Montealegre Questioned in Bank Fraud Case
Eduardo Montealegre, presidential candidate for the upstart Nicaraguan Liberal Alliance (ALN), went before a special congressional commission Monday to answer questions about his alleged involvement in a complicated $500 million bank fraud that’s being called “the biggest fraud in Nicaragua’s history.”
The presidential frontrunner and former Finance Minister told the lawmakers chairing the Commission of Probity and Transparency that he had nothing to do with the scandal, which involves the state intervention of four private banks between 2000-2001. He argued that the investigation was part of a dirty electoral-campaign to trick voters and smear his name.
“Those who defame and accuse me are those who think they are the owners of Nicaragua… the leaders of the FSLN and the PLC,” said Montealegre, referring to the Sandinista National Liberation Front (FSLN) and the Liberal Constitutional Party (PLC), his former party.
Commission president Donald Lacayo, a loyal supporter of incarcerated PLC boss Arnoldo Alemán, denied that the investigation was a political witch hunt. He insisted that the commission was acting independently to investigate a matter of “interest to all Nicaraguans.”
The banking scandal involves a series of Negotiable Investment Certificates (or CENIs) that were issued by the Central Bank to cover the collapse of the private banks during the end of the Alemán government.
The certificates were reportedly issued at a high interest rate for total amounts that allegedly exceeded the collapsed banks’ portfolios. Montealegre had been a major stockholder in BANCENTRO, one of the banks that bought up a lion’s share of the favorably negotiated CENIs.
Montealegre argued that he was not involved in any of it. He said that when the government took action in the first bank in August 2000, he was serving as Foreign Minister and therefore had nothing to do with it. The other three banks fell after he had already resigned from government to run for president for the PLC in 2001, he told the commission.
However, according to economist Adolfo Acevedo, who has been investigating the CENIs scandal for five years, Montealegre later became intimately involved in the case when he rejoined the government as Finance Minister in 2002, at which time he negotiated with the International Monetary Fund (IMF) to make payment on the CENIs a priority for the administration.
To service the debt, the IMF instructed the Nicaraguan government to sell off a series of properties that had been owned by the collapsed banks. The Central Bank was charged with auctioning off the properties, but allegedly sold them for a fraction of their real value determined by auditors, Acevedo said.
“Prime properties valued at a total of $380 million were auctioned off by the Central Bank for $28 million,” Acevedo told The Nica Times. “The amount of money the government recuperated from the sales of the properties barely covered administrative costs.”
Acevedo claims that the auctions were a case of insider-trading at the expense of the state.
As Finance Minister at that time, Montealgre was a member of the Central Bank board of directors that signed off on the auction sales, Acevedo explained.
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