for the same crime. May 4: Jerez is hit with a prison sentence for orchestrating the luxury vehicle scam.

These fraud cases have led to the imprisonment of various officials from the Alemán administration and the flight from justice of others, and resulted in the ascent of Bolaños and the descent of Alemán. Support for Bolaños is unanimous, while Alemán has declared that he "repents" ever having allowed Bolaños to be the presidential candidate of the party he controls. Just how far might all this go?

Impunity and state as booty

Over the course of March and April, ongoing revelations of the corruption scheme crudely organized around the "modernization" of Channel 6 had the population reeling. Investigations of and declarations by those who participated in this operation, whether innocently or with malice aforethought, kept leading to the presidential offices.

We were still reeling less than a month later when a new, even more hard-hitting chapter in the fight against corruption was played out in the TV news. It opened with scenes that until recently would have seemed fiction ripped from a grade B movie: the powerful Byron Jerez being questioned in court about his murky activities in the government’s all-powerful General Tax Division. The situation is without precedent. Never before in Nicaragua’s history have the two most solid pillars of national political culture—the state as booty and impunity for those who dip into it—been hit by laws instead of violence and from within the power structure. Simply challenging these pillars is, in itself, a magisterial lesson for the population on how a state ruled by laws and institutions that exercise control over the powerful is supposed to function. It is also teaching people the tight relationship that exists between the corruption of governors and the underdevelopment of the governed and the nation. They are extremely important lessons that have never before made it onto the national curriculum.

Rapid-fire lessons

To be able to follow the interminable stream of breaking news on the corruption cases, the population, with its meager legal understanding, is being forced daily to learn and memorize an unfamiliar institutional and legal terminology. Learning about prisoners’ rights, a lawyer’s functions, the stages of a legal suit and the contents and loopholes of a sentence is part of this great school, because it is all outside the curriculum of national experience. We are learning that both justice and injustice can swing on such procedural labyrinths and tiny details.
Although the numerous legal details are complex and it is difficult to understand the significance of all the evidence that appears in declarations and dossiers, the fundamental issue in the Channel 6 case was not lost on the population: former President Alemán is ultimately responsible, and he is free. And it did not miss the main point of the "SUV" scam either: the man who headed the tax-collection institution benefited legislators, politicians’ relatives, even a bishop—people who already enjoyed many other privileges—with high-ticket vehicles acquired with taxpayers’ money.

A common denominator

The conception that the state is a treasure chest to be dipped into to build or increase family patrimony has prevailed among Nicaragua’s political leaders during every government from the Somoza dictatorship through the Sandinista and Chamorro governments to the just concluded Liberal government of Arnoldo Alemán. Hand in hand with that conception is the feeling that this can be done with utter impunity. One of the central focuses of the Sandinista revolution, the most radical political process in Central America’s entire history, was the transformation of this patrimonialist conception of the state. And, indeed, there were signs of change in that direction in the first years, when the revolutionary leaders were still dedicated to laying the groundwork for the state and not to sharing its goodies. This incipient transformation did not become institutionalized because the FSLN never undertook an authentic internal democratization process that would allow for social control over the leadership. Because of this, the patrimonialist, or state-as-booty culture reemerged, its most public expression being the "piñata" as the FSLN was leaving office.

Thus, all four governments, with such dissimilar ideologies, had a common denominator. Their leaders not only lacked the political will to topple the two pillars but also maintained the perverse conviction that "anyone in power who doesn’t make personal use of that power is a fool." With a head so corrupted, the body followed close behind. This is why we are now such astonished witnesses to the first steps taken from within power in Nicaragua on this never-traveled road. For better or for worse—we still don’t know which—that pet qualifier that tends to round off so many analyses has never been more justifiable: the situation is one with "unpredictable consequences." What is happening now was unpredictable and is very positive, but nothing is defined yet, perhaps because the body being wheeled into the operating room has such an old, encysted and widespread tumor that it might not survive the surgery to extirpate it.

Transparency and the economy

Enrique Bolaños has known how to do his part, and do it well. He has not yet done it in the massive generation of jobs or in his tit-for-tat promise of credits in exchange for hard work to capitalize the thousands of small rural and urban producers, but he has certainly gotten off to an impressive start shaping up the government and launching a "moral restoration." It is difficult to calculate when the majority of the population will start to see any economic improvement, much less how far he wants to or will be able to take the war he is waging against corruption. But he has started his journey on firm footing, encouraged mainly by the total economic and political backing of the US government, the international financial institutions and the rest of the international cooperation community, factors of global power on which the weak Nicaraguan economy is totally dependent.

Although people expected the jobs and economic improvements more than punishment for the corrupt, seeing justice function, the corrupt acts already denounced by the media proven in detail and some of their perpetrators in the dock has been a breath of fresh air and generated great expectations. People are beginning to grasp that corruption and the economy are linked for many reasons. One of the more immediate and important ones is that the fight against corruption was a requirement set by the international community for continuing to provide economic backing to the Nicaraguan government.

It could be worse

On April 21st, in Bolaños’ much-anticipated speech and press statements to mark his first 100 days in government, the President offered some information that helped illuminate the still recessive and disheartening economic panorama.

The reduction of the fiscal deficit required by the International Monetary Fund as a condition for signing a new structural adjustment agreement with the government will not be as drastic as anticipated. On the contrary, it expresses an unprecedented flexibility on the IMF’s part, and even with the agreement still unsigned, various countries, led by Germany, have unfrozen disbursements. This has been very favorable for the government because part of the funds are earmarked to support the balance of payments rather than being tied to specific projects. The Alemán government was barred from this liquid form of international aid.

Bolaños explained how his government could ease the acute fiscal deficit within the current legal framework without having to request anything new from the conflictive National Assembly. One way is that the magnitude of tax exonerations is so great that just cutting them will substantially increase the amount collected without having to endure the political cost of establishing new taxes or increasing the rates.

All this means that establishing "order"—in the fullest sense of the word—in Nicaragua will also begin to lay a favorable macroeconomic base. The weakest macroeconomic point is still the domestic debt (equivalent to US$1.7 billion), such a challenge that Bolaños has asked US Treasury Department experts for advice.

Small is beautiful,
not just in Masaya

Meanwhile, the weakest point in re-igniting the economy is still rural production, for which the new government lacks the necessary bold policies, resources or institutions for dealing with small and medium producers, which will be hit by another drought caused by the El Niño phenomenon again this year, according to predictions. Addressing the rural challenge is strategic not only for economic reasons, but could have the added bonus of undermining Arnoldo Alemán, who still has strong political support in many rural zones.
The conviction that "small is beautiful" has yet to be introduced into Bolaños’ self-proclaimed "New Era." The hardworking household crafts shops that Bolaños knows so well and values so much in his native city of Masaya are not the only beautiful small businesses. No fewer than 500,000 small urban and rural enterprises all over the country are waiting for a similar appraisal and demanding support. It is of little comfort that there is money in the banks if the national private banking system has no credit technology for the rural sector. The powerful business magnate Carlos Pellas is Bolaños’ economic advisor for large international investments, but there is not as yet an equivalent figure, with similar resources and vision, to provide any answers for this half a million small national investments, so far left to their own fate.

An example and a major sign

In his formal 100-day speech—an event that neither Alemán, the leaders of his version of Liberalism or any representatives of the Catholic hierarchy opted to attend—President Bolaños stated that the fight against corruption "is not negotiable" and "will not be declinable." He explained that the international community is "tired of supporting Nicaragua given the mediocre results, the fact that Nicaragua has failed to comply with certain pledges and the corruption."
For pedagogical purposes, he gave a detailed example: The IDB still has a US$30 million loan blocked because Martín Aguado, a member of Alemán’s inner circle, was named Superintendent of Pensions during the former President’s government in violation of an express commitment to the IDB. (The Liberals modified the law ad hoc on the express order of Alemán, who wanted Aguado in this important post for the same reason as always: booty and impunity). It was an open case of corruption that was financially "punished" by international cooperation, and is not the only one.

President Bolaños also said in his speech, "It is sadly true that Nicaragua is listed among the most corrupt countries of the world. People know that corruption goes against their moral principles, costs money and damages their living standard. That is the pure truth. The public is now fed up and I’m on their side…. Another of the costs of corruption has been that people have no confidence in their institutions. My mission is to create that confidence. We must foster in the youth the conviction that success only comes by following the straight road…. Fighting the corruption of a handful is no cause for disunion, it is rather a reaffirmation of the moral unity of the majority, of both Liberals and the population as a whole. Morality, far from disuniting, unites us in the communion of principles and ideals, and counterpoises the undesirable road toward the tyranny of caudillismo."
Barely two days after this speech, we were stunned by the news that Byron Jerez had been put in jail. No act could have had a greater effect than the detention of that arrogant, super-powerful thief in demonstrating to Bolaños’ national friends and rivals and the international community that he is serious about the fight against corruption. If the arrest, trial and sentencing of Jerez for the luxury vehicle swindle rattled the PLC, among the population at large jubilation mixed with fear: ‘So, what comes next?’ Fear of the unknown also creates resistance to enrolling in this school.

Unbridled discretion,
the source of corruption

We are learning that the degree of omnipotent discretion, or liberty of action traditionally enjoyed by the President generates corruption. At the beginning, the present government itself assumed that the Channel 6 case, which was picked almost at random to kick off the fight against corruption, was small and symbolic. The idea was that it would be very useful for the first day of "anti-corruption class."
It would be instructive because it would reveal the prevailing modus operandi in the Alemán government. By telephone, in a corridor, at a dinner or through third parties, the President would order certain ministers or directors of government institutions to carry out a given activity with a diffuse purpose (in this case, issue checks with a dubious destination). All would obey him without argument and without requesting the order in writing, verifying the objectives or retaining any paperwork supporting the transactions...
The President’s omnipotent oral discretion to give and take, put in and remove anything in any government dependency has been habitual practice, not only in the Alemán government but in all that have preceded it as well. In this regard, the Channel 6 case has provided exemplary lessons. The foundations of "required obedience" have been called into question and perhaps from here on out the fear of prison will replace the fear of being fired. If so, it would begin to hamstring this caudillista practice that promotes authoritarianism and is a breeding ground for so many forms of corruption.

The immunity-impunity shield

The main underpinning of the impunity that provides public officials with the confidence to sack the state is an inveterate tradition that makes those with political or economic power untouchable. Nonetheless, the immunity law that protects appointed public officials and elected legislators has contributed even greater solidity to the pillar of impunity. Undoing this immunity-impunity knot is indispensable to Nicaragua’s democratization. In recent years, now above all, the population has begun to understand more clearly the serious consequences of this linkage.
All the public officials of the Alemán government ran for cover behind their shield of immunity between 1997 and 1999 any time Comptroller General Agustín Jarquín fingered them with responsibility for some corrupt act. In the Channel 6 case, it is scandalous that so many of these officials are now in prison for obeying Alemán’s orders in the Channel 6 fraud—some even reaping nothing personal from it—while Alemán and the two main executors of his operation, Communications Secretary Martha McCoy and Presidential Secretary David Castillo, remain free under guaranteed immunity. We have learned, more clearly than ever before, how impenetrable that shield can be.

Exemplary honesty

We have also learned that when an official acts honestly in a moment as crucial as the one we are in right now, that person establishes parameters that reduce the maneuvering room of the dishonest and oblige other officials to fall in line. The example persuades, but it also demands and obliges. Judge Gertrudis Arias is a case in point. She went into the Channel 6 case as a substitute judge and came out of it a national hero. But she herself said, "I was only doing my duty."
Arías’ example and the new government’s political determination left Judge Ileana Pérez no other choice than to follow suit only days afterward, requesting the National Assembly to strip ex-President Alemán, now National Assembly president, of his immunity so he can be tried in that same case. Nor did Judge Juana Méndez have any choice but to sentence Jerez in the vehicle swindle.

A carbon copy

Stripping Alemán of his immunity depends on the National Assembly’s board, which is controlled by PLC legislative representatives. Coming as no surprise to anyone, they closed ranks to protect their party’s political boss and honorary president. First, they scoured Judge Pérez’s request for any tiny technical flaw, which they found, and refused to accept the document. Once forced to accept it, they decided not to investigate anything. Next, they sent the request to the Assembly’s legal counsel office and finally they just filed it away.

This chain of procedures, which violates the Immunity Law from start to finish, was a virtual carbon copy of the one that Liberals and Sandinistas followed to protect FSLN leader Daniel Ortega, accused by his stepdaughter in 1998 of serious sexual crimes against her. It also evoked more recent events, when Ortega and several other FSLN legislators offered us their own new interpretation of what happened back then. As they shamelessly retold it, Ortega was always willing to renounce his immunity to stand trial and thus prove his innocence, but was blocked by the Liberals in the National Assembly who wanted this case hanging over his head as a means of pressure. They did not explain how he could be blackmailed by an accusation of which he insisted he could prove his innocence.

We have learned that fighting corruption is not an abstract principle; it is doing battle with very real and powerful individuals who do not hesitate to act or to lie about their corrupt actions. These people are thought of as "prominent" until the day they are summoned as defendants in a court case, or are mentioned in the declarations of a defendant or witness. The fight against corruption dethrones idols, opens wounds, generates contradictions. It is risky business.

Alemán reacts to the shift in the correlation of forces

The fight against corruption has quickly altered the correlation of forces that we forecasted would dominate the first months of the new government, and that we all imagined would favor Alemán. It has not happened that way, but Alemán is not going to give ground without a fight.
He is orchestrating a set of rather peevish counterattacks, such as calling President Bolaños an "oligarch" in a press conference, or referring to the Liberals who accepted appointments to Bolanos’ Cabinet as "ingrates" during a street demonstration Alemán organized on his own behalf." After hearing that his buddy Byron Jerez had been sentenced to prison, he went so far as to say that he "repented" having accepted Bolaños as the PLC’s presidential candidate and asked his sympathizers and followers to "forgive" him for that decision.
Alemán is also in a tactical retreat, at least from the press. Apparently fearful of being ganged up on by journalists or putting his foot in it, he stopped giving his weekly press conferences as president of the National Assembly and limited his chairing of the parliamentary plenary to only two days a week. Last but no less silly for that, he had a tunnel of polarized glass built so he can enter the Assembly building and cross to the presidential table without bumping into any journalist.

This hunkering down, not at all like his usual confrontational style, is a method applied only in Managua and toward the media, which, particularly in the case of television coverage, concentrate their activity in the capital. Outside, he is feverishly touring the municipalities pumping up the PLC grass roots to back his leadership and question and criticize that of President Bolaños. He wants to make it clear to Bolaños that if he does not stop giving his exemplary lessons they will make life very difficult for him because he has Conservative origins, is nobody without the PLC machinery and needs the Liberal bench to pass laws through the National Assembly.
What that would mean concretely is not yet clear. What is clear is that Alemán is in full battle dress, changing local party structures and leaders to ensure that the grass roots will not abandon him. He maintains that he has not given up his strategic plan to be the PLC’s candidate in the 2006 presidential elections—in which he is assuming that his opponent will be the inevitable Daniel Ortega—and is already preparing for that great face-off.

Although Enrique Bolaños’ new leadership and the fight against corruption has eroded Alemán’s own leadership, it is still quite strong within the party, because its roots are solidly sunk into the bedrock of caudillo political culture. This allows those who know him best to claim that if he can ride out the first wave of the anti-corruption struggle, he could run and even win in 2006. At the very least, this scenario cannot be ruled out given the fragile, inconsistent and ephemeral memory that accompanies political learning in Nicaragua.

Sugar and taxes

One legal tactic that has stood out in Alemán’s offensive is aimed at affecting the powerful Pellas group, which provides Bolaños’ main national economic backing. Thus, the PLC introduced a new bill to eliminate the protective tariffs historically enjoyed by national sugar, arguing that it will lower the price of sugar to national consumers by opening the market to international competition. Even on the face of it, that is a shortsighted motive for a country with Nicaragua’s high unemployment, an export production crisis and widespread poverty. It will only favor consumers at the very beginning, and will adversely affect thousands of sugar workers and their families. The real beneficiaries will be the global sugar dealers. And therein lies the real tale: the oligarchic and Conservative Pellas group dominates Nicaragua’s sugar empire and there is little that Alemán would enjoy more than seeing it crumble. The bill drips with the revenge of the uncouth, upstart nouveau riche who feel looked down upon by the oligarchy, an attitude—quite accurate, in this case—that has characterized Alemán and his inner circle since he was mayor of Managua.

Byron Jerez employed a complementary tactic in his attempt to demonstrate to the court that we are all corrupt and defrauding the state. He revealed that the "economic advisers [the Pellas family] to the anti-corruption czar [President Bolaños]" had paid no taxes on the construction last year of a $36 million mini-skyscraper in Managua that houses all of the headquarters of the Pellas group businesses. Jerez knew it to be true since he was the one who conceded the exoneration, a secret he had guarded closely because it was done on instructions from then-President Alemán.

A Pandora’s Box

If we are all corrupt, then no one is corrupt. If we are all sullied, everyone is equally clean. This was the de-moralizing discourse and practice that Alemán and his cohorts employed over the past five years. Many people—now demoralized in all senses of the word—worry that Bolaños’ offensive will open a Pandora’s Box from which will spring so many cases and names, so much muck, that it would be best to shut it right back up and start again from scratch. Some fear having to pay the price for their own participation in the corruption, but virtually all fear having to deal with the truth.

Behind Jerez’s revelation lies another truth we must learn from: state corruption could not exist without close links to the private sector. Many private sector agents, particularly the larger ones, benefit from corruption and even depend on it. Many names of banks, vehicle distributors, businesses and individual entrepreneurs have come up in the vehicle case. It is likely that more Pandora’s boxes will be opened as new cases are investigated and new court trials uncover new leads. Closing them without trying to learn their lessons would only help keep us from passing this indispensable course of study.

One escaped the pact’s cage…

We have learned that corruption cannot be successfully fought by a lone ranger with a silver bullet. There is a need for laws and the political will to apply them, as well as institutions and an institutional fabric. To start his fight and teach its lessons, President Bolaños has arrived at the classroom hobbled by an extremely limited institutionality. The causes for this are both the age-old imprints of a political culture built on the two pillars mentioned and the more recent ones of the Alemán-Ortega pact, based precisely on sharing that corruption and giving their two parties co-control over all institutions that might collaborate in any moralizing effort. The judicial terrain, for example, is strewn with the pact’s prints.

Shortly before the elections, the Office of Public Prosecutor for the Republic (in some countries known as the Public Ministry) was created and given some functions previously assumed by the Attorney General’s Office, in which the former now defends the citizenry and the latter the state. The authorities of the new institution were elected in accord with the pact: the public prosecutor a Liberal and the deputy a Sandinista, respectively loyal to their own caudillo, of course. The authorities of the pre-existing office, however, remained directly in the hands of the President. Bolaños announced while still campaigning that, if elected, he would name Oscar Herdocia, a reputable jurist, as attorney general. Many, stained by the pessimism that Alemán’s institutionalized hyper-corruption has wrought, concluded that it would be a more symbolic than effective appointment because, with Alemán heading the legislature, Herdocia’s office would be converted into little more than the state notary.

We were wrong, at least so far. The institutional structure buttressed by the pact, on which Alemán relied, remains intact in the National Assembly, the Comptroller General’s Office, the Supreme Electoral Council and the Supreme Court. But a loophole in the law made it possible to protect the Attorney General’s Office. This has taught us how much power the law can wield when there is the political determination to stand behind it. And when that happens, the population is taught an important lesson about what a rule of law decidedly on the side of transparency actually means. One tangible thing it means is that the Attorney General’s office was so tough and effective in the Jerez case that the European Union rewarded this office with US$250,000 in support funds after his arrest.

With Herdocia very ill right now, Deputy Attorney General Francisco Fiallos has been filling in for him. Fiallos has publicly reiterated that "we want to investigate what happened in the corruption cases, punish those responsible and recover the public resources that were lost." If it is not the first time in Nicaragua that acts of corruption have been investigated and the lost goods recovered, it certainly is the first time that the thieving officials are going to jail for it.

…but they are still set
on clipping its wings

Upon suddenly finding himself up against a hard-swinging, quick-acting institution in the struggle against corruption, Alemán’s other legislative tactic is thus based on annulling the attorney general’s effectiveness. His first approach was to promote an "authentic interpretation" by the National Assembly of the law creating the office to lop off the problematic attributions that allow it to open penal cases against public officials.

On May 8, however, the FSLN representatives to the Assembly revealed a different approach, announcing to the plenary that they had reached consensus with the PLC legislators controlled by Alemán on reforms not to the Attorney General’s Office but to the Comptroller General’s Office. They claimed that these reforms would strengthen this government auditing institution by returning some of the faculties President Alemán removed in 2000. Underneath the reassuring language, however, it is just a case of breaking into the same house through the back door instead of the front. Under this new initiative, Herdocia’s institution will be unable to go after a public official for acts of corruption without the Comptroller General’s Office first investigating the alleged crime.

In any reasonable institutional setting, this could be viewed as a legitimate approach. But in Nicaragua the problem is that the Ortega-Alemán pact paved the way for restructuring the Comptroller General’s office into a five-person collegial structure in which three comptrollers answer to Alemán and two to Ortega. Since then, this institution has at best acted slowly and ambiguously, always in the interests of the pact without any benefit whatever to Nicaragua. At worst, when the interests of the two sides in the pact do not coincide, the institution becomes paralyzed or conflictive.
In response to this succession of irresponsible and self-serving initiatives, Attorney General Herdocia issued a declaration in which he firmly rejected either option. Among other things, he said, "The Office of Attorney General is the active judicial and legal arm of the government of the Republic, of the state itself. If the intent is to annul its effectiveness, they will be depriving the state of an effective weapon of its executive branch. It would be a technical coup in favor of corruption and we would lose the capacity to sanction corruption, which is the spearhead of Enrique Bolaños’ government. It is evident that a certain power group fears the actions of the Attorney General’s Office. If they reform the law governing the Comptroller General’s Office and that reform somehow hobbles the actions of the Attorney General’s office, what they will be doing is decreeing a state of corruption. The Comptroller General’s Office has not lost effectiveness due to its governing law, but due to the lack of coordination and common cause among the people who run it."

A spinning top opens
the war of words

While all this was going on, Bolaños held a breakfast meeting with Alemán, also attended by other PLC leaders. Hours afterward, Bolaños surprised public opinion and infuriated Alemán backers by declaring that the former President was "very well behaved," explaining with obvious satisfaction that it was "like when we play with those tops that work so well you can spin them on a fingernail."
Bolaños wrapped up by asking the pro-Alemán media—Radio La Poderosa, the newspaper La Noticia and a bulletin called Trinchera—"to make peace with me." As was to be expected, and as Bolaños surely calculated, the condescending top metaphor worked like a declaration of war between the two already-hostile camps within the PLC. Those on Alemán’s side had already spent two weeks threatening to "switch to the opposition" because they do not feel represented by the Bolaños government.

Once the lawsuit was filed in the Channel 6 fraud case, Alemán announced that henceforward he would only make declarations on La Poderosa radio station, of which he has been the sole owner since it was founded at the end of 2000. La Poderosa currently broadcasts a virulent discourse of opposition to President Bolaños and unconditional backing for Alemán. Jorge Solórzano, auxiliary bishop of Managua, acknowledged on April 11 that the station’s frequency is registered to the Archdiocesan Social Promotion Commission (COPROSA), but lacking resources to put it on the air "for evangelization," it was "given for use" to an Alemán government official who had requested it from Cardinal Obando. The bishop refused to identify the official. Meanwhile, an investigation by the Comptroller General’s Office offered a preliminary estimate that the tax exoneration on the vehicles, many of them high-ticket, that came into the country through COPROSA for religious officials as well as people and activities unrelated to the Catholic Church was around US$57 million. In a communiqué, the Archdiocese of Managua attributed the news about COPROSA to "attacks from a small and isolated sector of some separated brothers from a clear political tendency and some media with resentments toward our Holy Mother Church."
The top Liberal leaders made unusually defaming declarations, even for this war of words, in a document published in the pro-Alemán media. Among them, this: "The Liberal Party is willing to collaborate to see that there is zero tolerance toward corruption in our nation. But it must be remembered that much of what is perceived as corruption were only efforts to mobilize financing to cover the political costs that, among other things, brought you [Bolaños] to power." With that, they inadvertently confessed to something widely suspected during the electoral campaign: that it was financed with acts of corruption expedited by that historic breeding ground of corruption, the confusion between state and party. Bolaños defended himself by stating that all expenditure for his presidential campaign had been recorded "to the penny" and was totally separate from the campaign of the PLC legislative representatives.

To counter this attack and give signs from within the PLC of support to President Bolaños’ anti-corruption struggle, his Vice President, Liberal leader José Rizo, promoted a signature campaign for a Liberal Manifesto that was published widely in the media. It contains the following concepts: "The fight against corruption is a Liberal initiative taken by a government largely made up of authentic Liberals faithful to their ideology…. We regret that some Liberals are among those tried for corruption…. The majority of our country’s Liberals are honest individuals…. Corruption in Nicaragua has always existed and was found at very high levels in previous governments, above all when we were governed in a totalitarian manner, without a publicly known budget, without an effective Comptroller General’s Office, without accountability to anyone…. We Liberals must assume this struggle with genuine pride, not forgetting that Liberals like ourselves initiated it and are promoting it from within the government elected by the vote of Liberals and other citizens with a democratic vocation and love of the country…. Let’s struggle against corruption following the example of incorruptible Liberals like José Madriz, Benjamín Zeledón, Augusto C. Sandino and Ramiro Sacasa Guerrero." Alemán lashed out at Rizo and ridiculed the text for the few signatures backing it.

From breakfast to dinner

The working breakfast was soon followed by a working dinner. Bolaños invited 13 Liberal legislators, several but not all of them well-known pals of Alemán, to discuss the plan for the coming agricultural cycle. Only three dared attend, while Alemán told the others not to go, assuming Bolaños wanted to divide them. For his part, Bolaños publicly interpreted their absence as a "lack of britches," a serious rebuff and an "open declaration of war." But, optimistic and secure, knowing the support he enjoys, he stated that he will fight this war and win it, and will follow through in the war against corruption, "squeezing every pimple in this country until all the pus is out." But there is so much it is disgusting, and if his campaign goes after it all, who will be left unbruised?
Although the obvious political reasons for this war are based on the anti-corruption struggle, which so strongly affects Alemán’s circle, deeper ones have to do with the efforts of a group of Liberals to democratize the party and break loose from the culture of political bosses and patronage. They are convinced that nothing could be more effective in assuring the party’s continuance in power for decades.

The personal reasons for this war also run deep. Bolaños and Alemán are both skilled rightwing anti-Sandinista politicians, but their styles are utterly different: squandering and ostentatious vs. austere and ordered, vulgar vs. subtle, swaggering caudillo vs. elegant businessman, and 19th century vs. 20th century. (The 21st century has not yet reached Nicaragua.)

Use vs. manipulate

With the doors to the anti-corruption school swung wide, some civil society organizations, Sandinista leaders more or less distanced from Ortega and independent leaders of the FSLN’s electoral alliance known as the Convergence decided to try to use this opportunity to organize a street demonstration against corruption. Their argument is that only sustained popular mobilization will push Bolaños to go all the way in this struggle and punish those responsible for the crimes being discovered, especially Alemán and the iron circle surrounding him.

Wanting to capitalize on the moment and manipulate the sentiments it is triggering, Daniel Ortega and the FSLN have also put themselves forward as champions of the anti-corruption struggle, trying to piggy-back these groups. Their mobilizing call is different: the fight against corruption must be a fight against neoliberalism, arguing that the neoliberal model is the root of both the corruption and the poverty.

Marches vs. surveys

It is hard to imagine that Bolaños will not go as far as he can in this fight, since he is supported by the international community, and most importantly the US government, which is still orienting the initiative that it triggered off by canceling Jerez’ entry visa. Given his style, Bolaños trusts this support and the surveys he periodically has his government team conduct to take the pulse of public opinion more than he does street demonstrations, however noisy and massive they might be. The surveys conducted days before Jerez was jailed indicate that 97% of those polled back the anti-corruption struggle he has initiated.
On the other hand, mechanically linking neoliberalism and corruption while ignoring the historical political culture, with its two firm pillars of state-booty and impunity, has no educational value. It is simply a rather thin smoke screen behind which the FSLN is attempting to hide the acts of corruption committed by so many of its own leaders while in government, and especially when they had to give it up in 1990.

Clean cause in dirty hands

Any mobilization against corruption called, led or even promoted by the FSLN and Daniel Ortega takes on a distorted quality. A clean cause will not be carried very far in dirty hands at this critical juncture in the nation’s development.

The FSLN’s anti-corruption positions make both the Liberal population and the bulk of Sandinista sympathizers not aligned to the FSLN uncomfortable, even indignant. In fact, many are waiting to see if the anti-corruption fight gets around to the FSLN leaders before they will be convinced of its importance, impartiality and effectiveness. Corruption runs so deep in Nicaragua that any attempt by a political group as discredited as the FSLN to manipulate it gets in the way of the effort to uproot it.

The Attorney General’s Office seems determined to file suit for some of the corruption cases related to the Sandinista "piñata," the term used, at least in its minimalist version, for the self-appropriation by individual Sandinistas of important state goods and properties. (There are those, of course, who use it to refer to any and all property transfers, including the agrarian reform, from day one of the revolution.) Deputy Attorney General Francisco Fiallos has referred to the piñata as "the largest collective theft in Nicaragua’s history." He adds that his office is studying some cases it believes have not been prescribed "because their consequences are still in effect, and because the right to property is a human right and human rights violations cannot be prescribed." If some of these cases, or others involving FSLN leaders, are threatened, it could breathe new life into the PLC-FSLN pact, revealing even more clearly what the pact’s real roots were.

The pact is waiting in the wings

While the court’s request to the National Assembly to strip Alemán of his immunity was being relegated to some dusty shelf, the subject was reportedly busy exploring the possibility of some agreement with Bolaños: Alemán would resign as president of the National Assembly and even abandon the political stage for a while, in exchange for losing the evidence being presented against him in the Channel 6 case or any other. He was requesting nothing short of a "graceful exit" without losing the guarantee of immunity and impunity.

Covering all bases, Alemán also explored the Daniel Ortega angle. He found him comfortably ensconced in the role of spectator, at least for the moment, contemplating what was unfolding, assessing what had already happened, measuring costs and benefits before deciding which position to take on the playing field.

Bolaños needs the FSLN’s vote in the Assembly—which Ortega has already put at his service more than once—but the last thing he needs or wants is an alliance with Ortega. The FSLN represents no threat to Bolaños right now, either politically or economically. Following the bankruptcy of Interbank and the accompanying crisis of the Sandinista economic power constructed around the Centeno group, and without the electoral victory that would have allowed the FSLN to restructure that power from within the state, the party finds its capacity to pressure rivals and influence the country much more limited. In addition, as long as Sandinismo remains captive to Ortega and his leadership style and objectives, as the electoral process showed that it currently is, Bolaños will have the luxury of asphyxiating it without even having to confront it.
A far more serious threat to Bolaños would be a reactivation of the Alemán-Ortega pact. That threat is waiting impatiently in the wings, as we learned on May 8, when the FSLN legislators announced their consensus with the pro-Alemán PLC bench regarding the Comptroller General’s Office. That agreement, which would hobble the Attorney General’s Office by harnessing it to the Office of Comptroller General, reminds us that the pact is alive and well, ready to write new chapters of impunity.

Can we assimilate
so many lessons?

We no more than finish our homework each day than we are presented with a new lesson the next. The fight against corruption is churning out news as worrying as it is encouraging, and at a dizzying velocity. As new and unexpected as the situation is, it is also risky. In what President Bolaños has called an "offensive"—which we think would be better understood as a school—we are obliged to sit through intensive courses and learn many lessons, some of them very painful. Will we have the capacity to assimilate so much in such a short period? And if the school keeps its doors open longer than the two months declared by Bolaños and the economy fails to climb out of its recession, will we have the energy and the desire to continue attending class?

The Bigger They Are, the Harder They Fall

At 5:30 in the evening of April 23, the police nabbed Byron Jerez, head of the former government’s General Tax Division (DGI), in a spectacular police operation as he was apparently on his way to the airport with a satchel full of money. He had previously been "absolved" for the now famous "check scam" in a very shady court deal, and it took international pressure to pry him loose from his illicitly lucrative post. The new government showed no such leniency. He was thrown in jail after the Attorney General’s Office accused him of fraud against the state for buying and selling luxury vehicles to third parties with DGI credit notes. The Attorney General’s suit only covered 36 of the vehicles in a fraud at that point calculated at just under US$1 million of the taxpayer’s very hard-earned money. The number of vehicles involved is now being tallied at well over twice that amount.

The sight of this physical and moral clone of Arnoldo Alemán being escorted to jail in handcuffs, surrounded by uniformed policemen, caused a commotion in the country. Jerez had been in the limelight again since January of this year, when the United States cancelled his US entry visa for laundering money through US banks, but he had been free to move about as he pleased and even traveled to Panama at one point.

In accepting the suit, the judge issued a warrant to search his belongings, which provided the Attorney General’s Office with hordes of evidence (documents, computers, checks, credit cards, bank documents and passports).
This could lead to new charges and expose the raft of businesses that Jerez directed with a little help from state resources. Much of this evidence is like a breadcrumb trail straight to Alemán, Jerez’s long-time intimate friend and co-conspirator. Another court order was issued to embargo his goods, freeze his bank accounts in Nicaragua and investigate the accounts he has abroad. Meanwhile, the US ambassador to Nicaragua clarified that Jerez’s arrest was unrelated to the investigations the US government has conducted into his activities.
Jerez tried to put off his court testimony claiming serious gastric disorders caused by an operation to lose weight. Nonetheless, exactly a week after he was apprehended, Jerez was questioned for over four hours, which was broadcast live on many radio stations and TV channels to record audiences. He admitted having made continuous use of DGI credit notes to buy vehicles and claimed that this had been a common practice in Nicaragua for half a century. But he sidestepped the real root of the crime: the vehicles went to individuals, not the state.

On May 4, Jerez was sentenced to prison. The previous day before the Attorney General’s Office had introduced yet another charge against him, again for trafficking in credit notes and checks, this time supposedly in favor of the former state telecommunications utility ENITEL rather than Channel 6. Miami-based businesses owned by Jerez and his brother, many of them existing only on paper, were the final destination of these shuffled funds—calculated at some US$3.5 million. Various other top officials of the Alemán government were also fingered for their involvement in this scheme.

Meanwhile, as the threads in the Channel 6 corruption case, discovered in March, continued to be disentangled, it became increasingly clear that even more was at issue than the already serious defrauding of the state. Behind that was a scheme that is more political than financial, and more articulated than was originally thought. On the visible level was the US$1.3 million skimmed off for the unfulfilled "modernization" contract between Channel 6, Nicaragua’s state channel, and an agency of TV Azteca, a Mexican corporation, promoted by two well-connected Mexicans who are now on the run from Nicaraguan justice. Under cover of that swindle, however, Arnoldo Alemán had crafted a complex plan to gain control of no fewer than eight private Nicaraguan TV channels, an objective very much in accord with the needs of a President who, all his power notwithstanding, never had quality mass media on his side.

A second verdict on the Channel 6 case, handed down on May 3, saw six more Alemán government officials join the four already sentenced to prison. Among them was former treasury minister Esteban Duquestrada, who fled to the United States when the case first broke. Other friends and former government officials in Alemán’s inner circle who also fled when the first shot was fired in the anti-corruption war included Jorge Solís, whose entrance visa was canceled by the United States for money laundering, just as Jerez’s had been.

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