The chance creditors of Luis Enrique Villalobos Camacho have to recover funds depends on whether the Costa Rican government will back them up.

"If the government is willing to take an interest . .  There is a good chance they can follow the trail," said a spokesman for one of the world’s top asset recovery firms.

The spokesman, Gregory Morris, was talking from the firm’s U.S. window on Latin America, an office in Miami. The firm is Kroll Associates, Inc., which, among other efforts, is involved in tracking assets of former President Alberto Fujimori for the government of Peru.

Morris sketched out a highly variable and difficult process for persons who seek to trace and recover assets internationally.

The issue is important in Costa Rica because Villalobos has been in default for two months on his payments to his many personal loan creditors and is believed to have left the country.

"This is one of the most difficult types of investigations we do," Morris said of the company. The firm has more than 50 offices around the globe and has particpated in recovering funds for The Philippines from heirs of Ferdinand Marcos and for the government of Kuwait after Saddam Hussein and his forces plundered that land in 1991.

In some cases, creditors get back nearly all of what they lost, but in other cases, the amount recaptured is from small to nothing, he said. Morris had no personal knowledge of the Villalobos case and just spoke about cases his company has handled. But he did express surprise that creditors here would accept an undated personal check from Villalobos as evidence of the debt. The checks are the only evidence most creditors have of the financial transactions.

About 6,300 persons, most of them North American and other foreigners, deposited money with Villalobos during at least the last 15 years. In return they got monthly interest payments of from 2.8 to 3 percent. But investigators raided his office July 4, and he suspended business and interest payments Oct. 14. Creditors have not received September and October interest. Only about $6 million is in Villalobos-related bank accounts here that were frozen by judicial order.

Morris said that the Villalobos case follows a pattern well known to persons in his firm’s Financial Services Group: A respectable businessman suddenly goes out of business and either vanishes or seeks bankruptcy protection. His firm or others in the same business are called 

in to see if additional hidden assets exist.

Such investigations are difficult because the person with the money deliberately tries to hide it, and bank secrecy laws work against individuals who seek account information, said Morris. That is why he suggested that governments have more success working on a government-to-government level.

Unlike tax collectors and accountants, "Our people are more interested in transactions. They know banks," said Morris.

His investigators look for patterns of travel by the target of the investigation before the financial crisis. Repeated visits to certain countries suggest that some money might be stashed there. Yet tax havens and countries that allow the creation of front corporations hinder investigations.

"There are a number of ways clever people can hide their assets," said Morris. But governments have the power to intervene with banks and discover to where money has been transferred, although such tracking becomes very complicated, he said.

In one case, his firm was able to discover hidden assets held in lines of credit by off-shore casinos. He said a man had defaulted on a large loan with a bank, a Kroll customer. The bank was willing to settle the loan for an amount something less than 10 percent of the orginal value. But Kroll used its contacts in the casino industry to turn up the full amount owed, Morris said.

However, his firm is unable to make any promises up front, and investigations are on a contract basis with a significant up-front payment by the customer. Morris said that such investigations, particularly in the Caribbean, generate "tremendous upfront expenses." His firm usually has a preliminary meeting with potential customers to discuss goals and expenses.

Sometimes customers do not take the advice the firm offers. Morris said that one development project on a Caribbean island looked great from an investment point of view. A Kroll customer, an institutional investor, wanted the firm to do a background check on the man in charge of the development.

Kroll did so, Morris said, and found the man had a history of failure and fiancial irregularities associated with previous projects. The firm advised the investor not become involved with the project.

But the investor did so, and ended up losing a lot of money, Morris said.

WASHINGTON, D.C. — The Bush administration will offer up to $5 million for information that helps law enforcement officials stop the flow of money to terrorists and the networks that support them, says Jimmy Gurule, treasury under secretary for enforcement.

In a joint press conference Wednesday, Gurule and Francis Taylor, state department coordinator for counter terrorism, said the reward would be offered for information leading to the dismantling of any system used to finance a terrorist organization, and for information leading to the arrest or conviction of those who planned or aided an act of terrorism against U.S. persons or property.

"Our strategy is simple: international terrorism is financed by money sent to terrorists from sources around the world; thus, we must disrupt and stop that flow of money," Gurule said.

The United States has also launched a public information campaign to publicize the reward program, using posters, flyers and paid advertisements, Gurule said. He added that the government is seeking the cooperation of trade associations representing banks, convenience stores and others to help raise awareness.

Gurule said the program might help investigators "gain new information and insights into how terrorist financiers are moving money for deadly purposes."

Following the Sept. 2001 attacks on the World Trade Center and the Pentagon, the United States launched a campaign to cut off terrorists from their sources of money around the world. Gurule said the campaign had succeeded in freezing about $113 million in terrorist assets, but stressed that much more work needs to be done.

"The money trail can be very difficult to follow," Gurule said. The new rewards program provides a way to "invigorate our strategy," he added. 

Bush asks OAS to create
terrorism convention

WASHINGTON, D.C. — President George Bush has called on the U.S. Senate to give its "advice and consent" for ratification of the Inter-American convention against terrorism, which was adopted at the Organization of American States' General Assembly meeting in Barbados in June.

In a statement Tuesday, the president said the convention will advance "important United States government interests" and enhance the Western Hemisphere's security "by improving regional cooperation in the fight against terrorism."

The forms of enhanced cooperation, Bush said, include exchanges of information, exchanges of experience and training, technical cooperation, and mutual legal assistance. 

U.S. confirms envoy
for Mexican position

WASHINGTON, D.C. — Garza has been confirmed as the next U.S. ambassador here replacing Jeffrey Davidow. The U.S. Senate confirmed Garza's nomination without dissent November 12.

President George Bush said when he nominated Garza for the position July 16 that the United States and Mexico "share not only a border, but a rich history of common economic and cultural interests. Tony Garza has an in-depth understanding of the relationship between the United States and Mexico and its impact on the people of both nations. 

“He has served the people of Texas with honor and distinction and will be an outstanding representative of the United States," he said.

Garza currently serves on the Texas Railroad Commission. In 1994, then Governor George Bush appointed Garza as Texas Secretary of State. During his three-year tenure, Garza was Texas' chief election officer, as well as lead liaison on border and Mexican affairs, working on a diverse range of issues including free trade, the environment, and border affairs.

Florida Keys’ reefs
given protective status

MIAMI, Fla. — The International Maritime Organization has granted protective status to the coral reefs off the Florida Keys, calling on all shipping traffic to transit those waters with care to avoid damage to the sensitive ecosystem. 

Sam Bodman, U.S. deputy secretary of commerce, announced the special designation Wednesday, granted upon an application submitted by the National Oceanic and Atmospheric Administration.

"This protective status makes the international shipping community aware of the coral reefs and increases compliance with domestic measures already in place to protect the area, while not hindering trade and commerce," said Bodman at a Washington news conference.

According to an administration release, the maritime organization rules call on ship captains to avoid certain areas within the 3,000-square-nautical-mile zone, and to heed three no-anchoring areas. All nautical charts produced worldwide will now show the protected area, known as the Florida Particularly Sensitive Sea Area.

The waters surrounding Florida are among the most heavily trafficked in the world, and ships have already caused damage to the delicate coral reef ecosystem by anchoring, groundings, collisions or discharges.

The waters of the Florida Keys are only the fifth such area in the world to win this designation from the maritime organization. The others are the Great Barrier Reef, Australia, the Sabana-Camaguey Archipelago, Cuba, Malpelo Island, Colombia, and the Wadden Sea proposed by Denmark, the Netherlands and Germany.

IRS invokes foreign 
re-incorporation rule 

WASHINGTON, D.C. — U.S.-based corporations will be required to notify the Internal Revenue Service (IRS) and their shareholders when their companies reincorporate in foreign countries or are bought by a foreign firm, the Treasury Department has announced.

In a release Wednesday, the department said that under temporary regulations corporations that in 2002 moved their headquarters offshore in a transaction known as corporate inversion will be obliged to report to their shareholders the fair market value of any stock received by the shareholders in such transactions.

The Treasury said it also proposed rules that would require corporations to notify the IRS and their shareholders about other large transactions in which the latter may be subject to taxation.

The action is part of Treasury's attempt to address corporate inversion transactions used by U.S.-based corporations in order to minimize their tax burden. A corporate inversion occurs when a U.S.-based, multinational company legally changes places with its foreign subsidiary. As a result of such a transaction, the foreign subsidiary — usually located in a low or zero tax country — becomes the parent company and the U.S.-based company becomes the subsidiary.

Photo exhibit to show
work of Casa Alianza

The U.N. High Commissioner on Human Rights in Geneva will inaugurate a major photo exhibit Friday capturing the work of Casa Alianza in Latin America. The exhibit will be featured in the main hall of the Palais Wilson on the shore of Lake Geneva until Nov. 22.

The display will feature award winning photographs of the life and death of street children in Mexico and Central America. The photos embody the efforts made by Casa Alianza to offer a future for those considered to be “throw away” children, according to the non-profit organization.

HIV vaccine in the works 
to fight most strains

BETHESDA, Md. — The National Institute of Allergy and Infectious Diseases is beginning clinical tests of a new type of vaccine designed to attack the three most deadly strains of the HIV virus. 

According to a Wednesday news release from the agency, the vaccine incorporates genetic material from three HIV subtypes that cause 90 percent of all HIV infections around the world.

In the more than 20 years of the epidemic, developing a vaccine against HIV has proven difficult because of the vaccine's many subtypes, or clades, and its capability to mutate rapidly.

"Any HIV vaccine must hit a constantly moving target," says Dr. Gary Nabel, head of the Dale and Betty Bumpers Vaccine Research Center where the vaccine was developed. "Essentially, we are trying to enlarge that target through a multiclade vaccine."

The first phase of the trial is to test the vaccine's safety. During this one-year test, researchers will be looking for adverse reactions in the test subjects and determining if the vaccine is inducing any immune response.

Third of population
has tried Internet

About 13 percent of Costa Ricans have access to the Internet from their homes. Some 13 percent more have access from work, and about 11 percent have access from a school or university where they study.

This was the finding of a probability survey made by the UNIMER firm at the request of Radiográfica Costarricense S.A., the Internet company.

But only about a third of the citizens have actually used the Internet at least one time, the survey showed.

Top Costa Rican financial and regulatory officials have their marching orders. They each must prepare plans to fight corruption in agencies under their oversight.

The order to prepare plans for a crackdown came after a meeting with President Abel Pacheco.

The president met with Luis Fernando Vargas, the contralor general of the country; Farid Beirute, the procurador; German Hess, the regulador general, and José Manuel Echandi, the defensor de los habitantes. Also at the session was Adolfo Rodríguez, the head of the Superintendentes de Valores or securities regulator; Bernard Alfaro, head of the Entidades Financieras, the agency that controls banks and lenders; Javier Cascante, head of Pensiones, and Ovidio Pacheco, minister of Trabajo.

The president told the officials that agencies must work together to increase efficiency, something that has not been done in the past. This will result in a common front to battle corruption, according to the president.

Vargas made a pitch at the meeting for the approval of a law against public enrichment that he introduced in 1999.

Beirute said that a revision of the country’s civil service laws should be brought to the front burner in the Assemblea Nacional. "In some manner, the law has rewarded inefficiency," he said, urging that the country hire employees who are efficient. The controversial revision of the law would give officials more control over state employees.

President Pacheco told the men that they would meet each Thursday to discuss progress in their attack on corruption.

Fighting corruption was a major campaign promise of Pacheco, but his efforts were knocked off balance last month when irregularities in financing his campaign came to light, including the acceptance of money from foreign sources, something prohibited by Costa Rica law.

Now it appears that campaign officials will take the fall on the violations although some of the checks were countersigned by Pacheco.

Human rights court
opens session Monday

The Inter-American Court of Human Rights, located here, will be back in session Monday to address human rights concerns.

The court will be in session until Nov. 30 and will deliberate and decide on cases brought from all over Latin America. Cases at the court cannot be made against the United States or Canada.

The court will hear cases like the 1991 execution of seven Colombian men.

There is no indication from the court’s public agenda that it will act on the case of American Lori Berenson, who has been detained in Peru since 1995. She was convicted of high treason before a Peruvian court and sentenced to life in prison for allegedly conspiring with a terrorist group there.

During the human rights court’s last session from Aug. 26 to Sept. 7, the court accepted the application to investigate whether Ms. Berenson’s rights are being violated by the state of Peru.

The court also decided last session to consider Peru’s claim that it is acting in accordance with accepted human rights practices and its own laws.

The Organization of American States recently passed a measure to increase the court’s budget by $600,000. António Cançado Trinidade, the court’s president, had previously expressed the court’s need for more sessions and staff to handle the workload.

African nations can sell 
ivory from elephants

SANTIAGO, Chile — A U.S. official says the vote by trade officials to allow three African nations to conduct a one-time sale of ivory stock is a "positive outcome" that supports the principle of sustainable use of resources.

U.S. Assistant Secretary of State John Turner, in a statement made Tuesday to delegates attending a meeting of the Convention on International Trade in Endangered Species of Wild Fauna and Flora here said many members felt it would have been unfair to, once again, deny requests for a one-time sale of ivory stocks by countries with good management and an abundance of elephants.

Turner said that the United States recognizes that local African communities are integral to elephant conservation and management and that all wildlife and park management agencies in African states are continually faced with the challenge of adequate revenue sources.

Turner also said "it is very important to note" that the United States will welcome efforts by countries such as Japan, China and Taiwan to significantly improve management and control of ivory trade and utilization.

Polio combated in
Africa with world aid

GENEVA, Switzerland — West African countries are in the midst of vaccinating millions of children against polio.

This week, 16 West African countries have united to vaccinate all children under five within their borders. Immunization campaigns over the past two years have driven the number of polio-affected countries in Africa to an all-time low. In 1999, 20 African countries were plagued by polio, but to date this year, only three are considered plagued.

This success is due to the Global Polio Eradication Initiative, a broad partnership forged to deliver polio vaccine to every child under five. The Aventis Pasteur donation is already making a difference, with almost 3 million of the 30 million of the doses bound for the polio immunization campaign in Liberia.

"We are further strengthening the solidarity which has brought us to the cusp of a polio-free world, and will indeed push us to full success," said Dr. Gro Harlem Brundtland, Director-General of the World Health Organization, at a recent signing ceremony at the United Nations in New York.

"We are so close to beating this crippling disease in Africa and worldwide," said Carol Bellamy, Executive Director of UNICEF, "but we are not there yet. We have to stay focused and committed and encourage support from all corners — from endemic countries, donor countries and the health industry — so all children can be immunized. This donation will help these countries finish the job and ensure no more African children are paralyzed by this easily preventable disease."
 
 

Professional Directory A.M. Costa Rica's professional directory is where business people who wish to reach the English-speaking community may invite responses. If you are interested in being represented here, please contact the editor. Psychiatrists Dr. Luis Carlos Sancho Torres   bilingual psychiatrist (UCR) • consulting • depression  • schizophrenia  • psychiatric disability VA Affairs • evaluations for gun permits   • bipolar disorders • addictions  • methadone Available 24-hour a day children and adults office: 233-7782 beeper: 233-3333 lucasancho@yahoo.com Lawyers INVESTMENT RECOVERY CENTER Learn how to best protect your interests in the Villalobos case. Explore your options at http://www.irccr.net Also, we invite you to join one of the most active discussion groups on the case.  Find out what people who care are saying. Join at irccr-subscribe@yahoogroups.com 2/16/02 American/Costa Rican attorney located in Costa Rica. Specializing in business law, commercial law, real estate sales, immigration law.  Lic. Gregory Kearney Lawson.  KEARNEY LAWSON & Asoc. Tel/Fax: (506) 221-9462 gkearney_lawson@hotmail.com temp Real estate agents MARGARET SOHN  of Carico 15 years Costa Rican real estate experience Member of the Costa Rican Real Estate Association, Lic. #1000  Member, Costa Rican-American Chamber of Commerce margaret@caricohenderson.com www.caricohenderson.com (506) 232-5016 home   (506) 233-8057 office  (506)382-7399 cell  2/9/03 Web design iStarMedia.net - Custom Website Design & Development - Website Hosting - Website Marketing & Promotion - E-Commerce Solutions - Internet Consulting One Price Websites - "A great service at an unbelievable price! " For more information visit our website at www.istarmedia.net or call  399-9642 or email at: info@istarmedia.net 52-11/25/02

WASHINGTON, D.C. — The United States has one of the most highly developed food regulatory processes in the world, making the U.S. food supply among the safest, according to two U.S. Department of Agriculture senior scientists.

In a recent briefing on agricultural biotechnology at department’s Agricultural Research Service headquarters in Maryland, Peter Bretting and John Radin said foreign scientists and journalists visiting ARS facilities "light up" when they learn about the broad scope of risk assessments. These are assessments used during the development of genetically engineered varieties of crops, livestock and fish that promise to help meet the world's growing food security needs.

The U.S. system serves "as a model" for other countries developing agricultural and food research centers, said Radin, who recently spoke to the South Korean Ministry of Agriculture on how the United States monitors and assesses the products of agricultural biotechnology.

Most scientists around the world agree that foods derived from agricultural biotechnology have proven to be as safe as foods developed through "traditional" means of plant breeding, the officials said. But the safety of foods enhanced by biotechnology is "largely underreported overseas." 

Adding to the public's confusion about biotechnology is that the topic has been "mingled" with anti-globalization sentiments by some biotech opponents, they said.

To date, soybeans, maize and cotton have received the most attention from biotech researchers in the United States. A new variety of genetically engineered maize resists corn rootworm. Currently, more pesticide is used to control corn rootworm in the United States than is used against any other crop pest. 

Genetically engineered foods approved for commercial use include potato, tomato, canola and squash. Rice genetically-engineered to contain higher concentrations of vitamins is one of the next major crops being developed that will be commercially available, they said.

WASHINGTON, D.C. — Spencer Abraham, U.S. secretary of energy, while announcing major plans for the future of personal transportation in the United States, cited the need for an energy economy based on hydrogen that can provide nearly unlimited energy with virtually no impact on the environment.

Abraham delivered his remarks Tuesday in a keynote address to an international audience of senior government, industry and academic officials attending the Global Forum on Personal Transportation in Dearborn, Michigan.

Abraham made major announcements about the future of personal transportation, including the "National Hydrogen Energy Roadmap." 

This outlines the research, development, demonstration and education efforts necessary to lead the nation to a clean and sustainable energy future.

The second program announced by Abraham, entitled the "New Vision for the 21st Century Truck Partnership," focuses on improving the energy efficiency and safety of trucks and buses.

Abraham acknowledged that achieving a "hydrogen economy" would be a long-term process, and that the next steps call for the creation of detailed research and development plans for hydrogen production, delivery, storage, conversion and end-use applications.

The U.S. automotive industry and several federal agencies began the process last January when they unveiled the Freedom Car Partnership to develop hydrogen fuel cell vehicles. 

These cars of the future have the potential to achieve over twice the fuel economy of today's vehicles and emit zero pollution.

Abraham said the partnership, which was announced jointly with the Departments of Transportation and Defense and the Environmental Protection Agency, will center on advanced combustion engines and heavy hybrid drives that can use renewable fuels.

Dear A.M. Costa Rica:

Your article “Impact of Villalobos default still hard to estimate” is not only not news but is a sorry mixture of opinion and speculation, and worse, it betrays a profound ignorance of elementary economics.

The economy of Costa Rica is not a collection of isolated mini-economies as seems to be implied. The effects of change in San Ysidro El General are felt in San José and vice versa. Your mention of a “multiplier effect” makes use of a term used in standard economic theory but misapplies it.

It is not merely a question of creditors of creditors who can't get paid. It is far more a matter of goods and services not being bought by the strapped creditors. Your Gran Hotel waiter makes less in tips. His employer's revenues are reduced. Both have less to spend.

Looking at consumption alone (that is, laying investment and savings aside): There is a “Propensity to Consume,” which is an average proportion of disposable income spent in an economy.

It varies from individual to individual of course, but the average concept is a useful analytical tool. In relatively poor countries like Costa Rica, the Propensity to Consume is relatively high — a large portion of the population have to spend almost all of their incomes on necessities.

Say the Propensity to Consume in Costa Rica is 80 percent. If total disposable income increases by 1000 colons, 800 more will be spent. If income decreases by 1000 colons, 800 less will be spent. It does not make a particle of difference where the initial increase or decrease occurs — things will quickly average out.

The “multiplier effect,” correctly used, is a direct consequence of the Propensity to Consume. Let P = the Propensity to Consume. Let M = the multiplier, then M = 1/(1-P). If P = .8, then M = 1/0.2 = 5.

If Villalobos investors have $1 million less to spend, the impact on the CR economy becomes minus $5 million. And, since Villalobos investors probably do not do each other’s laundry, $4 million of the $5 million comes out of the pockets of Ticos. My numbers are hypothetical of course.

I’m sure some Tico economist has measured P for Costa Rica, and speculation about it should not be necessary. But the amount of the initial reduction of spending by Villalobos investors involves too much speculation to support any sound conclusions.

We do not know how much total debt Villalobos owes to his investors. We do not know how much of it was drawing monthly interest taken out in cash by the investors, or how much of it was compounding and not being currently drawn.

Maybe the government knows, although Luis Enrique has been quoted as saying the records they have are stale ones not reflecting the current situation. Villalobos certainly knows, but he is not talking. Maybe he is not talking because he fears having anything he says used against him. Maybe he is not talking out of respect for the confidentiality of his relationships with his investors. Why speculate?

What we do know is that whatever amount is not being paid out to local Villalobos investors has an impact on the economy of 1/(1-P) times the amount not being spent, and (P) of it comes out of Ticos’ pockets.

Dear A.M. Costa Rica:

Your article by “staff” RE: Villalobos in the Nov. 13th edition was a waste of time reading. Anything concrete, new or helpful? Absolutely not. Why waste the ink on articles of this sort, especially where there is little or no facts to firm your ideas?

I love your “paper,” but when I see fluff like this I wonder who is watching the store? Why not take a poll of investors and former investors to show the overwhelming support for the honest performance and dependability of Sr. Don Enrique, and the degree to which investors and residents are dismayed by the governments attack, without proven cause, and to this date without formal charge against Don Enrique’s business?

This government obviously doesn't understand the degree to which The Brothers, in general, have benefited this country over such a long history — nor do they realize the extent to which all business here will be damaged by their continuing freeze on operating accounts. How long will it take them to wake up?

If they need an economic boost I think it's time they opened up the vast potential lying underground in oil and gas. Exploration of these assets will not necessarily damage the ecology — but the benefits for all Costa Ricans (as in my parents’ homeland of Norway) would be tremendous.

Costa Ricans could all become quite rich by the extraction of such God-given assets. 

Is it possible that the Government and the people wish to remain poor? Time to look at the larger picture and not play “patsy” for other governments, and to quit the jealous searching for secrets of profitable private business. The government is playing with half a deck.