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Supporters of Luis Enrique Villalobos Camacho plan to distribute leaflets today and rally as a group Tuesday in the court complex in downtown San José.
The purpose of the rally is to show support for the embattled businessman and to urge the Costa Rican government to promptly end its investigations of his high-interest loan business.
Organizers said they hoped that Villalobos himself would attend the rally, which coincides with the date in which a judicial freeze will end on some 50 local bank accounts held by corporations associated with Villalobos.
The businessman has not made direct contact with most of his investors since he closed his office Oct. 14 and stopped paying interest, although a few have said they received telephone calls or e-mail messages.
Michael J. Nystrom-Schut, one of the organizers, said that he was worried that a more radical, smaller fringe group of investors might resort to physical violence to get their concerns aired.
"Give me the names of five men who have done more for this economy" than Villalobos, Nystrom-Schut said. "He is legitimate. . . no question in my mind." the spokesman is a member of United Concerned Citizens, Residents & Friends of Costa Rica, a group that generally supports Villalobos in his battle with the government.
In part, the literature the group will distribute reads:
"As Mr. Villalobos lenders, there would be no fraud concerns had he been allowed to do his work. We feel he should be permitted to represent his good intentions by working directly with his lenders, rather than sending us all to the courts for the next several years. We feel that any charges that involve Mr. Villalobos with banking violations, money laundering or drug interactions amount to absurd and unfair claims against him. We want his name cleared, and his ability to do business given back to him, now!"
The flyers, in English and Spanish, will be distributed in the court area today. Tomorrow the group will try to attract as many investors as possible to put on a show of strength. However, Nystrom-Schut noted that some investors might not want to appear in public.
Villalobos and his brother Osvaldo operated a chain of money exchange houses called Ofinter S.A. But Villalobos also operated his private high-interest lending business that may have as much as $1 billion in deposits. He used to pay up to 3 percent per month, frequently in cash at his Mall San Pedro office, until he said Oct. 14 he no longer could operate because officials had frozen his local bank accounts.
Many of his primarily North American customers depended on the interest for their daily lives. The organization is trying to alert Costa Ricans to the possibility of an impending financial disaster for the country if Villalobos is not allowed to resume business.
This is the same organization that sent five representatives to meet with Prosecutor Walter Espinoza Espinoza Thursday. Several other groups have formed, including one that seeks a solution by filing suit against Villalobos. Another has threatened to blacken the name of Costa Rica as a tourist destination unless the investigations are terminated.
United Citizens could be characterized as a moderate pro-Villalobos group which is prepared to wait and trust the businessman rather than take immediate legal action. They hope Costa Rica can negotiate with Villalobos in a way that allows him to return to business.
The group set up and then canceled a meeting for Sunday because they said they had little to report. Although many investors look to a quick resolution Nov. 26, even many members of the United Concern Citizen board believe Tuesday, Nov. 26, will be a disappointment. They expect a judge to extend a freeze on the Villalobos accounts.
Many had hoped that if the freeze were lifted, Villalobos would come out of his self-imposed exile from business life, pay back interest and resume his lending business.
One board member said the Sunday meeting was put off, in part, because organizers feared that disruptive elements would show up and cause problems.
As if to emphasize their desire not to be confrontational, the 10 a.m. rally Tuesday is called a "peaceful public gathering."
Even the most loyal Villalobos supporters are concerned that he has avoided public statements for more than a month. Some say that support will begin to diminish if the businessman does not take a public position soon.
Others report they have been told that Villalobos is setting up a reincarnation of his lending business in another country and will make that known when he is ready to accept funds.
A police raid July 4 hit both Villalobos and the Ofinter offices. Investigation showed that a Canadian drug dealer had deposited up to $500,000 with Villalobos. Canada asked for the raid, but later revelations showed that Villalobos had been under investigation by Costa Rican officials for at least two years.
So far it appears that Costa Rican officials have been unable to learn where the bulk of the investment money is, exactly what Villalobos did to generate such high returns for investors or exactly how Villalobos is linked to the 40 to 200 corporations that have been associated with his business here and elsewhere.
Nystrom-Schut said that he believes Villalobos is involved in international short-term bank loans and that the investors’ money is hard at work even if the businessman cannot now pay the interest he owes.
Costa Rican officials are investigating if Villalobos broke the law by acting as a bank without being licensed. The law here is such that it is far from clear he did break any law.
They also are studying the possibility that the funds were used to launder money, but no investigator has said that any evidence has been found.
Villalobos himself has said that investigators missed key documents when they raided the business operations and that he closed his business because he feared a second raid.
|Pacheco decree protects
Isla del Coco Park
By the A.M. Costa Rica staff
President Abel Pacheco has placed off limits to tourism and fishing the waters 12 nautical miles around the Isla del Coco, which is a national park.
Calling the park a true treasure, Casa Presidencial reported that Pacheco signed a decree that would greatly limit access to the area. The protected zone extends 22.2 kms.
Pacheco took the action Friday night as a first step in preventing the hunting of sharks. Anyone who disobeys the edict will face charges of damaging the environment or disobedience to authority, according to the decree. Some tourism boats and others with special permission can still visit the island.
A statement from Casa Presidencial said that illegal shark hunters had taken to vandalizing the watercraft of the park police. Now the coast guard will take over.
The island has a large concentration of all types of flora and fauna. The park was created in 1978. The reference to a "true treasure" is a play on words because pirates were supposed to have hidden rich treasure stolen from the Spanish on the island in the 17th century.
Two boys drown
By the A.M. Costa Rica staff
Two brothers, both U.S. citizens, have died in the surf at Playa Guapil.
The Judicial Investigating Organization said the deaths took place Wednesday when Jerry Horst, 9, got in trouble in the surf as a result of a rip tide and brother Marcus, 15, tried to save him. This happened about 11:30 a.m., investigators said.
The beach is south of Dominical, and is not protected by lifeguards. Both boys were members of a Menonite religious community in nearby Pérez Zeledón.
Former coup leader
By the A.M. Costa Rica wire services
QUITO, Ecuador — A former coup leader who campaigned in army fatigues has declared victory in Ecuador's presidential election.
Former army Col. Lucio Gutierrez appeared to defeat a banana magnate who hoped his business reputation would draw investors to the South American country. With 93 percent of votes counted, Gutierrez has garnered 54 percent of votes cast, with Alvaro Noboa trailing with 45 percent.
In a speech last week to close his campaign, Gutierrez pledged a fight against corruption. He also promised to improve social services in Ecuador, where more than half the people live in poverty.
The former army colonel gained a reputation in early 2000 when he joined protesting Indians to commandeer the assembly hall in Congress. Later the same day, Jan. 21, 2000, he formed a ruling junta with a Supreme Court judge and an Indian leader. They ruled for mere hours before the country's vice-president took power, and Gutierrez spent six months in jail as a result of the coup.
He calls his party the 21st of January Patriotic Society, but Gutierrez has rejected Noboa's comparisons of himself to Venezuelan leader Hugo Chavez. Like Chavez, Gutierrez sometimes campaigned in his military uniform but rejects implications from the Noboa campaign that he'd run the country as a dictator.
Of about five million votes cast Sunday, about 10 percent were annulled, an indication, analysts say, many voters were unhappy with both candidates.
During his campaign Gutierrez traveled to the United States, aiming to attract badly needed investments to Ecuador, whose major exports are petroleum and bananas.
In a business suit, he visited Wall Street and told potential financiers that his country would continue with the dollar as its currency and would meet its debt obligations to multilateral lenders. He said he wants a new deal with the International Monetary Fund.
Interim pick Reich
By the A.M. Costa Rica wire services
WASHINGTON, D.C. — The controversial U.S. official in charge of Latin America policy, Otto Reich, has lost his job as assistant secretary of state.
The State Department says Reich's appointment ended Friday after the U.S. Congress went into recess.
Officials say, however, that Secretary of State Colin Powell has asked Reich to assume the role of special envoy for the Western Hemisphere.
Reich was appointed by President Bush last January while Congress was in recess. President Bush took action after Democrats on the Senate Foreign Relations Committee blocked Reich's confirmation in the post.
The Bush administration could again seek the committee's approval for Reich next year, since Republicans will be in control of the Senate.
Reich headed the State Department's office of public diplomacy in the mid-1980's. Some members of Congress have questioned his activities involving Nicaragua during the Reagan administration. Reich has never been charged with any crime.
A Cuban-American, Mr. Reich supports Washington's four-decade-old trade and travel embargo against Havana. His stance puts him at odds with some lawmakers who want to strengthen economic ties with Cuba and ease restrictions on travel to the communist-run island by U.S. citizens.
|Joint police force
cracks down in city
By the A.M. Costa Rica staff
A joint task force of various police agencies cracked down on illegal aliens and other law violations over the weekend.
About 100 undocumented foreigners, all Nicaraguans, were held for likely deportation. The Friday police effort was concentrated in La Carpio. Among other violations, police said they found five places where alcohol was sold illegally.
Involved in the sweep were units of the Ministerio de Gobernación, Policía y Seguridad Pública, such as the Unidad de Intervención Policial, the Dirección Regional de San José, the Fuerza Pública and the Policía Especial de Migración.
Also involved were the Policía de Tránsito, the Patronato Nacional de la Infancia, the Judicial Investigating Organization and the Ministerio de Salud.
Saturday morning police were around the commercial center of El Pueblo.
Agents of the Patronato interviewed nearly 50 children, some of whom were found in bars. Some 16 were escorted to their parents, while one young woman was placed under arrest because she was named in a warrant, said police.
Luis Hernández, regional director of the Fuerza Pública in San José, said this was the first in a series of operations in various sections of the capital planned for the Christmas season.
More detentions OK’d
By the A.M. Costa Rica staff
A judge in Golfito has ordered more pre-trial prison time for three suspects in the murder of Shannon Martin, a U.S. student from Kansas.
The action took place last week in the Tribunal de Casación Pena. Miss Martin, 23, died early May 13, 2001, when robbers intercepted her while she was on her way to the home she shared in Golfito. She was a University of Kansas senior soon to be graduated. She suffered 15 stab wounds.
A woman by the name of Cruz was arrested last November. Two men, Castro
and Jumbado, were detained in July. The extension of detention is for four
months for Cruz and three months for the two men.
RIO DE JANEIRO, Brazil — Participants at an international economic conference are questioning whether the free market-free trade economic model can generate enough growth to alleviate poverty. Such criticism and soul-searching about the impact of globalization is unusual for the World Economic Forum. The group's defense of globalization has drawn protests in recent years.
The Latin American Business Summit, sponsored by the World Economic Forum, has brought together several hundred business leaders, government officials and others to discuss the future of economic development in Latin America. The region has been battered by political and economic crises over the past year, and economic growth has slowed compared to the 1990s.
Regional powerhouse Brazil, which is the 10th-largest economy in the world, is not expected to grow by more than 1 percent this year. Argentina, whose economy collapsed late last year, will see its economy shrink by 14 percent in 2002. Overall, the Latin American region will expand by less than 2 percent this year, according to some economic projections.
This compares to average regional growth rates of around 3.3 percent a year during the 1990s, not high, but better than the previous decade.
The 1990s was a period when many Latin American countries embarked on reforms to open up their markets and impose fiscal and monetary discipline. These reforms, advocated by international lending institutions and the United States, became known as the Washington Consensus. Latin American countries were told that, by adopting the Washington Consensus, sustained economic growth would follow.
But this did not happen in many countries for a variety of reasons. Disenchantment has set in, benefiting populist leaders like President Hugo Chavez of Venezuela. The recent election of former trade union leader Luiz Inacio Lula da Silva as Brazil's next president is seen, in part, as a reaction against the economic policies of the outgoing government.
These developments have prompted some participants at the World Economic Conference in Rio to call for abandoning the Washington Consensus. Addressing a discussion panel, former Colombian finance minister Juan Manuel Santos called for dramatic change.
"I think, politically," he said, "it would be a good step forward, if the World Economic Forum, which is the symbol of globalization, that this forum bury the Washington Consensus. Not bury some of the good things that the Washington Consensus promoted in Latin America, such as low inflation, fiscal discipline, and open markets, but to build a new paradigm from the Washington Consensus."
While not calling for an end to the Washington Consensus, World Bank President James Wolfensohn issued a stern warning at the conference. He said, while many of the problems experienced by Latin America cannot be blamed on globalization, there must be a new awareness among the private sector that maximizing profits cannot be the only goal.
"More and more business people understand they cannot live in a vacuum, that if the society around them is going to burn down their factories, or, if
|they're not going to develop their
markets, or if
they're going to ruin the environment, they themselves might profit, but their children will not," he said. And, I think that some businessmen, being rational, recognize that you cannot separate profits from social responsibility."
The issue of private sector social responsibility has gained ground at the World Economic Forum. On Thursday, organizers of the forum issued what they called a "Private Sector Declaration," calling on business to move beyond its traditional role, and support governments in their efforts to alleviate poverty and improve basic healthcare and education.
Representatives of about 100 companies signed the declaration.
U.S. Deputy Treasury Secretary Kenneth Dam, who participated in the forum, acknowledges that globalization must be accompanied by more social responsibility. But Dam, who described the Washington consensus as a term, not U.S. policy, was adamant that economic reforms work.
"Obviously, there have been a lot of problems that have developed, but I would say two things about it: reform works, economic reforms bring advantages," he said. "Perhaps what has happened is not that the Washington Consensus has failed but that it hasn't been consistently followed. If the Washington Consensus is a code-word for globalization . . . that somehow globalization is somehow a movement that has to be re-examined, all I would say is globalization is not a policy option, globalization is a fact."
Former Costa Rican President Jose Maria Figueres, who is a top member of the Forum, says there is no alternative to sound free-market policies. But, he says, business must become more engaged.
"We do have to look for new fresh approaches, to the development equation, to the development proposition that can make this global market, where we already have a global economy, a market of three or four billion consumers," he said. "That would mean that we would have lifted many more people out of poverty, that they would have had well-being, that they would have been able to become consumers. There's a lot we can do in that direction, and that is going to require multi-stake-holder coalitions. Governments, private sector, NGO's [non-governmental organizations] can't do it by themselves. We all really have to step up to the plate and bat."
World Bank Chief Wolfensohn made a special appeal to the private sector to come up with a new model. "The only way we're going to solve this problem is, if we understand that there's a mutual responsibility, and that we need to work in ways together that we have not worked before," he said.
"We have to think of new paradigms of development, not as a matter of charity, but as a matter of self-interest. And all of us must understand that, unless we deal with the question of poverty, there's just no world worth living in. I think, in the end, that's what's going to drive business to understand the issue of social responsibility and environment."
The Private Sector Declaration issued by the Forum appears to be a step in that direction, and an acknowledgment that simply pursuing the Washington Consensus is not enough to lift 224 million Latin Americans, almost half of the region's population, out of poverty.
In Mexico, there is increasing unrest among farmers in poor rural areas, in anticipation of the lifting of agricultural tariffs Jan. 1, under the North American Free Trade Agreement, known as NAFTA. The issue is being exploited by opposition political parties, which are organizing protests.
On Thursday, federal officials ended a 24-hour standoff with angry farmers who had blocked a major highway south of Mexico City. Armed police arrived on the scene, but the blockade ended without violence. At the same time, another group of angry farmers dumped tons of beans in front of the Mexican senate building, causing consternation and traffic jams in the area.
The farmers are upset about the Jan. 1 elimination of tariffs on all agricultural imports, with the exception of milk, corn, beans and sugar. Their cause has been championed by opposition parties, in particular, the Institutional Revolutionary Party, or PRI, which ruled Mexico for 71 years uninterrupted, until the election of President Vicente Fox two years ago.
Mexican Agriculture Minister Javier Usabiaga says the PRI and other political groups are manipulating the poor farmers for their own purposes.
He has called on political groups not to use the farmers for political gain that disrupts social harmony. He says the leaders of these protest groups have blocked roads and streets without
|first attempting a dialogue with
Among the protest leaders at the road blockade Thursday was a PRI congressional deputy and the party leader in the state of Morelos. They say the government has failed to provide sufficient help to farmers in the state, just south of Mexico City, whose crops were ruined by bad weather. The Fox government says it has provided help, and, earlier in the week, also boosted subsidies for basic grains by $10 billion.
But farmers groups say these measures are not enough, given the $190 billion subsidies the Bush administration has provided to U.S. agricultural producers over the next 10 years. Opposition lawmakers are calling on President Fox to seek a delay in the implementation of the tariff eliminations. A mechanism for doing so is provided under NAFTA, as long as Mexico can demonstrate that the tariff elimination would severely damage the nation's agricultural sector.
But free trade supporters here in Mexico say a delay is not necessary. They note that, on a per-ton basis, Mexican government subsidies to support grain prices are higher than those of the United States. The real problem, they say, is that most Mexican farms are small, inefficient operations that cannot even support the families who live on them.
Around 70 percent of Mexican farmers have only about five hectares of land. Mexico's 8.5 million farmers produce about one-seventh as much as their three million U.S. counterparts.
|Some questions raised
about prosecutor’s views
Dear A.M. Costa Rica:
Your article on "Investors meet prosecutor for information" was highly interesting, but not for the reasons that one might think. First, there are two pieces of good news not just one 1. That the IRS is not interested is good: however, why were they contacted by Costa Rica?? The IRS would go after the investing American citizens not after Villalobos. 2. That the Costa Rican government did not find the money (they were hoping to confiscate) is not bad but very good, indeed.
It is amusing that [Prosecutor Walter] Espinoza "offered Villalobos a deal at an early stage of the investigation: all charges would be dropped if Villalobos came up with a solid plan to repay the money owed to his investors:" While Villalobos was in operation, he always paid both interest and capital according to the rules he gave to his investors. Hence, without the raid and the intervention of the Costa Rican government, no investor would be in jeopardy. To claim now that this institution is only interested in the welfare of these investors is ludicrous.
Moreover, what charges would or could Espinoza have dropped (as he claimed he would have) if none have been made yet? Consequently, either the statement made by Espinoza to [J. Duke] Moseley was simply untrue, or, if the offer described by Espinoza was indeed made, Villalobos was very wise by not responding. A plan of how to repay the loans would amount to informing Espinoza how much money he has and where he has it, and that is what Espinoza wants to know.
The comment of Moseley that "The meeting was not … hostile, although … he felt Espinoza was trying to pump the five for information as much as the five were pumping him" confirms this suspicion. That a state, who has put so many into desperate situations now claims to only be concerned with the welfare of those desperate people is grand hypocrisy.
For the same reason, it will be very unwise to register claims with this government. Even if they wanted to, they could not return the money to investors because, by Espinoza’s own admission, they do not have it. What Espinoza wants is a list of all investors with the amounts they invested in order to be able to gauge the exact size of the operation. Supposedly, he thinks such a list could then be used as evidence in court that banking laws were violated.
To prove the violation of the banking laws, the government must show that Villalobos was running a (public) banking operation. However, by requiring that a new investor be recommended by an already trusted friend, Villalobos was not letting anybody off the street open an account with him, but he was carefully selecting his circle of friends. That is why those attempted traps of the investigators did not work.
If the government has any intension to help the investors, it needs to drop the investigation and assure Villalobos that he will not be harassed any further, perhaps requiring him to adopt some mode of operation that would be acceptable to the state. Then everything could return back to normal.
One fears that after Nov. 26 Espinoza will find another judge who will allow the continued freezing of the accounts and thereby extend the agony of investors.
It is obvious that Costa Rica is better off with Villalobos operating; the money received by the investors is being spent here and helps the economy. Yet the government thought it could improve the state budget on the backs of these investors, but, in Villalobos, they found their match. To resolve the current mess, someone higher up in the government needs to call off the hunt — and praise Espinoza for a job well done.
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|He writes to educate
Dear A.M. Costa Rica:
Well, it seems you took a broadside today from Mr. Lindowski about the fraud issue that has surfaced in this "Brothers" thing. I am not knowledgeable when it comes to Costa Rican law . . . except that it is painfully inept and corrupt. That of course is another issue.
I think when Villalobos informed the investors of a new way to receive their dividends . . . Western Union, set up bank accounts, direct deposits, etc., he was simply stalling. I visited David Mathieson in person, who informed me that the dispersment was being handled by an independent contractor. When I pressed for a name or phone number so that I could contact the contractor, he said he did not know the name or phone number of the contractor handling millions of dollars of our money and that he had no way of contacting them.
Of course he was . . . stalling, or whatever. At the same time he was continuing to accept funds from investors. Now if there never was intent to pay interest on the new investments, or repay the loans, I call that fraud.
In other words, what about funds invested after the freeze? Where is the interest on those funds. . . . .
To many uninformed that have written saying we deserve to be ripped off because the interest rate of 2.8 or 3 per cent is outragous, therefore, we should have known it was "too good to be true." Consider this: Every appliance store I visited charges 4.5% per month or 54% annual interest when a Costa Rican buys a television, washing machine, refrigerator or whatever. What if Mr. Villalobos provided the money to those stores at 3.5% or 4%. The stores would make an extra half to one per cent on the financed product without having invested anything. Mr. Villalobos picks up 1% to 1.2% after paying the investors their 2.8% to 3%.
The biggest problem with the uninformed in the North is ignorance: U.S. banks are charging upwards of 20% on Visa, Mastercard, etc., while paying less that 5% on savings. What U.S. banks are paying in interest does not even keep up with inflation. U.S. banks also send a lot of money off shore. Your money! Making more money using your money. Their trick is to keep you in the dark, and it is working.
My personal opinion about this entire matter: The Costa Rican government has gotten into this Villalobos thing and wishes it could get out of it. This investigation has cost this country millions of dollars in lost revenue. The loss of future revenue????? How many millions of dollars have the Villalobos investors pumped into this economy in the last five, ten, or twenty years?
I think government is searching for a way to save face. They have made a really stupid mistake but do not want to appear stupid. Saving face is probably more important to those involved than the innocent people they have harmed. Probably, Mr. Villalobos is going to have to step up and be the bad guy somehow.
This country is on very slipery slopes because of this investigation....I will recover, I can always make more money. Invest here?????? Who will????? You have my permission to air any or part of this letter. I did not sit down to write a beautiful, perfect letter. Nor to let off steam. I just want to inform some of the uninformed.
Bill SchritterNosara checks in
Dear A.M. Costa Rica:
Villalobos solution! Under what conditions can Villalobos reopen?
The best thing for Costa Rica and for the Villalobos Brothers investors would be for Sr. Enrique Villalobos Camacho to be allowed to reopen his business.
Other companies similar to his are still operating successfully. The prosecutors office does not seem able to come up with any "criminal" evidence to bring charges against Sr. Villalobos.
The prosecutors have stated that they offered to drop any potential charges if he gave the money back to the investors; if he does that, it puts him out of business, and most investors don't want just their money back. They want to continue receiving the interest. The investors had no complaint prior to 4 July 2002.
The real question that needs to be asked is: "under what conditions can he reopen?"
The people from United Concerned Citizens, Residents & Friends of Costa Rica who met with the prosecutor should go back and ask!
Congressman Luis Ramirez should go to SUGEF and ask!
This should be done Monday, the 25th, before the prosecutor is forced to extend on the 26th - because he has no solution.
This message is sent from Don and Karen Haskin - but represent our employees, our friends who are also investors, and I am sure, a great proportion of all the investors......
Don and Karen Haskin
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