US embassy cable - 04SANTODOMINGO6308

C O N F I D E N T I A L SECTION 01 OF 02 SANTO DOMINGO 006308 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CAR (MCISAAC) 
 
E.O. 12958: DECL: 11/19/2014 
TAGS: KJUS, PGOV, DR 
SUBJECT: GODR ATTORNEY GENERAL TARGETS VEHICLE SCAM 
PARTICIPANTS 
 
Classified By: Michael Meigs, Economic/Political Counselor, reasons 1.4 
 (b) & (d). 
 
 1.  (U)  Summary.  On November 18 the Dominican Attorney 
General filed charges against 12 former officials and members 
of former President Mejia's party faction, all of them with 
ties to El Plan de Renovacion de Vehiculos (Plan RENOVE), a 
government program created in 2000 by the Mejia 
administration to finance the modernization of vehicles for 
public transportation.  Of those implicated, two were 
ministers in the Mejia administration and one was Secretary 
of the Armed Forces under President Balaguer.  Leaders of the 
Dominican Revolutionary Party (PRD) met immediately to 
denounce the arrests as  politically motivated.  End Summary. 
 
2.  (SBU)  Dominican Attorney General Francisco Dominguez 
Brito levied various charges of falsifying public and private 
documents, fraud, embezzlement, bribery, and conspiracy 
against 12 "friends of Hipolito" yesterday.  The 
investigation into the Plan RENOVE project established in 
2000 by President Hipolito Mejia was led by the 
Anti-corruption Department of the AG,s office, a department 
that drifted into virtual nonexistence under Mejia but has 
now reemerged in the second Fernandez administration as one 
of its forward leaning entities in the fight against 
corruption. 
 
3.  (U)  The three most prominent figures charged in the 
scandal are Pedro Franco Badia, former Minister of Interior 
and Police under Mejia, Siquio Ng de la Rosa, former Director 
of Migration and Minister without Portfolio under Mejia, and 
retired Admiral Ramon Emilio Jimenez,  Secretary of the Armed 
Forces under President Balaguer.  The former director of Plan 
RENOVE, Fabio Ruiz Rosado, is also one of the named 
defendants. 
 
4.  (U)  All defendants are accused of profiting from a 
program developed to upgrade the public transportation fleet. 
 Less than two weeks after taking office in August 2000, 
President Mejia signed an executive order creating a program 
of low interest loans for the purchase of vehicles to be used 
for public transportation.  The program was controversial 
from the outset.  In April of this year the Dominican 
Comptroller General denounced serious irregularities in the 
accounting practices and financial operations at Plan RENOVE, 
and newspapers headlined accusations of fraudulent loans, 
missing funds, and vehicles  purchased for the personal use 
of friends and family of Plan RENOVE officials. 
 
5.  (SBU)  President Mejia was quoted at the time as saying, 
"if there is an act of corruption, the (responsible 
individual) will go to prison."   Mejia later backed off 
those statements and commented that the auditors of Plan 
RENOVE should be the ones incarcerated.  Mejia's attorney 
general at the time, Victor Cespedes Martinez, said that the 
audit must have been falsified; he maintained that if there 
were sufficient evidence of this, the drafters of the audit 
would be brought to trial.  No charges were filed against the 
auditors or any other parties.  The story lost steam in the 
press and Plan RENOVE was on the back burner until yesterday. 
 
6.  (U)  The Attorney General's office had all officials 
arrested yesterday and is requesting that the investigating 
magistrate deny them bail.  The accusation is that the frauds 
perpetrated by the defendants resulted in a loss to the 
government of one billion pesos (US $ 33.33 million).  (Some 
of these losses may affect foreign banks that loaned to the 
program, including the Import/Export Bank of Korea, the Ing. 
Bank of N.V. of Seoul, the Ing. Bank of Amsterdam, and 
Nataxis Popular Bank.)  A bail hearing is scheduled for 
November 19, 2004.  The AG,s office also charges that at 
least 100 vehicles purchased with Plan RENOVE funds, with a 
value of US $ 3.5 million, cannot be located. 
 
7.  (U)  Leaders of the Democratic Revolutionary Party (PRD), 
including former President Mejia, met immediately after the 
charges became public.  Mejia called the move "part of a 
show," implying that the Fernandez administration is trying 
to discredit Mejia's administration and the PRD.  PRD 
Secretary General Vicente Sanchez Baret accused the AG,s 
 
SIPDIS 
office of arresting the defendants without cause and 
infringing on their due process rights.  He said the PRD 
would pay for the costs of the defense. 
 
8.  (U)  Badia went one step further, asserting that 
President Fernandez ordered his arrest in retaliation for his 
months-old accusation that Fernandez had received checks from 
the now defunct Baninter.  "In an abuse, the President of the 
Republic has ordered my arbitrary detention."  Ruiz, in what 
could be perceived as an admission of involvement in fraud, 
told the press that although many have been implicated in the 
case, those with ties to the current administration have been 
excluded from the investigation. 
 
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Comment 
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9.  (C)  Our sources have long told us that Plan RENOVE was 
corrupt, a source of graft and an easy means of putting cash 
into the hands of PRD party faithful.  The fact that credible 
allegations of misappropriation of funds were made while 
Mejia was still in power lends credence to the AG,s charges. 
 The Fernandez administration has made the fight against 
corruption one of its pillars, and Plan RENOVE participants 
were a logical choice to target for investigation.  Early 
indications are that the AG,s Department of Anti-corruption 
has evidence that can be used to convict some, if not all, of 
the named defendants.  Whether a weak judicial system will 
withstand political pressure in these high interest cases is 
an open question. 
 
10.  (C)  We expect continued posturing in the press by the 
PRD as well as by officials of Fernandez's Dominican 
Liberation Party (PLD).  The PRD will call these cases 
political prosecutions and the PLD will stress the importance 
of these cases in the countrywide fight against corruption. 
Each side has an element of the truth, but on this issue the 
balance tips in favor of the PLD.  The initiation of 
prosecutions of Plan RENOVE participants may offer the 
prospect of a long awaited break in the tradition of impunity 
for Dominican politicians. 
 
11.  (U)  Drafted by Angela Kerwin. 
 
12.  (U)  This piece and others can be found at our SIPRNET 
site 
http://www.state.sgov.gov/p/wha/santodomingo/  along with 
extensive other material. 
KUBISKE