Downfall in Nicaragua

When Arnoldo Alemán took office as President of Nicaragua in 1997, he seemed ready to make history. He had defeated Daniel Ortega, longtime leader of the Sandinista Front, and vowed to lead his long-suffering country toward democracy and prosperity. Now it is likely that he will be remembered for something very different. He may become the first ex-president of a Latin American country to be sentenced to prison for corruption while in office.

The story of Alemán’s rise to power follows a familiar Latin American pattern. He maneuvered his way into politics through skillful back-room deals. His ebullient campaign style helped him win the presidency, and as soon as he took office he began to loot the national treasury. What has happened to him since he left office, however, is not only unfamiliar but unheard-of. His successor, President Enrique Bolaños, has denounced him as a thief. Newspapers have published damning evidence against him. A judge has placed him under house arrest, and prosecutors are asking that he be sentenced to twenty-five years in prison.

Latin America is poor for a variety of reasons, but corruption is one of the most persistent and insidious. It is so deeply ingrained in the political culture that many people take it as a force of nature, like bad weather. In several countries, cabinet ministers and other second-level figures have been convicted and even imprisoned after leaving their public posts, but it has never happened to a former president. The immunity of ex-presidents is a deeply entrenched law of Latin American politics. In recent years, serious charges of corruption have been made against presidents of Mexico, Guatemala, Venezuela, Colombia, Paraguay, Brazil, and Argentina, but none of these countries has dared to throw any of them into jail. If Nicaragua does so, it will send a message across the continent that could reshape Latin American politics and preserve for the poor untold millions of dollars that would otherwise have been stolen.

The drama unfolding in Nicaragua is the most striking example of a new awareness that is slowly spreading throughout the world. During the cold war, the United States and other powerful countries tolerated the corruption of their third-world clients, just as they tolerated grotesque human rights abuses. Beginning in the late 1970s, generals and dictators who abused human rights began to realize that they could be held accountable by the courts. The same is now starting to happen to corrupt politicians. Corruption still thrives, just as do torture, repression, and political murder, but it can no longer be practiced with impunity, as it once was. Presidents and prime ministers who steal public funds now know that they may have to pay for their crimes. This is something new and profoundly important.

Part of the rising demand for honesty in government comes from private groups like the Berlin-based Transparency International, which rates countries according to their degree of official corruption (Nicaragua ranked eighty-first out of 102 surveyed last year) and helps governments devise ways to safeguard their assets from leaders who may steal them. Part comes from Western governments, including for the first time the United States. Most important, it comes from awakened citizens encouraged by a vigorous free press.

The recent combination of these pressures is changing the way politics is practiced in Latin America. It is especially remarkable that Nicaragua, which has rarely led the continent in anything except poverty, illiteracy, and political conflict, should be the first to confront a president’s corruption.

During the 1980s, when Nicaragua was ruled by the Sandinista Front, Arnoldo Alemán was a low-level figure in an association of private coffee growers. His income was so modest that he could not even afford a house of his own, and had to live with his in-laws. In the 1990 election, which put a surprising end to Sandinista rule, he was elected to the Managua city council. When the council met to choose one of its members to be mayor, Alemán amazed everyone by making enough private promises of jobs and favors to get the post.

Violeta Chamorro, who was elected as Nicaragua’s first post-Sandinista president in 1990, adopted policies that greatly benefited Mayor Alemán. Unlike almost every other Nicaraguan and Latin American leader, Chamorro decentralized power and gave the country’s mayors broad political authority, including the power to impose taxes. As a result Alemán had money with which to build parks, avenues, traffic rotaries, and fountains in what has long been considered one of the continent’s ugliest capitals. He reveled in his power and captivated people with his populist enthusiasms. Alemán is a fat man, an exuberant eater and drinker, famously unable to concentrate on a single subject for more than a few minutes, but also dynamic, inspirational, and charismatic. He hugged women, kissed babies, and remembered everybody’s name. His support was always strongest among the poor. Rural illiterates were among his most fervent admirers.

President Chamorro also gave Mayor Alemán another political gift. She proclaimed from her first day in office that she would not pursue grievances against the Sandinistas by dismissing Sandinista army and police commanders and prosecuting Ortega and others for corruption and human rights abuses. Her more militant supporters were bitterly disappointed by her moderation. They looked for another leader, and found one in Alemán. He made plenty of quiet deals with the Sandinistas, but in public he fiercely denounced them. It took him only a few months in City Hall to emerge as the country’s most militantly anti-Sandinista politician. He dismissed Sandinistas from city jobs and sent squads out to whitewash the many political murals that Sandinista groups had painted on Managua walls.

Alemán began stealing money soon after his election as mayor of Managua. He started on a small scale, importing cars from the United States without paying duty and then selling them at a profit in Nicaragua. According to Nicaraguans who have watched his career closely, he was soon making larger sums from kickbacks and payoffs from contractors he chose to build the public works projects that were his most visible legacy. By the time he launched his presidential campaign in 1996, most voters suspected that he was taking public money. Still, he had transformed Managua, and his fiery rhetoric thrilled the many Nicaraguans who detested the Sandinistas. He also enjoyed the support of the resurgent Liberal Party, formerly the political base of the Somoza family dictatorship that had ruled Nicaragua from 1936 to 1979. The Liberal machine helped carry Alemán to victory, and in January 1997 he took office as president.

Nicaraguans have become used to corrupt leaders. The Somozas illegally took over vast farmlands and lucrative businesses throughout the country. Their successors, the Sandinistas, also felt no compunction about confiscating whatever houses and other properties they wanted. So Alemán’s record did not prevent voters from electing him president.

Once in office, Alemán lost all sense of proportion. He and a small clique of friends and relatives established a system designed not just to skim money from government contracts or grab some cash when no one was looking, but to take everything they could get. Their brazenness amazed even the most cynical Nicaraguans. “What the Somozas stole in forty years and the Sandinistas stole in ten,” my Managua barber told me, “Arnoldo stole in five.”

Prosecutors estimate that Alemán stole more than $100 million from the public treasury. That may be an exaggeration, but there is little doubt that he made off with a huge amount of cash. Some of his schemes involved the misuse of public funds for his personal benefit, for example $300,000 to build a highway to a house he owns in El Chile, an isolated region where hardly anyone else lives or works. Others were more elaborate, as when he allocated more than $1 million to modernize a state-owned television station and then diverted the money to accounts he controlled. Some were simply outright theft. For example, he deposited nearly $4 million in government funds in a Panamanian bank, then ordered the bank account closed and the money sent to four shell companies he controlled.

The scam that has caused the most outrage, perhaps because it is so easy to understand, was Alemán’s misuse of an American Express card issued in his name by the Central Bank. The card was supposed to be used only for official expenses, but bills show that Alemán used it to pay for lavish trips abroad. In March 2001, for example, he and more than a dozen friends went to Paris, ostensibly for a two-day conference about debt relief, and spent $15,348 on hotels and restaurants. Then the group went on to Egypt for two weeks, charging the Central Bank $14,278 for hotel rooms, $22,530 for carpets, and $1,029 for perfume. Later Alemán led a delegation to India and spent $30,879 for the hotel, $37,627 at a handicraft shop, $9,362 for jewelry, $14,583 for carpets, and $10,656 for a party at an expensive restaurant. On the way home he stopped in Bali, spending $13,775 at the Ritz-Carlton Hotel.

By many standards, Nicaragua is the second most miserable country in the Western hemisphere. Only Haiti is in worse condition. Half of Nicaragua’s population lives on less than $1 per day, malnutrition is widespread, and jobs are all but impossible to find. It is no wonder that people are angry at Alemán. The wonder is that the government has decided to call him to account.

Alemán tried to have the Nicara-guan constitution amended so that he could run for a second term as president, but he failed. His vice-president, Enrique Bolaños, a gray-haired cotton farmer, was elected to succeed him, and took office on January 10, 2002. Less than twenty-four hours later, one of Bolaños’s aides received a telephone call from a Managua banker. A man who had been a close aide to Alemán was in the bank seeking to cash a check for $300,000 drawn on a government account. The banker asked if he should honor the check, and was told not to. That was the beginning of an avalanche of revelations that led Alemán to his present predicament.

Bolaños claims that during his years as Alemán’s vice-president, he did not realize how much public money his boss was stealing. Nicaraguans find that hard to believe. Bolaños may have averted his eyes in order to preserve his own chance at the presidency. Yet he deserves credit for the decisiveness with which he is pursuing his former friend.

Why is he doing it? Few doubt that he shares the popular outrage at Alemán’s crimes, but he has other reasons as well. Only days after Bolaños assumed the presidency, Alemán arranged to have himself elected president of the National Assembly, and from that position he sought to continue running the country, taking from Bolaños the power for which he had waited so patiently. This was too much for the new president. Everyone I spoke to in Nicaragua told me that if Alemán had retired quietly and dropped out of sight with his millions, Bolaños would not have turned against him.

I wanted to ask President Bolaños himself if this was true. Decades as a farmer have given him the habit of rising with the sun, and his press secretary told me that if I wanted to talk to him, I should expect to be called to his house as early as 5:30 in the morning. As it happened, he had another meeting at that hour, and I was told to come at 7:30. Bolaños, who is seventy-four, lives in a comfortable but not ostentatious house south of Managua. I found him energetic and as sharp-tongued as he was during the 1980s, when he was an outspoken critic of the Sandinista regime. He spoke coldly about Alemán.

“I think he is totally guilty, and if the court agrees, he should pay for his sins as an example,” he said. “As long as stealing from the public treasury is tolerated, this country is never going to be able to climb out of its poverty. We need to make very clear that anyone who commits this kind of crime is going to be severely punished.”

That was a noble sentiment, I replied, but what about the suggestion that Bolaños had acted at least partly out of anger at his predecessor’s refusal to fade quietly into retirement? To my surprise, he did not deny it. “They say that when a butterfly flaps its wings in China, it can cause a big reaction somewhere far away,” he told me. “Especially in politics, you need to be aware that every action has consequences.”

For two decades Bolaños has despised the Sandinista leader, Daniel Ortega, and a couple of years ago he told an interviewer that the very thought of talking to Ortega made him want to vomit. The corruption scandal, however, has brought them together in a most unlikely alliance. Before Bolaños could proceed against Alemán, he needed to persuade the National Assembly to revoke Alemán’s parliamentary immunity. Most Liberal deputies remain loyal to Alemán, so the votes of Sandinista deputies were crucial. Ortega delivered them, and in short order Alemán was stripped of his immunity, expelled from the National Assembly, indicted, and sentenced to house arrest pending a verdict.

Ortega is supporting the campaign against Alemán for two very good reasons. First, encouraging a bloody battle between Bolaños and Alemán is a sure way to split the Liberal Party, the only one that stands in the way of Ortega’s still-intense desire to return to the presidency. Second, by attacking Alemán, Ortega is able to pose as an enemy of corruption and a defender of public morality. He hopes this will help voters to forget his own larceny, exemplified most vividly by the mansion in which he lives, which he seized from a prominent banker while he was running the country in the 1980s.

Ortega’s support is vital to a successful prosecution of Alemán because, as a result of political deals, the Sandinista Front effectively controls the Nicaraguan judiciary. The judge who presides over the Alemán case, Juana Méndez, was formerly married to a Sandinista comandante and owes her job to Ortega. Last year she showed her loyalty by dismissing the sexual abuse charges that Ortega’s stepdaughter filed against him. When I visited her in her cramped office, she seemed determined to pursue the Alemán case vigorously, but her motives are unclear. If Ortega were for some reason to change his mind and decide that the case should be dropped, he probably would have no trouble persuading Judge Méndez to drop it. The case against Alemán, then, is as much political as legal.

The third partner in this odd alliance between President Bolaños and Daniel Ortega is the US government. In the years since the fall of the Sandinista government in 1990, the United States has provided Nicaragua with $1.2 billion in aid. American officials, like their counterparts in other donor countries, are no longer as willing to have aid squandered or stolen as they were when they sought to buy allies during the cold war. Under the Patriot Act, passed after the terror attacks of September 11, they also have new authority to pursue foreigners who launder money through American banks. Using this authority, investigators from several United States government agencies have worked on the Alemán case and shared their findings with Nicaraguan prosecutors.

Evidence that these investigators uncovered has led the United States to suspend the entry visas issued to Alemán as well as to his former taxation director, Byron Jeréz, who is in prison awaiting verdicts on various corruption charges, to his former finance minister, Esteban Duque Estrada, who is a fugitive, and to Jorge Solís, former head of the Nicaraguan telecommunications agency, also a fugitive. American officials have frozen Alemán’s assets in the United States, consisting of bank accounts and Florida real estate worth a total of $4.6 million. They have also provided information to Panamanian authorities that has led Panama to freeze assets worth another $10.5 million.

Nicaraguan prosecutors filed their case against Alemán on August 7, 2002, charging him with, among other crimes, fraud, conspiracy, and theft of public funds. That same day, President Bolaños delivered a nationally televised speech that was remarkable not only for what he said but for his highly emotional tone. He began by telling Nicaraguans what they already knew: that corruption had been “one of the most important factors in keeping our people in poverty,” and that the country desperately needed to enter “a new era of moral regeneration, honesty, transparency and accountability.” He directly addressed Alemán:

Arnoldo, I am sad, pained, and disillusioned to see the irrefutable and overwhelming proof that a former president of the Republic conceived and carried out such crimes. You stole pensions from the aged. You stole medicine from nurses. You stole teachers’ salaries. You betrayed the confidence of our people. The nation now demands that I declare frankly, clearly, and honestly that our country cannot progress if we remain hostage to corruption and fraud.

No leader of a Latin American country has ever spoken words like that about his predecessor in office. By pronouncing them, Bolaños violated a political tradition that is as firmly entrenched as it is pernicious. Now politicians from the Rio Grande to Patagonia are watching to see if he will be able to carry his campaign to its logical conclusion by putting Alemán in prison. That would be a stunning event. Many Latin American leaders have been deposed or assassinated over the years, but none has ever been jailed for stealing.

The first effects of this prosecution could come in Guatemala, where President Alfonso Portillo, an old friend of Alemán’s, is said to share his penchant for larceny. High Mexican officials who have enriched themselves with public funds could also be affected by Nicaragua’s example. So could the government of Paraguay, where outgoing President Luis González Macchi barely survived impeachment last year after he was found to be driving a stolen BMW and accused of diverting $16 million from the state treasury. Even if no other former leaders end up in prison, those elected from now on would know they are no longer protected by the immunity that allowed their predecessors to retire rich and secure.

That is only likely to happen, however, if Alemán actually ends up in prison. President Bolaños hopes he will, and when we talked he even speculated on which jail was best equipped to provide him with the “right kind” of cell. Prosecutors seem determined to press for a prison sentence. So does Judge Méndez. No one, however, will predict when a final verdict and sentence might be issued. “I’ve been asking that question since last summer,” one foreign diplomat told me. “I get the same answer every time: there should be a verdict in about two months.”

Meanwhile, Alemán is under house arrest at his house in El Chile, half an hour’s drive from Managua along the country’s newest and least-used road. Some Nicaraguans are angry that Judge Mendez has not already sent him to prison, as she could under a law that allows judges to issue “provisional sentences” to defendants when strong evidence has been presented against them. They complain that with his cell phone and computer, he is continuing to run the Liberal Party and trying hard to undermine both President Bolaños and the judicial process.

Alemán turned down my request for an interview. In one of the most recent ones he granted, to The Washington Post last September, he said that he had “never stolen anything” and that his credit card purchases were legal because no law restricts the president’s use of credit cards and “what is not banned is permitted.” Nicaraguans no longer accept such claims. “Ale-mán made the mistake of thinking he was living in another era,” said Agustín Jarquín, who during his term as controller-general uncovered many of the former president’s crimes.

He didn’t take into account the huge changes that came over Central America after 1990. The peace process that ended wars here gave people a sense that they could control their own fate. We began to have real elections. Armies had to submit to civilian power. The press became freer than it has ever been. People stopped tolerating things that they used to tolerate, especially human rights violations and government corruption. Alemán didn’t grasp this. He never had the slightest fear that he would be called to account for what he did. He didn’t realize that the rules had changed.