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Health-Care Financial Scandal Continues

June 18, 2004

THE ongoing financial scandal thathas rocked the Social Security System(Caja) – Costa Rica’s nationalized healthcaresystem – saw several developmentsthis week.The Superintendence of Securities(SUGEVAL) filed a complaint before theProsecutor’s Office late last week againstEmilio Bruce, president of pharmaceuticalfirm Corporación Fischel S.A., alleging hehad presented investors with incompleteinformation about the company’s financesduring its most recent stock offering.SUGEVAL charges Bruce may haveauthorized the publishing of false balances,presented fraudulent credit documents andissued false testimony, the daily La Naciónreported. If charged and found guilty ofthese crimes, Bruce could be sentenced toseveral years in prison.ACCORDING to Adolfo Rodríguez,Superintendent of Securities, Fischel presenteda sworn declaration guaranteeing theveracity of the information in the company’sprospectus. However, this information wascompromised after it was discovered that theprospectus failed to include several companiesowned by Corporación Fischel.The companies are Farmacias Catedral,S.A. and Farmacias Fischel, S.A, both registeredin Panama. The prospectus alsofailed to include that Fischel owns a 40%stake of the firm Asesores de Servicios enSalud (ASERSA).Bruce told the daily Al Día he andCorporación Fischel would fully cooperatewith SUGEVAL and courts.ON Monday, private Hospital ClínicaBíblica ran full-page ads in several dailynewspapers announcing it was ending itscontract with Corporación Fischel for thesupply and distribution of medications tothe pharmacies of the three San José areabasic health-care clinics (EBAIS) it administratesfor the Caja.Clínica Bíblica operates EBAIS clinicsin the western suburb of Escazú, the southernSan José neighborhood of Leon XIII andLa Carpio, a shantytown west of San José.The hospital’s board of directors professeda willingness to be open about thehospital’s relations with Fischel and gobefore the courts, if necessary. The ad stated,however, that the board would henceforthavoid speaking to the media about itsrelations with Fischel.La Nación published statements byJaime Peterson, the president of CostaRican Medical Services Association,which owns Clínica Bíblica, explaining thecontract’s termination.“THE decision was made because of allthe problems we were having as a result ofour relationship with Fischel,” Peterson stated.“Our personnel are spending too muchtime responding to questions about Fischel.”While the Association will have to payFischel $120,000 for breaking that contract,its other business relations withFischel will continue, he said.“We are only separating the businessthat is related to the Caja,” Peterson told LaNación.Also on Monday, former Vice-President (1998-2002) and EducationMinister Astrid Fischel testified before theLegislative Assembly. She said that in1998, before becoming vice-president, shebroke all ties with Corporación Fischel,which was founded by her grandfather.Fischel was a member of the company’sboard of directors between 1991-1997 and in 1994 she served as its president.She told the legislative deputies shebroke all ties with the company after sellingall her shares to her sister SophieFischel.During Tuesday’s weekly cabinetmeeting, President Abel Pacheco appointedJosé Manuel Arias, an economist with adegree in business management, to theCaja’s temporary board of directors. Ariasreplaces César Jamarillo, who resignedshortly after being named last week, citinga conflict of interest.THESE events are the latest chaptersin a scandal that broke in April followingLa Nación reports questioning Fischel’sprivate dealings with Caja executive presidentat the time, Eliseo Vargas.Vargas reportedly rented a luxury homefrom Fischel executive Olman Valverde athalf its value. Vargas and Valverde bothresigned shortly after this was reported.The report prompted a governmentinvestigation, which revealed that whileVargas was a legislative deputy in 2001, hesupported a $32 million loan from theFinnish government to finance medical suppliesin Costa Rica. A Fischel subsidiaryreceived these government contracts.Caja’s board of directors laterannounced that Project Finland’s supplieswere not “priority needs” in Costa Ricanhospitals (TT, May 14).As a result of the ongoing investigations,two weeks ago, a judge suspendedthe nine members of Caja’s board of directorsfor six months on the grounds that theymisused $6,000 in public funds by takingout ads in four major newspapers supportingVargas after he was accused of shadybusiness dealings with Fischel.President Abel Pacheco named a temporaryboard of directors to preside overthe Caja on June 8 (TT, June 11).

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