Argentina's ex-president sentenced for embezzlement
Source: Associated Press
Argentina's ex-president sentenced for embezzlement
Dec 1, 3:25 PM EST
BUENOS AIRES, Argentina (AP) -- An Argentine court sentenced former President Carlos Menem on Tuesday to four and half years in prison for embezzlement.
The official judicial news agency said that the local court also sentenced former Economy Minister Domingo Cavallo to three years and six months for his role in illegal payments to staffers authorized by Menem during his 1989-1999 presidency.
Investigators said Menem and Cavallo were part of a scheme to overpay officials and later split the take among all of those involved. The overpayments were intended for security and intelligence expenses.
Menem is currently a senator representing La Rioja province where he was born. That status as a lawmaker protects him from being imprisoned.
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George H W Bush and Carlos Menem and one of his ex-wives [/center]
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All three, however, will remain free on appeal - which could mean years. Or the rest of their lives, as in the 85-year-old Menem's case - who was sentenced to 7 years in prison for authorizing illegal arms sales to Croatia and Ecuador in 1995, but is till "free on appeal" on that as well.
I should have liked to see Cavallo, Economy Minister for most of the period between 1991 and 2001 (upon which Argentina famously collapsed), prosecuted not so much for collecting and distributing illegal bonuses (the crux of this case) but for his bad-faith profitizations - sweetheart deals that entitled privatized firms to receive hefty subsidies indefinitely, as was the case of the railways, with no enforcement of investment (or even fee) obligations in return. That's "free market reform" for you.
Around $24 billion were earned by privatizations in Argentina during the 1990s. But around $15 billion of that was in the form of Brady Bonds that were worth 60 ¢ or less on the dollar, meaning that the Argentine state earned at most $18 billion (most of which went to debt repayment, at 10% interest, anyway).
A Bank of England audit requested by Menem himself, found that Argentina's 300 state-owned enterprises had $1 trillion in assets at the time the privatization drive began in 1990 (!).
The criminal case for public fraud against Cavallo et al. (including Macri's Central Bank President-designate, Federico Sturzenegger) for the 2001 bond "Megaswap" - a fool's bargain which added $23 billion to Argentina's debt load - should have also been pursued. All were, however, acquitted in 2013 by right-wing judges.
Nice work if you can get it!
Pictured: Argentina's then-Economy Minister Domingo Cavallo in December 1991, touting the new peso and its 1:1 parity to the U.S. dollar. The parity, which was maintained for a decade, initially stabilized and revitalized the economy; but it also tripled the national debt because it required constant foreign loans to maintain - and at increasingly high interest rates. The IMF-sponsored Ponzi scheme eventually collapsed in December 2001.