Costa Rican Ex-President Convicted in Historic Trial

by Arbol | October 6, 2009 at 11:00 am

339 views | 15 Recommendations | 1 comment

Costa Rican Ex-president Rafael Ángel Calderón Fournier (1990-1994), was found guilty of peculation in what was known as the Caja-Fischel case, which culminated in the largest corruption scandal and the first prison sentence for a former president in Costa Rican history.

The three judges in charge of the case voted unanimously for the sentence, which was read yesterday, October 5. Aside from Calderón, who got five years in jail for embezzlement, six other people were also found guilty of corruption and sentenced to serve between two and five years in prison. Only one of the accused, Olman Valverde, was found innocent beyond a reasonable doubt.

The Caja-Fischel case involved important figures of the Costa Rican Department of Social Security (CCSS - Caja Costarricense de Seguro Social, the government health care system) and Fischel Corporation (a private pharmacy chain), including the former CEO of CCSS, Eliseo Vargas, and former CEO of Fischel Corporation, Walter Reiche.

The sentence comes on the eve of the electoral campaign, where Calderón was a presidential candidate of the Social Christian Unity Party (PUSC - Partido Unidad Social Cristiana). However, during the court session yesterday, the court judges disqualified him to hold any public office and he resigned his candidacy, leaving the Party without representation for the 2010 elections.

The Caja-Fischel Case

It all began in 2004, when local newspaper La Nación uncovered that then-president of CCSS, Eliseo Vargas, was renting a property whose owner was Fischel's financial manager, Olman Valverde. The next day after the news came out, Vargas quit his office.

On May of that same year, the Public Ministry (responsible for defending legality and the interests of the State) raided all CCSS offices, along with Fischel's headquarters and Eliseo Varga's house.

On June, the Attorney General arrested Fischel's CEO Walter Reiche and Fischel's lawyer Rándall Vargas, for destroying valuable documentation related to the investigations that were taking place.

It was then known that Fischel Corporation had made some suspicious payments to a Public Limited Company in Panama, which was linked to Rafael Ángel Calderón. Later on during the investigations they discovered an elaborate plot involving ilegal "commissions" and a bid to acquire new medical equipment for CCSS's public hospitals, later called "Finnish Project".

Calderón was accused of being the mastermind behind a $39.5 million government contract (CCSS's second largest contract ever) with Instrumentarium Medko Medical, a Finnish medical supply company, of which some $8 million were deviated from its purpose by the former president to pay for what he called "commissions" to some highly ranked figures in CCSS and Fischel Corporation. Fischel Co. is the representative of Instrumentarium in Costa Rica.

It was Eliseo Vargas, a legislative deputy at the time the Finnish Project was being discussed in the Congress, who finally unveiled Calderón's involvement in the consolidation of the contract and the illegal payments he made to him and others, who pushed for Instrumentarium to win the tender.

The ensuing investigation discovered that, while Vargas was a legislative deputy, it was proposed to use a us$30 million credit from the government of Finland to purchase medical equipment from the Caja.

Former president Calderón is alleged to have sped up the deal which was finalized when Vargas became the executive president of the Caja.

The Corporacion Fischel was awarded the bid for the purchase made with the Finnish loan that had been expanded to us$39 million dollars, of which millions of dollars in commissions was funneled to the pockets of the accused.

However, Vargas later backed out and claimed his innocence during the court hearings, which lasted almost a year. On the contrary, Walter Reiche, who got 4 years in prison, confessed to the payments received and helped the Public Ministry put the pieces together in the corruption scandal.

The Finnish Project

Costa Rica purchased the finnish medical equipment to upgrade CCSS's public hospitals in 2002, after the Congress passed the 'Finnish Project' and approved the credit. The equipment was bought with a loan from the government of Finland, with a three year grace period and a ten year repayment schedule.

However, as Teresita Rodríguez, one of the court judges, said yesterday during the sentence, even though the equipment is being utilized fully and is of high quality, the accused clearly used the public loan for their own benefit:

By 2:35pm the faces of the accused showed their surprise at the sentence that was just read to them. The president of the court, followed with and explanation of their decision and how it was arrived at.

Teresita Rodríguez explained that the sentenced had defrauded the public, that even though it was beyond proof that the medical equipment purchased with the loan from the government of Finland was of quality and not overpaid and of benefit to people of Costa Rica and that the equipment is being fully utilized in social security hospitals, the accused took advantage of their position by receiving a commission on the deal that both the people of Costa Rica and of Finland must pay.

The Caja-Fischel trial and sentence open a new political era in Costa Rica, as one of the two traditionally strongest parties, PUSC, which was already on the verge of extintion, is left with no representation and no other well-known face to run for the presidential nomination, making it almost impossible for the party to recover itself from its disastrous results at the 2006 elections.

Calderón: Heritage Gone Wrong

The Caja Costarricense de Seguro Social (CCSS), most commonly called Caja, is in charge of the national health insurance and health care systems, and it's also one of the most distinguished and beloved government institutions in the country.

Ironically, Calderón Fournier, now convicted for embezzling it funds, is the son of Rafael Ángel Calderón Guardia, a Costa Rican historical personage and president from 1940 to 1944, who founded the CCSS and CR health care system.

Calderón Guardia, a member of the oligarchy, rose to power and immediately started introducing major reforms to the State. He established the Labour Code (introducing the minimum wage for the first time) and the Garantías Sociales (Social Guarantees) alongside the Catholic Church and the Communist Party. He also established the public University of Costa Rica (UCR).

Now, after the sentence that declared Calderón Fournier guilty of corruption, the memory of his father and the "calderonistas" may rest in peace -at least for the upcoming elections.

3 See all footage | View Slideshow

Share: email story | add to any | | facebook | stumbleupon