Costa Rica Digest, Sept. 29

Note: tomorrow's digest will either be in the
evening, or combined with Friday's in observance of a
religious holiday.

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>>Costa Rica News Digest<<
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TODAY'S CONTENTS
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*News Digest

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NEWS DIGEST
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*Wife of Former ICE Director Flees Costa Rica

Following the revelation on Monday that the wife of
former
Instituto Costarricense de Electricidad (ICE)
director, José
Antonio Lobo, had received a payment of US$2.400.000
dollars
from ALCATEL, immigration officials confirmed
yesterday that,
Jean Philp Gallup, had abandoned Costa Rica on a
flight to New
York at 8:15am yesterday (Tuesday) morning.

The Dirección de Migración y Extranjería confirms
that Philp
boarded a Continental airlines flight with direct
service between
San José and New York, surprising officials since the
investigation
had just gotten underway on Monday, following reports
of payoffs
in awarding the ALCATEL contract for GSM cellular
service.

ALCATEL was awarded a contract valued at
US$149.000.000 dollars to
install 400.000 GSM cellular telephone lines, that
would add to the
country's TDMA cellular network.

The GSM contract was the second contract awarded to
ALCATEL by ICE.
A contract valued at US$109.000.000 was awarded to
ALCATEL in May to
install a fixed telephone central system.

According to Pablo Cob, president of ICE, José
Antonio Lobo was a
member of the board of directors that approved the
ALCATEL contracts.

Philp left the country on the same day that the
Spanish daily
newspaper La Nación broke the story of the payoff.
Official at the
Ministerio Público were quick to add that
notwithstanding the woman's

departure, the case will remain open and an active
investigation will
be conducted.

The report comes on the heels of the Contraloria
General de La
Republica (Comptroller's office) not approving the
Ericsson contract
for 600.000 new GSM cellular lines, following reports
of clandestine
meetings between former ICE executives and Ericsson,
among other points
of contentions the Contraloria had on the contract.

ALCATEL, along with other communications firms had
bid on the new
contract, however, Ericsson was chosen by the ICE
board of directors.


*Pacheco brushes off questions on Alcatel donation

Reporters for the Spanish-language media pressed
President
Abel Pacheco Tuesday to explain why he and his
political campaign
accepted $100,000 from Alcatel, the French
telecommunications firm.

The donation was revealed earlier Tuesday by the
newspaper La Nación
as part of a larger exposé of some $9 million paid by
the French firm.
The company won a series of contracts worth $260
million to provide
upgraded cellular telephone service in Costa Rica.

Reporters wanted to know how come the donation came
illegally from
a foreign entity, why it was not reported to the
Tribunal Supremo de

Elecciones, as the law provides, and why the campaign
accepted a
donation in an amount greater than the law allows.

Pacheco did not answer the questions directly. He was
in the middle
of explaining how his government was mobilizing to
fight corruption.

La Nación interviewed Luis Fishman, the second vice
president who is
in exile from the Pacheco government. Fishman, who
managed Pacheco's

presidential campaign, confirmed that he had received
the money in his

personal account and said that all of it went to the
campaign.

He also said that Pacheco attended the meeting where
Édgar Valverde,
manager of Alcatel, agreed to support the campaign.
Also there was
Roberto Tovar, said Fishman. Tovar, who now is the
foreign minister,
handled campaign financing.

The money coming to Pacheco and others appears to
have a connection
with an earlier continuing scandal. An engineer at
ICE appears to
have accepted $77,000 from the French firm, and that
money came
through Marchwood Holdings Inc. Marchwood is a
Panamanian company
headed by Walter Reiche Fischel, the former head of
the pharmaceutical

company that bears his second surname.

Reiche Fischel is in jail under investigation in the
payment of some
$8 million in loan commissions to various politicians
connected with
the Caja Costarricense de Seguro Social. The Caja
purchased medical
supplies from Finland with a $38 million loan



*BAC San Jose Seeks Those Who Started Rumors

The BAC San José bank confirmed that four suspects
were involved in
the false rumour that was spread on August 10, of the
bank's imminent
failure and the ensuing rush of depositors to
withdraw their savings.

Gerardo Corrales, manager of the BAC San José
explains that the
Ministerio Público does not consider the spreading a
rumour a crime
and the bank has to make a case for defamation and
proceed in a civil
court case.

The BAC San José has received support from the Banco
Central de
Costa Rica and Superintendecia de Entidades
Financieras so that
this type of situation does not repeat itself.


*Poder Judicial Gets More Manpower to Combat Scandals

The president called on the officials for a quick
resolution to
the scandals that have been plaguing the country the
last couple of
weeks - the Fischel-Caja and the Alcatel payoffs head
the list.

The government is giving the Poder Judicial a boost
with more
manpower and an increased budget. However, the Fiscal
General (head

prosecutor), Francisco Dall'anesse, says that the
government handout
just barely covers the cost of the current
investigation his office is

conducting.

The Poder Judicial will have a budget of ¢9.100
million colones
(a little over US$20.000.000 dollars) for the 2005
calendar year.



*Delta Adding Second Daily Flight to Costa Rica

Delta Air Lines Inc. is adding a handful of new
routes in Latin
America as part of the carrier's strategy to do more
lucrative
international and long-haul flying that low-cost
competitors haven't yet

encroached on.

The additional connections between Atlanta and
several Latin American

countries may also help bolster Atlanta's bid for the
permanent
headquarters of the secretariat for the Free Trade
Area of the Americas,
say Delta executives and local economists.

Delta plans to add a second daily flight in December
to San José,
Costa Rica, as well as São Paulo, Brazil. The carrier
also plans
to re-enter Buenos Aires, Argentina, and it will
begin service to
Belize before the end of 2004.

The Latin American market represents one of Delta's
biggest growth
segments, showing a 10.4 percent increase in revenue
so far this year,
from $270 million during the first half of 2003 to
$298 million for the
same period of 2004. Delta has flown to Latin America
only since 1997,
when it inherited some routes to Mexico and the
Caribbean through its

acquisitions of Western Airlines and Northeast Airlines.



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