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President Seeks Finnish Debt Forgiveness

President Abel Pacheco has brought one of the biggest political corruption scandals in Costa Rican history back into the spotlight by insisting that Finland should forgive a controversial $32 million loan to Costa Rica. The loan, signed in 2001 and used for a medical-equipment purchase from the Finnish company Instrumentarium, is at the heart of the corruption scandal involving the Costa Rican Social Security System (Caja) and ex-President Rafael Angel Calderón, Jr. (1990-1994).


Pacheco maintains that because it appears Costa Rica did not get its money’s worth in the transaction – a study commissioned in Finland has shown Instrumentarium overcharged the Caja for the equipment, and investigations are under way in both Finland and Costa Rica to determine who was responsible for the alleged channeling of kickbacks related to the purchase – Finland should not collect on the loan. He expressed doubt that Finland’s investigation will prove Costa Ricans were solely responsible for the alleged corruption.


“THERE may have been some bad Costa Ricans… but also some bad Finns who took advantage, apparently,” he said at the press conference following his weekly Cabinet meeting on Tuesday. “It takes two to tango.”


According to Pacheco, Costa Rica will pay back the loan if the internal investigation by the government of Finland determines Costa Ricans were entirely at fault, but otherwise, Finland should “give us a hand,” either by forgiving the loan – set to begin repayment this year – or providing medical equipment Costa Rica needs.


Pacheco’s stance, which he first unveiled during a radio interview with the BBC broadcast in December, met with disapproval from Inger Hirvelä, Finland’s ambassador to Central America. She told the BBC the President’s statement was “rather pathetic – asking us to forgive a debt when they have been fooling us,” according to a transcription of the interview by the daily La Nación.


Hirvelä suggested Pacheco may be seeking political gain through his stance: according to the ambassador, Finland is not considering forgiving the debt “because (Pacheco’s suggestion) is obviously more for internal use, probably with an eye to the upcoming elections (in February).”


The Tico Times attempted to contact Hirvelä at Finland’s Foreign Ministry this week, but was told she retired at the beginning of the year. Consul María Soderlund said she could not yet provide further comment on the loan or Pacheco’s statements. Edgar Mohs, the Costa Rican ambassador to Switzerland, said there has been no other response to Pacheco’s comments, which Mohs echoed.


“In theory, one expects that there are two parties (in a corruption case): one who accepts the bribe and one who offers the bribe,” he told The Tico Times yesterday in a phone interview from Switzerland. “It seemed unfair to us that there was an investigation in Costa Rica and not Finland. Now that there’s an investigation there, it could be that we will resolve this injustice.”


The BBC interview was the first time Costa Rica had presented the idea that Finland should forgive the loan, Mohs said.


AT the heart of the scandal surrounding the loan are Instrumentarium, a subsidiary of General Electric; Corporación Fischel, the company’s representative in Costa Rica; a $9.2 million commission Fischel charged on the Caja’s purchase of medical equipment; and Costa Rican public officials including ex-President Calderón, who allegedly pocketed some of the funds and divided the rest among other leaders as a bribe for ensuring the purchase was approved quickly by the Legislative Assembly. (The assembly approved the loan in 2001 in a mere three days.)


Under the terms of the loan, Costa Rica was required to spend at least 50% of the funds on equipment from Finland; the only eligible company with representation in Costa Rica was Instrumentarium. The company won the entire contract as the only bidder.


According to La Nación, a study overseen by Finland’s Foreign Ministry showed that the Caja – Costa Rica’s state-run public health-care system – was overcharged by 28.5-80% for the equipment. Instrumentarium also sold Costa Rica unnecessary equipment, according to the report, conducted by Swiss audit firm SGS.


FOLLOWING the publication of the SGS report, Finland’s Foreign Ministry asked for further investigation from the National Bureau of Investigation, which has requested information from Costa Rica, according to the Helsingin Sa nomat, a Finnish newspaper (www.


The paper also reported that another study, conducted by corporate watchdog organization FinnWatch, found that the equipment sold to the Caja consisted of expensive, highly specialized devices that Costa Rican hospitals did not need.


Mohs said he has “faith in the Finnish justice system” and is pleased that the investigation, which began in November, is now under way.


The Costa Rican Prosecutor’s Office has been investigating the case since mid- 2004, when La Nación revealed that a company owned by Corporación Fischel President Walter Reiche was paying for rent on a luxury home for former Caja director Eliseo Vargas. (Vargas first proposed the Finland loan as a congressman in 2001.)


A chain of allegations ensued, peaking when Vargas accused Calderón of pocketing funds and masterminding the distribution of the $9.2 commission from Fischel (TT, Oct. 22, 2004). Calderón was released from house arrest late last year after nearly a year in preventive detention (TT, Oct. 21, 2005), though the investigation

is ongoing.


FOR Pacheco, all this adds up to an unfair deal for Costa Rica. On Tuesday, he reiterated many of the same arguments from his BBC interview, including a comparison of Costa Rica’s experience to “buying a cow and getting a goat.


“Could a country like Finland… be capable of abusing a little country like Costa Rica? I have hope that Finland will give us a hand,” he added. “Sooner or later, justice will be served. No matter how pathetic it may appear to an ambassador, I will insist that the story about how Europeans gave us little mirrors and we gave them gold is now history.’’


Mohs confirmed no formal action will be taken until Finland’s investigation is complete.


“That’s the only way it can be,” he said. “It’s not prudent to do anything until that’s over.” Like Pacheco, he said options Costa Rica could request, depending on the outcome of the investigation, include reduction of the debt or the delivery of additional medical equipment. Asked what kind of equipment Costa Rica would request, he said it was too early for specifics, but that “there must be a long list of needs in Costa Rica.”




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