Weak in the knees when it comes to the banking system

The return of "El Maneque" to ARENA

The bank is questioned once again: the case of CREDISA

Arms for the violence

News Briefs

WEAK IN THE KNEES WHEN IT COMES TO THE BANKING SYSTEM

Only a few weeks ago, President Calderón Sol, as Commander in Chief of the Armed Forces, demonstrated to the country strength and determination seldom before seen; but not so when dealing with the banks, it would seem. President Calderón Sol showed himself to be strong when confronting the army but weak as he faced big capital, which he does not treat with the same firmness he shows when dealing with other national sectors even to the point of not requiring them to comply with the law in the same manner —something that, as a public functionary, he is obliged to do.

The financial difficulties of CREDISA were nothing new for those in the know; everything has been common knowledge for some years now. But not long ago, the Superintendence of the Financial System discovered that CREDISA had used incorrect operations and imposed a huge fine on its board of directors, who, however, pressured the superintendence to such an extent that the charges were dropped and the fine cancelled. If at that time the government of Calderón Sol had supported the decision of the superintendence and the fine imposed had been maintained, perhaps the history of the bank would have been different.

More recently, the president presented reports of illegal activities by FINSEPRO and INSEPRO, received its owner in his office and cautioned him that he had one month to put his affairs in order. In this case the Superintendence of the Financial System, following orders of higher ups, postponed his intervention and did not halt the operations of the two financial institutions until the losses were irrevocaable. Calderón Sol justified his behavior by affirming that, as president of the republic, he could meet with whomever he chose. This is the very same authoritarian argument he used when dealing with the Armed Forces.

For some time now it was a well known fact that the balances at CREDISA did not reflect its actual financial reality, even though they had been audited and had been approved by the Superintendence of the Financial System itself. But this practice is not limited to this bank. It is a well known fact that, in general, the bank balances published, religiously, in the newspapers, do not reflect their real financial status unless the superintendence intervenes. Something similar is taking place in the Superintendence of Pensions. The financial reports of the pension fund administrators are "adjusted" by common accord with the superintendence itself. It would seem, then, that this entity does not supervise, but, rather, collaborates fully with those whom it should be supervising

The role of the Superintendence of the Financial System and the Central Reserve Bank stands questioned. In 1994, the Central Reserve Bank contracted a Chilean consultant firm to draw up a report designed for CREDISA investors. In that report, investors were assured that the institution had been cleared, which turned out to be false. Four years later, the same firm was contracted to analyze the financial status of CREDISA, but this time its report served as support for the decision of those who wanted to liquidate CREDISA. The balances reported for the last four years were reviewed and approved by the Superintendence of the Financial System, which found no irregularity until the end of 1997 when it published the existence of "important credit and administrative risks". Moreover, there exist reasonable doubts as to the criteria used by the Superintendence oof the Financial System to demand reserves for the reorganization of CREDISA. Some consider that this measure was more severe than that applied to other banks in similar situations. In fact, its application was one of the causes for the insolvency which precipitated the transference of active and passive accounts to other banks.

In short, the Superintendence of the Financial System had abused its discretionary faculties. But, it would seem, it did not use them in the same way as all banks. It is not difficult to guess that it is more severe and inflexible with the small banks than with the big banks. It is probable that it alleges that the big ones are more solid than the small ones and, therefore, more amenable to the confidence required to adopt a more complaisant attitude. Neither does one need much imagination to be aware of the fact that the big banks are bent on making the small banks disappear. The double-edged sword of the Superintendence of the Financial System appears to be, when looked at in this way, an adequate instrument for obtaining these ends without interference and with apparent legality. This weak-kneed posture on the part of the government as it confronts big capital is in direct contrast to its public discourse on freedom of the market and competition and this posture signifies impunity.

In practice, responsibilities and a rendering of accounts are not being required. Frauds and bankruptcies seem to occur with inevitable fatality and, therefore, those responsible disappear by magic. CREDISA granted related loans without real guarantees and these grants fell beyond the limits of what is legally permitted; it pardoned interests, administered its credits using inadequate and extremely risky methods; it made short-term loans in order to pay long-term debts, engaged in faulty administration, made loans to its employees so that they could acquire shares, etc. Many of these operations were well-known practices, but none of the entities charged with supervising them seem to have pointed these practices out. Last year, a brave woman made a statement that CREDISA confronted grave financial difficulties and was taken to court for defamation of character. Now it appears that others are those who should be brought before the tribunals for committing fraud against the public economy.

This new bankruptcy only serves to confirm what is already known: that Salvadoran banks are not worthy of confidence. Fraud and poor administration have left in their wake four successive bankruptcies and there is another on the way, according to what is generally known. But as opposed to the earlier breakdowns, in the case of CREDISA, at least the deposits were salvaged; but not the investments of the shareholders. In spite of the fact that these bankers maintain that confidence is the basis of their business; in practice no effort is made to generate that confidence. On he contrary, the bank is perceived to be more and more of a business characterized by wild ambition and merciless methods. Nevertheless, there is no alternative and one must deal with them knowing that, at any moment, the bank’s patrons might be hit with the surprise of their lives. The government, which should oversee the banking system to guarantee a modicum of honesty and respect for the law, is given to a weak-kneed posture when faced with the enormous power of the banking system.

THE RETURN OF "EL MANEQUE" TO ARENA 

Near the end of 1996 a massive flight of ARENA party members unhappy with their party contributed to a deepening of the crisis that the government party was experiencing during that period. "Los Maneques", as the dissident group called itself, shortly thereafter joined the rank and file of another right-wing political party: the PCN. This state of affairs seems to have presaged ill winds for the ARENA party. It was thought that, finally, after long years of arrogance and hegemony, it was the turn of the party in government to bow its head and recognize that power was not given to it for once and always as if by divine decree.

Now, two years after those events, those who were once unhappy with the party have returned to the ARENA fold and the party rises anew from the ashes. How much did the "Los Maneques" maneuver affect the ARENA party? One has only to recall that it was in part thanks to the arrival of that group of dissidents that the PCN succeeded (during the 1997 elections) in significantly increasing its number of seats in the Legislative Assembly and the number of municipalities it administered. This means that, when the "Los Maneques" group left ARENA it took with it not only its lack of conformity, it took, moreover, a considerable lot of votes —votes which ARENA was evidently lacking during those elections.

So it is, then, that the fissure in the ARENA party’s hegemony was not only a result of the triumph of its principal rival, the FMLN—which was, without doubt, the most decisive reason--, but also (and this cannot be laid to rest) the acquiring, thereby, of greater quotas of power by a reinforced PCN. Antonio Cornejo Arango, leader of the "Los Maneques" group and founding member of the ARNEA party, is not mistaken when, as he was asked if he believed that ARENA had learned the lesson that he and his cohorts had given the party, he answered yes. It is clear that the ARENA leadership did not decide to make certain modifications at the heart of its party (see Proceso, 839) only by virtue of what Cornejo Arango and those who went with him succeeded in winning in March, 1997. But there is no doubt that what happened influenced later determinations taken by ARENA.

Some months after all of this happened, the "unhappy" ARENA members began to have problems with the PCN. It turned out that deputies recently arrived to the party began to support initiatives coming from the left opposition , and this with the objective of demonstrating to ARENA not only that the PCN, with its new members at the helm, would begin to acquire real autonomy, but also that a new quota of power acquired by it would permit it to position itself as an important opposition political force. But the old PCN leadership was not willing to get a complete divorce from ARENA. One thing was to have capitalized on the scandal of the dissident group and another entirely that the leadership of the PCN would be willing to bend to the needs of the "Los Maneques" group (see Proceso, 785).

And so it was that the group not in conformity with ARENA began, then, to abandon the ranks of the PCN as well. Perhaps some of them understood that without a party platform they had no future in the world of politics and, as "good sons", returned to ARENA. This is the case of Sigifrido Ochoa Perez. Others, it would seem, became aware that the old PCN leadership was never really interested in becoming independent from ARENA because the only thing its members aimed to achieve was a satisfaction of their own personal needs, for which, the most easy and convenient was to remain allied to the governing party. Such is the case with Cornejo Arango himself, who, giving no warning and heeding no protocol, decided that he, as well, would return to the party to which, together with D’Aubuisson, he had founded..

In an interview by the morning daily La Prensa Gráfica "El Maneque", speaking of his return to ARENA, declared that, doubtless, in any political ambience other than the Salvadoran, his actions would be seen as a bad joke. For example, in answer to the question, "is it true or false that you only appear at key the moments when there exists a possibility of winning a quota of power?", he responded in a nonchalant way: "I can say that it is true". Or, to another related question related to whether he believed he possesses all that is necessary to take up a leadership position in ARENA, he expressed the opinion that "the truth is that I have more than enough [of those qualities]". And this after having been asked if he believed that his vote saved the PCN —to which he replied: "yes, but don’t put it to me that way, because I like humility".

And if this were not enough, Cornejo Arango declared that he would be "the conscience of the party", that he would not permit" things to be done which were not in the interest of the common good" and he presented himself, moreover, as the "father" of all ARENA members, whom he has the right to "scold" when "they do something bad". The first question to be asked when examining the declarations of "El Maneque" is: how is it that a person whose past has been questioned because of his participation in death squad activity and for his possible linkages with kidnappings is now declaring himself to be the "conscience" of the party? It is difficult to understand why Cornejo Arango does not understand that he possesses not the slightest moral authority to "reprimand" or to decide when politicians are acting in conformity with "the common good".

The truth is that it is an insult that "El Maneque" returned with such arrogance to the first line of the political scenario. But, is there any point in denouncing his cynical behavior in a country where impunity reigns supreme among the powerful and over the consciences of the population? His case is far from being the only one. Just as in Arango’s case, Rodolfo Parker has a dark past, but the fact that his name appears on the list of those denounced by the Truth Commission has not kept him from becoming the presidential candidate for the PDC. As in the case of Parker, an undetermined number of names which today occupy number one positions in public life of the country could be named. Everything seems to indicate that the Salvadoran people are destined to be governed by those who, in the recent past, committed acts outside the legal limits without there existing the least possibility that they might be punished. It would seem that, implicit in present day reality lies the idea that that is the price to be paid for peace and for the advancement of the process of democratization.

The foregoing is not only a political problem, but also an ethical one and there is much to be said in this respect. The grave and serious problem with the current state of affairs is that the behavior of politicians continues to be immoral and undemocratic and that impunity continues to be the order of the day. Politicians accuse each other publicly of corruption and nothing can be done about it legally. When something obstructs one’s pretensions to power or impedes his progress towards greater quotas of power, one simply changes parties and no one even bats an eye: to wit, something similar to what happened in the PCN is happening in the PDC, whose dissident members have made agreements with the FMLN or are currently involved in the process of transferring over to the USC. All in all, then, how are we to have confidence in or believe in the credibility of politicians?

THE BANK IS QUESTIONED ONCE AGAIN: THE CASE OF CREDISA 

Since its founding, the financial system in El Salvador has been fraught with diverse cases of fraud, questioning of its procedures as well as reforms of its judicial and institutional context. A case in point is the fraud which resulted from the decentralization of the emission of the national currency at the end of the last century, the creation of the Central Reserve Bank and then of the Monetary Junta, the nationalization and reprivatization of the bank, recent cases of financial fraud, and, more recently, the bankruptcy of the Real Estate Credit Corporation (CREDISA, for its initials in Spanish).

The banking system arose as a result of the introduction of coffee production during the second half of the nineteenth century in El Salvador, and, throughout its existence it has always been a creature of the business sector. In the year 1934, the Central Reserve Bank was created with the objective of controlling the flow of credit and the demand for the circulation of currency; nevertheless, during the first thirty years of its existence, its leaders were representatives of the coffee producing, banking and commercial sectors. As a result, their decisions were clearly tied to the interests of these sectors, a state of affairs which neither the creation of the Monetary Junta, or the nationalization, nor the processes of privatization have succeeded in changing.

Nationalization was proposed with the express intent of converting the bank into an instrument for development, but, at the end of the decade of the 1980´s, its critics pointed out that the bank was technically bankrupt, exhibited unfavorable micro and macro economic indicators complicated by the fact that it had not succeeded in its objective of eliminating discrimination in the granting of credits. Some of the problems which the state-owned bank exhibited were: high indexes of non-payment, problems of liquidity, low profit level, insolvency and a lack of capacity for reorienting economic growth.

The process whereby the banking system was privatized was presented as the panacea for these problems, but, since the implementation of privatization during the 1990´s, far from exhibiting resolutions to these problems, significant financial fraud has been documented such as has never before been seen in the country. This phenomenon is to be seen in the cases of CREDICLUB and FINSEPRO-INSEPRO, cases which occurred in 1997. Now, over and above the cases of fraud, a case of crisis provoked by inefficient management has come to the fore —in theory something which is not usually the case in private enterprise— in CREDISA. Should it be true that the bankruptcy of CREDISA is not a new case of financial fraud, this would be yet another indication that efficiency is not a "natural" and exclusive characteristic of the private sector because, as it would appear, the bank in question has come to the thresh hold of ruin as a result of subjective management of credits and because of the administrative costs of the institution itself.

Be this as it may, CREDISA´s bankrupt state, it must be mentioned, reflects the fact that the management policies of the financial institutions are neither the best for the nation nor for their own finances. Proof of this is the anti-productive bias exhibited in the granting of credits, various cases of embezzlement and the bankruptcy of CREDISA.

It may be germane to the point to indicate here that agriculture and industry have not been the recipients at the hands of private financial institution so of the same lines of credit as other sectors. If the behavior of credit for the decade of the 1990´s were to be examined, one might observe that, between 1990 and 1997 the agricultural and livestock sector moved from a level of receiving 13.3% of the credits available when it received 10.1% while industry moved from 16.9% to 17.1%. On the other hand, construction moved from the level of 2.3% to 13.1% during the same period of time, while at the same time services went from receiving 1.8% to 4.6%. This suggests that the management of the financial system did not contribute to achieving the objectives proposed for development, which necessarily stimulate the growth of the productive sectors. Precisely a case in point is CREDISA which focussed on financing construction projects, a policy which quickly proved itself not to be the best option.

The CREDISA case, moreover, demonstrates that privatization is not synonymous with efficiency because, in accordance with the analysis presented to the Superintendence of the Financial System (SSF), in the banking institution diverse errors were committed in the management of the credit portfolio and in cases of interest rates. Additionally, CREDISA suffered from a conjunctural problem related to the contraction of the construction sector which came to the fore in 1994. According to this same source, the most important problems of CREDISA are five, and may be summarized as follows: a strong concentration of credits in the housing and construction sectors, high administrative costs, relatively low margins of financial intermediation, inadequate credit structures and, in its final phase, the flight of deposits as a result of loss of confidence on the part of the depositors.

CREDISA came into existence during the decade of the 1970’s with the flowering of the construction and housing industry and, since that time, it has been characterized by its provision of financing for construction projects. The economic recession which began in 1994 had a strong impact on the construction sector and, as a consequence, also upon CREDISA’s balances, in the measure that the construction enterprises became overdue in their payments. According to data provided by the SSF, of the total loan portfolio granted by CREDISA, 43.7% was in the housing sector and 22.2% in the construction sector, a situation which implied that both had taken up 65.9% of the total credits granted.

Administrative costs also came to affect balances in the acquisition of a new building for the functioning of the bank and the broadening of its network of branch banks, in spite of the fact that some agencies already functioned at a deficit. Moreover, the financial mediation was inferior —by 2.3 points— to those which were in place in the other banks of the financial system. Meanwhile, CREDISA obtained up to 6.4% of the financial margin. This is owing to the fact that it charged lower rates on profits (1 point less than the rest of the banks) and paid the highest passive rates (2.3 more than the other banks).

CREDISA’s credit structure came to represent an additional problem in proportion to the long range credits which it financed with the portfolio of short-range deposits . This meant that it did not have the necessary resources to maintain the levels of liquidity adequate to the amount of the deposits which had been confided to it. The situation became completely untenable after October of 1998 when the SSF made public CREDISA’s precarious financial situation and gave it 60 days to increase its capital by 50 million colones. From that moment on, a massive flight of deposits which lasted for two months began and came to represent close to 500 million colones.

The CREDISA case represents a demystification of the pretension that the private sector is a good administrator par excellence and that privatization is the solution to all the ills of the state sector’s inefficiency. At the same time, the case demonstrates that the owners of the financial system can easily use public resources to extend preferential credits at their discretion, or even to businesses related to the themselves, such as the SSF has suggested. This reality would seem to oblige the state to increase its monitoring of financial institutions as well as to consider the necessity of articulating the sectorial interests of the bank with national interests by means of encouraging productive activities supported by opportunity and sufficient credit assistance.

ARMS FOR THE VIOLENCE

A few weeks ago, the communications media reported on the Legislative Assembly’s intention to present an additional bill as part of the project to reform the Firearms Law, the provisions of which permit civilians and citizens in general who do not belong to the police or defense bodies to be able to acquire and carry heavy caliber and large firearms (read: M-16s, AK-47s and others in the same category). This is a project specifically of the Defense and Public Security Commission and the law up to now has restricted the use of these arms to state entities because they are classified as weapons of war.

The argument most frequently cited by the deputies of the Legislative Assembly who are heading up this initiative is that "honorable" citizens need more resources in order to defend themselves against criminals who are generally better armed than the guards employed by security companies as well as the police themselves. According to news reports, the initiative arose from some business sector and would be supported by all of the parties making up the Legislative Assembly, with the exception of the FMLN which is the only political party which has publicly opposed the project. At bottom, this type of proposal will do nothing more than elevate the level of arms in circulation in Salvadoran society —which are considerably higher than they were some years ago—, at the same time as it was revealed, on the one hand, that the kind of reactions which come to the fore at the moment of fighting crime and, on the other, the inability of the country’s authorities to articulate a coherent and effective policy on crime.

The magnitude of violence and crime in El Salvador, which is outside the realm of normality by any measure, is a well known fact. Such levels of violence not only make peaceful coexistence among Salvadoran citizens an illusion —this having been a goal posed by the Peace Accords which should, by now, have been achieved—, rather, moreover, they represent one of the major challenges to the process of political transition which the country is experiencing. One of the situational factors which has contributed the most to the quotas of Salvadoran violence is the number of firearms in circulation in the hands of the civilian population which are subject to very few restrictions. The quantity of ordnance with the capacity to kill is, in part, the voluminous inheritance of twelve years of civil war, but, it is a product of a policy of liberalization of the buying and selling of handguns or semi-automatic weapons which have allowed almost anyone to acquire a pistol or handgun in the same way one buys domestic electrical appliances.

In other words, the problem of firearms in the country not only has to do with the fact that they are leftovers from the war —many of which are probably in deteriorated condition and without replacement parts—, but is also a product of an industry which is subject to no controls which has managed to update the arms which are in the hands of Salvadoran citizens, supplying them with munitions and accessories for their use. The lack of an efficient policy for control of the buying and selling of armaments has provoked a situation in which efforts by a civilian organization to encourage the exchange of arms for consumer goods in the end only managed to bring about the recycling of arms already in the hands of civilians.

Diverse studies have demonstrated the connection between the levels of violence in a society and the availability and ease with which its citizens can obtain arms. To argue, as do the deputies of the Legislative Assembly, that those responsible for death and violence in this country are the people and not the firearms as a way of justifying the introduction of heavy firearms onto the local markets, constitutes a fallacy which could have terrible consequences in the current Salvadoran situation. Although it is true that those who are basically responsible for the violence are people, this does not obviate the fact that an armed person is more inclined to use force than and unarmed person. And not only this: an individual with a firearm —above all if it is a high-caliber firearm— is much more dangerous than an armed person with a club or machete because the firearm is more lethal and effective when the object is to kill someone. The investigation of ACTIVA implemented by IUDOP and coordinated by OPS demonstrated that people with firearms or who want to have them possess a system of norms which tends to justify the use of violence with more frequency than those who do not possess firearms and do not wish to possess them.

To remove legal penalties for the carrying of heavy caliber firearms would only increase the potential to do harm by those who are disposed to use violence. The argument that these are for defending oneself against criminals could be true, but to place them in free circulation also makes them available to criminals and, moreover, obliges criminals to increase the level of their "firepower".

Behind this initiative for buying and selling heavy caliber arms is, doubtless, the feeling of insecurity which many have and which is provoked by the perception of the fact that the state has not been capable of providing basic public security for the population. Opting for firearms, nevertheless, cannot be a guarantee of security for anyone, above all when the inoperability of the mechanisms of control over carrying smaller arms has not been proven. In other words, no guarantee whatever exists that the most dangerous arms will not end up in the hands of those who wish to use them to commit criminal acts. There is no reason whatever to expect that the PNC or the authorities will have access to mechanisms so that only "honorable" citizens can have access to armaments, considering that many of these citizens are as dangerous —or more so— than the criminals themselves.

The bottom line is that the intention to liberalize the buying and selling of high powered firearms also demonstrates the incapacity of authorities and the government to articulate coherent measures to confront crime and violence in an effective way. It demonstratives, moreover, the clear absence of a consistent policy on crime. To permit the entry into the legal market of more lethal instruments such as rifles and other high powered firearms is a measure that by all standards goes against what ought to be the steps which lead to a diminution of violence in El Salvador. There exist sufficient experiences in other countries which demonstrate that a restriction on availability and the carrying of firearms contributes to a noticeable reduction in the rates of criminality. A report published in the magazine Newsweek two weeks ago reveals that in the United States in the states which adopted more restrictive measures with regard to firearms there has been a reduction by 26% in the levels of crime. In the Salvadoran case, the initiative in favor of firearms is one of the blind efforts made by the authorities with regard to the problem of crime; this is a problem which they have been incapable of solving and which probably has contributed with measures of the same kind.

In order to reduce the levels of crime and violence which currently exist in El Salvador, the population must be disarmed —be they "honorable" or not"—, extremely firm controls must be established for the acquisition and carrying of arms and munitions and accessories without which firearms do not function (for example, munitions and ammunition) ought to be heavily taxed. The only persons authorized to possess firearms ought to be security forces and these ought to be under strict control as to their use by members who are on leave from active duty.

The persistence of violent crime in El Salvador is the result of this kind of proposed measures coming from the Legislative Assembly. Bills like these are only an example of how the remedy could become worse than the sickness when the remedy is a result of ignorance.

_____________________________ 

This article by Miguel Cruz, Director of the University Institute for Public Opinion (IUDOP) of the UCA.

NEGLIGENCE. The superintendent of the Financial System, Francisco Bertrand Galindo, stated, on January 26, that the liquidation of the CREDISA bank could be owing to deficient methods of handling resources by the institution’s administration. The Superintendence stated that it would proceed to investigate the reasons for the liquidation in more depth until it has established that a crime has been committed against the national economy or such a possibility can be waived. Likewise, Bertrand Galindo corroborated the fact that the losses reach figures close to 700 million colones. Nevertheless, the superintendent expressed doubts that bankruptcy is eminent and spoke rather of "a problem of very serious inexperience, very seriously risky decisions taken that, in the long term, led to the current state of affairs.". He stated, also, that he suspected that serious violations of the law had been committed. "What is happening is that we did not want to act until there was a clear relationship between the act and the responsibility linked against this act", explained the superintendent, according to whom, there exist two options: to report the case to the Attorney General’s Office —although this office does not have the tools to discern who is responsible and who is not— or delve more deeply into the investigations and try to determine what conduct and which persons are linked to this set of circumstances so that the attorney general can avail himself of these elements in order to take action (La Prensa Gráfica, January 27, p. 4).

CONTRADICTIONS. After the ex commandant Joaquin Villalobos accused ex commandant Shafik Handal, on January 12, of having planned the kidnapping of Kerim Salume, a series of contradictions between the declarations of other ex commandants have come to the fore. Villalobos stated that in a 1991 meeting of the general command of the FMLN, Handal accepted that the Communist Party held Salume kidnapped because it needed money. So then, two other ex commandants of the FMLN, Salvador Sanchez Ceren and Francisco Jovel, declared under oath that such a meeting never took place and that the topic of the kidnappings was never discussed before the signing of the Peace Accords. Nevertheless, Alvaro de Soto, the UN representative for the peace process, explained that he transmitted to the commandants expresident Alfredo Cristiani’s concern about the presumed participation of the FMLN in the kidnapping of Salume. In this context, Shafik Handal has publicly denied any participation in the kidnapping. He has, however, not made declarations before a judge as he enjoys constitutional immunity. Given Villalobos’s declarations, government representatives, legislators, representatives of Public Security and members of the ARENA party called for "justice and greater responsibility at the moment of examining the facts which surround the case" (La Prensa Gráfica, January 29, p. 5 and El Diario de Hoy, January 29, 0.2)

HANDAL. Ex commandant Shafik Handal said, on January 29, that he is willing to testify before the courts in the matter of the kidnapping cases and, at the same time, denied that his constitutional immunity had been an obstacle for his doing this. He explained that he had not made declarations because he had not been called upon to do so. "I have never been subpoenaed...no one has asked me to testify, because those who are interested in continuing on with this case want, at all costs, to make me out to be someone against whom charges are being brought, not as a witness", he declared. Deputy Handal affirmed that behind the Joaquin Villalobos declaration is the National Association of Private Enterprise (ANEP) and ex president Alfredo Cristiani who is carrying out a campaign against him. According to Handal, "ANEP has lent its name" to a group which is against him. At the same time, he argued that the fact that the news media learned of the Villalobos declarations before the judicial authorities did shows that the case has a "certain coloring due to the electoral period". Handal maintains that the Communist Party did not kidnap Kerim Salume nor any of the four other persons mentioned by Villalobos in his January 12 declarations. Ricardo Siman, the president of ANEP, declared that "ANEP would not stoop to lend its name or compromise its institutionality for...political convenience or power groups" (La Prensa Gráfica, January 30, p. 14).

SUPREME ELECTORAL TRIBUNAL. The Magistrates of the Supreme Electoral Tribunal (TSE) hired 300 employees with salary who will work temporarily on the electoral project. The methodology for the assignation of the quotas to be paid to each magistrate is known as "the key or coded system" which consists in proportional sharing of positions which are open during each election. These workers will answer to the parties to which they have representation in the TSE. According to explanations provided by secondary magistrate Augustin Diaz Saravia, assigned by the PDC, the three magistrates who represent the four majority parties have assigned 20% of the total to each one. The two proposed magistrates for the Supreme Court have 15% each one. The remaining 10% have not yet been assigned. However, the system of codes, or keys, was denounced by the Consortium of Non-Governmental Civic Education Organizations. Tony Torres, member of the Consortium, denounced the system in which keys or codes persist and that the positions are not shared out according to capability or whether the person is the best for the job, but rather on the basis of political criteria. Some deputies of the Legislative Assembly also expressed their discontent. For them, there is an evident lack of equality because the parties which now dominate the magistrates offices of the TSE hire their sympathizers, leaving those parties which cannot choose at a disadvantage (La Prensa Gráfica, February 1, pp. 4-5).

ABORTION. The Committee for the Defense of Dignity and Life, on February 1, presented a bill to the Legislative Assembly in which they request the ratification of an amendment to Article 1 of the Constitution of the Republic in order to eliminate any possibility of a decriminalization of abortion. The said amendment was part of a package of 28 bills which ARENA introduced into the plenary session on April 30, 1997. Article 1 states: "El Salvador recognizes the human person as the origin and end of the state’s activity..." Possibilities for its ratification are quite serious because the majority of legislative fractions reacted in favor, except for the FMLN Deputy Eugenio Chicas, who stated that "the ratification is not helpful. It is not up to date with the sciences". Chicas considers that a broad discussion ought to be encouraged on the topic in order to permit abortion in some specific cases. The PCN is the only party which still has not decided upon its posture with reference to abortion (El Diario de Hoy, February 2, p. 8 and La Prensa Gráfica, February 2, p. 17).

NATIONAL CIVILIAN POLICE. The PNC authorities announced, on January 29 a change in 44 heads of specialized delegations and divisions of that police corps. The changes enter into effect on February 1, one of the most important of which was the appointment as sub-commissioner Gabriel Antonio Mayorga as the new head of the Criminal Investigation Division (DIC). Mayorga substitutes for Mauricio Rodriguez who became a legal advisor for the head of the institution, Rodrigo Avila. Although various sub-commissioners showed their disagreement with the ascension of Mayorga because of his short history of experience, Avila defended the decision by arguing that the designation of the head of the DIC is a question of capability and results more than of seniority. Mayorga, for his part, stated that as he takes up his new post he plans to restructure the DIC and provide follow-up for the work left by Rodriguez. He indicated, moreover, that he plans to implement changes in the heads of DIC departments. On the other hand, he committed himself to support the work of the news media so that there is transparency in the work carried out by the DIC (La Prensa Gráfica, January 30, p. 5 and El Diario de Hoy, February 2, p. 17).

RESIGNATION. The Assistant Ombudsman for Children’s Rights, Ruth Anabella Henriquez, resigned from her post on February 1 arguing that a defined work policy in the Ombudsman’s Office for the Defense of Human Rights (PDDH) was lacking It would seem that Henriquez considered offering her resignation on December 23 of last year should Ombudsman Eduardo Peñate wish to accept it. The ex ombudsman explained that her resignation was a result of the fact that during the eight months in office of the new ombudsman he has worked only on the basis of a "policy of firing people" aimed at functionaries who were part of previous administrations. "This does not strengthen the work of the Assistant Ombudsman’s Office," she explained, adding that the institution needs the total support of a director who will encourage work in favor of young people and that implies that the person who assumes the post must have knowledge of infancy and adolescence. Henriquez asked Peñate to sum up the projects acquired by the Assistant Ombudsman’s Office for Children’s Rights. This, she explained, is in order to have a auditor’s report demonstrating the transparency of her administration. The ex ombudsman declared that the PDDH is not complying with the role assigned to it within the democratic process of the country (La Prensa Gráfica, February 2, p. 5).

TESTIMONIES. The Attorney General’s Office of the Republic subpoenaed Juan José Domenech in the case of the murder of Sigifrido Guth Zapata which occurred in 1996. Apparently, Domenech removed portfolios from the vehicle in which Zapata was assassinated because he was his nephew. The Sixth Court of Instruction seeks to determine if there existed an intent to contaminate the scene of the crime. According to Judge Roberto Arevalo, "if it can be proven that there was intentional contamination, procedural fraud will exist". Domenech, because of his close relationship with Zapata, offered important elements in the investigation. The principal theses in the case have to do with the motive for the murder involving a supposed millionaire swindle in LAFISE, the currency exchange office of which Zapata was director, and money laundering. On January 29, during his testimony, Domenech categorically denied having taken documents from the vehicle. "At no time did I take any documents or "attaché case" from the vehicle", he affirmed. Concerning the theory of money laundering of dollars, he limited himself to saying that "this is a smokescreen they have drawn across the scene". Domenech expressed the opinion that the crime is a result of the millionaire swindle committed in LAFISE. The judge in the case affirmed that the Domenech testimony contributed little to the investigation and so "the possibility of contamination [of the scene of the crime] has almost been ruled out" (La Prensa Gráfica, January 29, p. 12 and 30 and January 30, p. 6).