Swiss banks down- Caymans next?

Matthew X profrv at
Tue May 11 09:02:45 PDT 1999

Peru gets secret fortune linked to former spy chief
Special to The Herald
LIMA - Switzerland on Tuesday returned to the Peruvian government $77.5 
million linked to Peru's discredited former spy chief, Vladimiro 
Montesinos, concluding that the money ``originated from corruption-related 
The money had been squirreled away in secret bank accounts during the past 
decade by Montesinos and other officials in former President Alberto 
Fujimori's government.
The bulk of the money, $49.5 million, was in accounts belonging to the 
jailed Montesinos. Another $21 million was in an account held by retired 
Gen. Nicolás de Bari Hermoza Ríos, who headed the Joint Chiefs of Staff 
throughout most of the 1990s.
The remaining funds were deposited in Switzerland by an unidentified arms 
The Peruvian government expressed satisfaction Tuesday with the decision of 
the Swiss Federal Office of Justice.
''This is great news. We are not only recovering money that belongs to all 
Peruvians, but the decision of Swiss authorities will also help us work 
with other countries to repatriate more funds,'' said Rep. Anel Townsend 
Diez Canseco, a member of congress and close ally of President Alejandro 
The returned funds were transferred to an account belonging to the Peruvian 
National Bank at Citibank in New York.
The repatriated funds represent a staggering amount of money for a 
relatively poor country like Peru, which is fighting to overcome an 
economic crisis.
Earlier this year, the Swiss government agreed to return to Nigeria some 
$535 million held in blocked accounts in Swiss banks by the late Nigerian 
dictator Sani Abacha. In terms of money returned to a Latin American 
government, however, the Peruvian figure is believed to be one of the highest.
In addition, the Peruvian government is working with the Swiss Federal 
Office of Justice to repatriate another $33 million held by Montesinos in 
accounts that have been blocked in that country.
Montesinos was sentenced to nine years in prison in early July for 
illegally acting as head of Peru's National Intelligence Service. Fujimori 
never formally appointed him to head the intelligence service, which he ran 
for 10 years. He faces nearly 60 other charges, many involving arms 
smuggling, and has been held at a special prison on a navy base in Callao, 
near Lima, for more than a year.
Hermoza Ríos, arrested in April 2001, also faces a long list of charges. He 
admitted to siphoning resources from the military budget and agreed to 
return the money. He has not been sentenced.
Swiss authorities said Montesinos' accounts were from commissions made on 
at least 32 arms purchases in the 1990s. Montesinos took an 18 percent cut 
on transactions. Hermoza Ríos' $21 million was embezzled from the military 
budget during nearly seven years as head of the Peruvian army.
The two are also accused of making a fortune from drug trafficking when 
they formed part of a three-man team that ran Peru with Fujimori from the 
early 1990s. Several jailed drug traffickers testifying before a 
congressional commission said they paid off both men. Montesinos and 
Hermoza Ríos deny the accusations, which would mean life sentences if shown 
to be true.
Montesinos' accounts were first detected by Swiss authorities in November 
2000, leading to the creation of a Special Prosecutor's Office and a dozen 
congressional commissions in Peru.
Switzerland has also blocked accounts belonging to other former political 
brokers, including Victor Joy Way, a former congressional speaker and 
finance minister. Joy Way is in prison awaiting trial.
The money being repatriated represents a small fraction of the total 
identified by the main commission investigating corruption in the Fujimori 
administration (1990-2000). When it finished its second report months ago, 
the commission had tracked $782 million belonging to more than 200 people.
Townsend said she hopes the Swiss decision and tougher banking laws enacted 
in that country will encourage other nations to cooperate more fully with 
Peru. Switzerland, long considered a paradise of banking secrecy, passed 
stricter laws in 1998 requiring banks to report deposits suspected of 
coming from illicit sources.
The Swiss decision comes at a key moment for the cash-strapped Peruvian 
government. President Toledo has set up a special fund to administer money 
embezzled during the Fujimori years.
The fund has already received $38 million from bank accounts held by two 
other jailed Montesinos associates, Alberto Venero Garrido and Juan 
Valencia Rosas, at the Cayman Island-based Pacific Industrial Bank.

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