Eleven thesis about the governance in El Salvador

The Comptroller’s office, the private enclosure of the PCN

The Comptroller’s office, the private enclosure of the PCN
The only thing that the Comptroller’s office needs to be declared as the private property of the right-wing Party of National Conciliation (PCN) is a decree that makes official what has been an inveterate practice for long time: the distribution of the state’s institutions among the political parties. Because of the repartition, the Comptroller’s office is the private enclosure of the PCN. The unexpected replacement of Rutilio Aguilera for Hernan Contreras, when it seemed as if the reelection of Aguilera was already a fact, only confirms that at the Comptroller’s office nothing can be moved if the PCN does not approve.

An old plunder
Founded in 1939, the Comptroller’s office has been the patrimony of the PCN since 1982, when the ARENA congressmen –who controlled the Constituent National Assembly- put Jose Francisco Guerrero at the head of that institution, who back then was a member of the PCN, and later he became a part of ARENA, the party founded by Roberto D’Aubuisson.

From that moment on, there have been a few conspicuous figures from the PCN at the presidency of the Comptroller’s office: Wilfredo Navarrete, Ciro Cruz Zepeda, Rafael Flores y Flores, Hernan Contreras, Rutilio Aguilera, and Francisco Merino. Contreras is getting ready for a second period at the head of an institution that his party has taken the time to discredit.

All of the formerly mentioned names have been questioned about their performance, to the point that some of them have been removed from their position for facing corruption accusations. However, these destitutions often mean superficial changes: the power of the PCN at the Comptroller’s office has remained intact. This is what just happened when ARENA and other right-wing parties agreed to keep Aguilera as the president of the Comptroller’s office.

Aguilera, a “rebel” inside the PCN?
The congressmen of the PCN have justified their decision of removing their support from Rutilio Aguilera. They have questioned his actions inside the Court. However, it is reasonable to doubt that the support given to Hernan Contreras might obey to a preoccupation for improving the profile of the institution. It is possible to think, if Aguilera’s performance is considered, that the PCN acted like that to get rid of a heavy load.

It seemed as if Aguilera had the awkward habit of disobeying certain decisions of the party, and act according to his own criterion. This does not mean that this official was an example of transparency: it only means that Aguilera preferred, at times, to forget about the “script” of the PNC and act accordingly to his own judgment.

As an example of that lack of transparency, it is necessary to remember, for instance, that last year, when Aguilera was at the presidency of the Court, the evidence of the corruption of the Banco de Fomento Agropecuario (The Bank for the Agricultural Encouragement, BFA, in Spanish) got lost. On the other hand, the audits performed at the FEDEFUT and at the INAZUCAR, detected considerable losses. The official decided to move the auditors to a position where they were not considered dangerous.

However, Aguilera demonstrated that he was a “rebel”, and he did not always stick to the interests of the PCN and ARENA. It was the Comptroller’s office the one who denounced the BFA for the loss of a considerable amount of fertilizers donated by the Japanese government. On July 2001, the Court also accused the bank of an inadequate administration of the funds destined to the El Carmen refinery. The result of this accusation was the arrest of Enrique Rais and Raul Garcia Prieto, and the charges against Hector Cristiani; last year, all of them were executives of the BFA.

There is no doubt that this situation was an inconvenience for the followers of the so called “right-wing block”, since one of the suspects, Garcia Prieto, has occupied positions at the direction of ARENA. It was clear then that this “block” needed to guarantee the total docility of the person who directed the Comptroller’s office. Aguilera’s outbursts of independence seemed to be harmful for the interests of the right-wing.

Hernan Contreras, a questionable figure
The fact that Aguilera has been replaced does not change the situation at the Comptroller’s office. Hernan Contreras had already been president of the Court between July 1990 and August 1998. He left this position to dedicate himself to his presidential campaign for the following year’s election. As he did not succeed in his career for the first magistracy, the politician took a seat in the legislative body. This means that this character has never been away from “the business of politics”. A multifaceted man at all of the fields in which he has worked, Contreras has left behind him the shadow of a doubt.

For example, he covered up his successor, Francisco Merino, in the illegal sale of some field areas at the county of San Luis Talpa. Contreras was fully aware of the illicit transaction. However, he thought it was more convenient to forget it, in order to let his colleague fill the position. That person is Hernan Contreras, the president of the Comptroller’s office.

The name of the current president of the Comptroller’s office came out to the public light again in August 2001. Thirty seven former students of the Nueva San Salvador University (UNSSA, in Spanish) discovered that they graduated with certificates that had been contested by the Ministry of Education. Contreras, who is the Rector of that University, chose not to respond to the claims. That person is Hernan Contreras, the businessman.

This character, along with other legislators of the PCN, is one of the people responsible for having turned the Congress into a political market, where privileges are on sale for the political parties and for certain people at the expense of the state. That person is Hernan Contreras, the congressman.

Where is the Comptroller’s office going to?
With the way the PCN has dealt with the affairs of the Comptroller’s office, it has not become a civilian instrument to guarantee the probity of the public matters’ administration. Moreover, this institution has only been able to pretend it does not notice the theft of the public property.

To audit the state, the Comptroller’s office needs independence, and this is a remote probability if it is considered that the designation of the people who occupy the important positions is the result of transactions made between the political parties.

The Comptroller’s office, with such a delicate responsibility, needs to be examined from the outside. The PCN has acted only according to its own wishes. So far, the comptroller’s office has been managed without any inspections. Although the Organic Law of the Comptroller’s office authorizes the Legislative Assembly to audit it, certain congressmen have prevented such action from happening. The only thing that can be expected from the Contreras administration is the continuity of the vicious actions. The Comptroller’s office is the private property of the PCN, and it seems that no one can put an end to this.

Is the increase on the prices a result of the privatization process?
 

The increase on the price of the electric energy and the telephone services is one of the most disappointing news for the consumers, and something that has been happening for years, despite the small inflation rates that the official information presents (1.4% for 2001, and 2.5% by last April). During the last three or four years, the distribution range of the basic services might have been enlarged, as those who agree with the privatization process assert; however, the consumers are the ones who pay for it. In other words, it is not the result of the intervention of the international private business companies alone, as they intend to make believe. An evidence of that is how the contract that directs the operations of the private telephone company justifies the increase on the consumer's bill for the investments made to enlarge the coverage range.

The privatization process was celebrated and highly advertised by saying that it would considerably improve the efficiency and the reliability of the services, that the coverage range would become larger, and that the rates would go down. At least that was the discourse of the governmental officials who were responsible for promoting it. The privatization of both the telephone services and the distribution of the electric energy took place first in the field of the basic utilities. Hey also intended to do something similar with the distribution of the potable water.

The events, from the privatization of the telephone services to the distribution of the electric energy, show different tendencies: on the one hand, a larger coverage range and more technical efficiency which contrast with an increase on the prices (one of the highest rates in the Central American region). Apparently, the higher efficiency levels of the business companies have higher prices for the consumers and higher profits for the companies, which actually means that the "superior" efficiency of the private business companies is not so genuine.

Without going too far, a recent announcement of the General Superintendence of Electricity and Telecommunications (SIGET, in Spanish) has reminded to the consumers that the contract with the administrator of the telephone service contemplates successive increases on the basic charge. During the next five years, new increases are planed for the basic telephone charge, which will go from 71.09 colones (the price for 2001) to approximately 123.08 colones for the year 2007. That means an accumulated increase of 73.2% that will be applied gradually and annually. The first increase will be 18% until it reaches a price of 84.15 colones starting now in June. From that moment on, the plans are to increase the rates every month of June until it reaches the formerly mentioned amount.

It is interesting to notice that, by the definitions of a contract, the increases are not essentially a business policy, but a "concession" of the state. One of the clauses of the privatization contract of the telephone services opens the possibility to increase the rates as long as the private telephone company increases the coverage range of the telephone lines, something that has apparently been done already.

A similar disposition exists as far a the electric energy supply is concerned, with the difference that here the changes do not depend so much on the investments, but on the cost of the megawatt/hour access. This does not mean that there are no extra charges for using the investment made on the transmission net and for the assistance to the public.

By May, the cost of the electric energy increased 6.6% because it was necessary to generate the electricity through thermal devices, due to the low level of the waters at the hydroelectric dams. The inconvenience is not only that the thermal generation of the energy is relatively expensive, but that the Hydroelectric Executive Commission of the Lempa River (CEL, in Spanish) arranged an unfavorable contract with the private generators (See Proceso 989). In summary, lax concessions would have been arranged for the production companies that would allow the establishment of extremely high prices in relation to the available offer at the neighbor countries, such as Guatemala. It seems that this high price for the consumers is about to be eliminated with a millionaire compensation that the CEL will have to pay to the owners of the companies that generate thermal electricity in order to indemnify them because of the effects of the contract.

As far as the behavior of the electricity prices during this year is concerned, it can be said that something has gone wrong with it: the charge was increased up to 70.75 colones per megawatt/hour in February, they fell to 56.06 colones in March, only to increase it two months later and reach the 69.14 colones in May. This behavior mostly obeys to the considerable fluctuations of the generation of energy through hydraulic devices at the dams, which involves lower generation costs, but a higher dependency on the hydro-meteorological factors, specially when it does not rain frequently.

In the past, when there was not enough capacity of installed thermal generation, the years after the dry seasons (such as 1988 and 1992) forced them to perform a program of energy rationing that sometimes lasted six hours a day. In the present, the energy deficits left behind by the dry seasons can be supplied with the offer of the thermal generators, but for a higher price that in the end affects the rates. This is precisely what would have taken place in the last months: the generation at the dams has been reduced and the thermal generation has been increased along with the profits for the suppliers.

In both cases, the SIGET has stated that the increases could have been higher and that they had been able to alleviate the increases by negotiating them -in the case of the telephone services- and by promoting the saving of the energy at the governmental sector, which reduced the demand and avoided an even higher increase on the electric energy prices. It would be necessary to infer that, after all, the state has a certain capacity to regulate.

These events can make people reflect over two aspects: in the first place, the behavior of the prices in the privatization era; and in the second place, the role that the state has been playing and should play in the process. If there was an available indicator of the prices of the basic services it would reveal that the consumers actually face higher increase rates than those presented by the Index of Prices for the Consumer. It can be inferred from the former idea that if the state were the one administrating the services now, the prices would have been increased, but not at the pace dictated by the private business sector.

It cannot be ignored that, in the case of the telephone services, the charges are increased because the coverage range is enlarged; while in the electricity services the rates are increased because of the additional charges for investments on the assistance to the customers, or because of the use of the transmission net (some aspects that in the “inefficient” former system were not considered) or, in certain cases, because of the gradual elimination of the subsidy on the consumption, presently reserved only for the homes that consume less that 100 kilowatts per hour on a monthly basis. Therefore, the “efficiency” is paid by the consumer, and little by little the basic services become less accessible for most of the population.

The state can be made responsible for a considerable percentage of these increases on the charges; decisions such as the gradual elimination of the subsidy, the negotiation of contracts that increase the cost of the energy generated by thermal devices, and the permissiveness for the introduction of new prices and the new ways of establishing them have affected the rates. Just as it was expected, privatization has turned into a profitable business for the international companies, and in a bad business deal for the consumers, who will keep paying more for these services, no matter what those in favor of the privatization process say.