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Integrity Scorecard

By Camilo de Castro*

The morning of November 9, 2008, Gabriela Gutierrez left home before dawn. Along with her husband and her eldest child, she headed straight to her polling place, precinct number 5431. She wanted to vote early, avoiding the long lines.

This time she was certain her candidate would win the election and become the next mayor of Managua. All around the capital people turned out to vote in large numbers, despite rumors that sympathizers of the governing political party, the Sandinista National Liberation Front (FSLN—Frente Sandinista de Liberación Nacional), planned to intimidate opposition supporters.

The FSLN candidate, Alexis Arguello, was behind in the polls. For the first time in 16 years, the Supreme Electoral Council had barred national electoral observers from entering polling places, raising concerns about the possibility of foul play. By the end of election day, those fears became a reality. Election officials closed Elena Santo's polling place early and hundreds of people were not able to vote.

According to an independent audit of the municipal elections published in May 2009 by the Institute for Democracy and Development (IPADE—Instituto Para el Desarrollo y la Democracia), the FSLN claimed victory in 13 of the country's most populous municipalities as a result of widespread fraud. A total of 34 municipalities reported serious anomalies on election day.

In violation of the electoral law, the Supreme Electoral Council never published the result of 30 percent of the precincts in Managua. A year after the election, thousands of voters are still wondering why their votes were not counted. Gabriela Gutierrez is one of them. "I voted with my whole family", Gutierrez complains angrily. "It is unjust that our vote wasn't counted."

The electoral fraud sparked several days of protests on the streets of Nicaragua's largest cities and unleashed months of political unrest, raising more doubts about the ability of the government to tackle rising unemployment and violent crime in the country.

The conflicts generated by the electoral fraud only made a bad situation worse. The price of export commodities plummeted because of falling demand on the US market. Beef prices fell by 30 percent, while retail saw a drop in sales of 11 percent. In response to the growing crisis, the textiles sector shed 26,342 jobs since February 2008.

Despite calls for the resignation of the Supreme Electoral Council, the government defended the election results. In the face of international pressure over the result of municipal elections, President and FSLN's leader, Daniel Ortega, blamed the crisis on a conspiracy by the wealthy, backed by the United States government and the media establishment.

The fallout from the electoral fraud

In June 2009, the US State Department canceled the Millennium Challenge Account (MCA), which planned to invest US$64 million in road repairs and land entitlement programs designed to benefit 120,000 families in the northern states of Leon and Chinandega. The final approval of a US$130 million loan from the Central American Economic Integration Bank was also put on hold, despite the desperate appeal of agricultural producers who asked not to be punished for the mistakes made by the government.

A resolution approved by the European Parliament in December 2008 condemned the violation of basic human rights in Nicaragua and concluded that the November municipal elections lacked "all democratic legitimacy." The European Union froze US$62.4 million in aid, forcing the government to make deep cuts in the national budget, at the same time the Central Revenue Office reported a steep fall in tax revenues.

Because the foreign aid was lost, July 2009, the government was forced to cut US$109 million from the national budget, reducing the funding available for health, education and infrastructure programs. The president's advisors assured the public that health and education programs would be prioritized, but a closer analysis of the budget reforms reveals an increase in other less important expenditures.

In a year without scheduled elections, the Supreme Electoral Council was assigned more money for cell phone use than the entire Health Ministry. Three of the most unpopular branches of government — the National Assembly, Supreme Court and Supreme Electoral Council — were assigned a budget for advertising that surpassed the Health Ministry's budget for public health campaigns by 26 times.

The end of checks and balances

The General Comptroller's Office has waved public procurement procedures 653 times since 2007, giving the government officials in Ortega's administration a blank check to spend some US$350 million in public funds.

According to a report published by the Comptroller's Office in March 2009, over the past 14 months the comptroller had given the current administration the green light to spend US$173 million without completing procurement procedures, by far a much larger amount than any previous administration.

By comparison, the government of former President Enrique Bolaños (2001-2005) was given permission to contract US$103 million dollars without procurement, a mere 23 percent of the amount approved in the last two-and-a-half years.

After the electoral fraud in November, opposition parties in the National Assembly stalled the president's legislative agenda in protest. For a brief moment, the Constitutional Liberal Party (PLC—Partido Liberal Constitucionalista), the second-largest party in the National Assembly, looked ready to punish the FSLN for the electoral fraud by voting to remove the government-backed president of the National Assembly.

But in early January 2009, it became clear the PLC was using its leverage to achieve a more important goal: the acquittal by the Supreme Court of former president and leader of the PLC Arnold Aleman (1997-2002), who in 2003 was found guilty of diverting more than US$100 million in public funds to banks in Panama, the US and offshore accounts in the Caribbean.

Three days before the election of the new president of the National Assembly, the Supreme Court acquitted Aleman of all charges and the FSLN remained in control of the National Assembly. In a sordid replay of the electoral fraud carried out in November, political interests prevailed over the public good, annulling any real hope of making civil servants accountable for their actions.

Grand scale corruption

On June 30, 2008, the National Assembly approved US$20 million for the Nicaraguan Electricity Company (ENEL—Empresa Nicarguense de Electricidad). According to the emergency funds request made by President Ortega, the money was needed to cover debts acquired between the state-owned energy company and the state-owned petroleum company, Petronic, which supplied the Nicaraguan Electricity Company with fuel oil. However, media reports later revealed that the Nicaraguan Electricity Company was secretly diverting public funds to ALBA CARUNA, a private lending institution run by associates of the ruling government party.

A handful of legislators called for an investigation into the diversion of public funds, but neither the National Assembly nor the Comptroller's Office made a serious effort to investigate. In an environment of growing corruption, the Nicaraguan Electricity Company acted with impunity.

In October 2008, documents leaked to the media showed that the director of the state-owned electricity company, Ernesto Martínez-Tiffer, ordered the company's administrator to buy airtime in media outlets run by the family of President Ortega. Each month, the administrator would buy exactly US$19,000 worth of airtime in radio and T.V. programs and make out a check to Publicity and Digital Productions S.A (Publicidad y Producciones Digitales S.A.), a publicity agency run by Rosa Maria Hernandez, the wife of the first lady's personal assistant. Dozens of documents and checks showed that between March 2007 and March 2008, more than US$200,000 were used to pay for radio and T.V. spots that were never aired. Martínez-Tiffer, however, continues to head the state-owned electricity company with the full support of President Ortega.

The ruling party has also benefited from energy agreements signed between Venezuela and Nicaragua. Some US$300 million are managed without any oversight each year, as a result of a scheme designed by the government to evade institutional controls. As a result, President Ortega and his associates have been involved in the acquisition of hotels, gas stations, power stations, health clinics and multi-million dollar houses.

Ironically, the Nicaraguan Central Bank forecasts the economy will contract by 1 percent in 2009 and, according to the last CID Gallup poll published in June, 68 percent of Nicaraguans say they are worse off today than 12 months ago.

Repression

According to the same poll, 58 percent of Nicaraguans now believe it is unsafe to speak out about political issues in public. Since April 2008, FSLN sympathizers have attacked opposition rallies and protests organized by civil society organizations more than a dozen times in an effort to silence critics of the government. A journalist was stabbed in November 2008 and dozens of citizen have been injured.

Despite public protests, the police refuse to investigate the attacks, raising serious questions about the credibility of the police force. The government has also used its influence in the judicial system to intimidate journalists and civil society leaders, who have been subject to investigation without legal justification.

* Camilo de Castro is an investigative reporter at Esta Semana, a weekly news magazine show in Nicaragua. A graduate of Columbia University, he has collaborated with the Miami Herald Tribune and Chicago Tribune and in 2007 won the Award for Excellence in Journalism "Pedro Joaquín Chamorro". His investigations revealed an extortion ring linked to close associates of President Daniel Ortega, the courts and the political party Frente Sandinista de Liberación Nacional.