US embassy cable - 05QUITO1218

UNCLAS QUITO 001218 
 
SIPDIS 
 
SENSITIVE 
 
DEPT PASS TO USTR BENNETT HARMAN 
 
E.O. 12958: N/A 
TAGS: EPET, ENRG, PGOV, ECON, EINV, ETRD, EC 
SUBJECT: ENERGY MINISTER ON HIS WAY OUT? 
 
REF: QUITO 1115 
 
1. (SBU) Elder statesman and self-professed man of integrity, 
Energy Minister Fausto Cordovez may not be long in his job. 
Two weeks ago, he reportedly tendered his resignation to 
President Palacio when Palacio insisted on appointing Palacio 
confidant Robert Pinzon as the new president of state-run oil 
company PetroEcuador, instead of one of Cordovez's inner 
circle.  More worrisome, Cordovez, who claimed he had the 
integrity and stature (reftel), if not the sector knowledge, 
to run the crucial oil and energy ministry, has turned out to 
be a bit of a deadbeat.  Approached last week by a newspaper 
about alleged delinquent debts, Cordovez sought a several day 
delay for the interview.  In the intervening days, Cordovez 
miraculously came up with over $100,000 to pay off the debts, 
some of which had been lingering for 8 years.  He said he got 
the money from his children. 
 
2. (SBU) Cordovez's payment problems were front-page news in 
Sunday's papers, but President Palacio has not yet accepted 
his resignation.  The Friday before his delinquent payment 
history became public, Cordovez was crowing about his 
integrity to a group of private oil and energy company 
executives (whom the GOE owes millions), never mentioning 
that he was also going to pay off his own delinquent accounts 
that day.  The failure to pay debts is nothing new in Ecuador 
and the laws greatly favor debtors over creditors, but 
Cordovez's seeming hypocrisy could damage his credibility. 
That could make it harder for the Ecuadorian public to accept 
any settlement Cordovez must approve with Occidental 
Petroleum (should it ever come to pass), or any of the other 
pending private oil and energy sector company disputes. 
Chacon