April 1, 2003
An IMF technical adviser arrested in Argentina is likely to be extradited to Peru in the coming months. According to his own declarations to an Argentine court, reported by the newspaper Clarín, the IMF knew about the charges against its employee and the international warrant that finally led to his capture, but chose to ignore them. Interpol arrested Jorge Baca Campodonico in February on his way to the Sheraton hotel in Buenos Aires, the base of the IMF delegation. He was part of an IMF technical mission visiting the country to examine aspects of the new Fund programme.
Baca, a former Finance Minister of Peru, has been charged in his country on various accounts of high-level corruption. In June 2001 a parliamentary investigation concluded Baca had illegally countersigned decrees authorising weapons purchases with revenues from state enterprise privatisations that were intended for poverty reduction. Clarín reports that in 1999 Baca joined the Inter-American Development Bank after leaving the government, and that he was then hired by the IMF in April 2001 to work as an adviser on fiscal issues, for a $10,000 monthly salary. In September of that year he had to testify in a Peruvian court about his links with former President Fujimori's spy chief Vladimir Montesinos, recently sentenced to five years in prison for human rights abuses, money laundering, embezzlement and arms deals. Baca was then prohibited to leave the country but fled to the US. In December 2001 he was found guilty of contempt of court. An international warrant was issued on 5 February 2002 and in May 2002 he was arrested in Miami, but extradition efforts failed.
The IMF provided legal assistance to Baca after his arrest in Argentina and expressed "concern". The judge in charge of the case questioned whether IMF concerns had to do with the fact that "[she had] made effective an international warrant or because they are employing a person wanted by Interpol". Baca had a UN passport and the immunity normally granted to IMF staffers, but this only applies to acts performed by employees in their official capacity. The judge said it would be juridical nonsense if "[the IMF] could deny one of its member states the possibility to exercise its rights as a sovereign state on one of its citizens". Baca was released after a $10,000 bail was paid, but he cannot leave the country. A federal court will rule on the UN immunity claimed by Baca's lawyers.
Peru expressed "strong discontent" with the IMF's legal and financial support for Baca's defence. The question remains why the IMF hired Baca despite the dubious nature of Fujimori's regime - but above all why he was retained once his situation became clear. Embarrassed IMF external relations chief, Tom Dawson, said "we do extensive reference checks on individuals when they are hired. It's not quite clear that he was on any kind of list at the time that he was hired at the Fund". This seems to be - strictly speaking - correct, if indeed Baca was hired in April 2001. But it is a selective account of events. Baca says he later informed the Fund that he was a fugitive and that an international warrant had been issued for his arrest. According to Baca the Fund asked the FBI to send agents to Peru to investigate the charges; their assessment was that they were unfounded and that Baca was being persecuted by the new government. Apparently the Fund decided to retain Baca and ignore the international warrant.
A request to the IMF's external relations department for more information remain unanswered. What was the nature of the IMF's assistance to Baca? Did the IMF bail him out? And has Baca remained on the IMF's payroll in Argentina since his arrest? Clarín reports Baca is still at the Sheraton and enjoys the swimming pool, judging from the tan he displays in court.
This serious incident is a blow to the IMF's credibility, especially to its increasing tendency to lecture borrowing countries about a 'good governance' agenda. In a recent speech on "the way forward for Latin America" IMF Director Horst Kí¶hler stated that "combating corruption will yield significant benefits for economic growth by boosting investor confidence, but will also address social equity issues directly, as it is small businesses and the poor who often bear the brunt of the burden of corruption".
The IMF's reaction contradicts the recent acknowledgement by the institution's Executive Board that "the IMF's public image and accountability can only benefit from the institution's willingness to learn lessons from its experience and to openly acknowledge mistakes when they do happen". Further IMF failure to address pending questions can only increase suspicion that Baca has high-ranking friends at the Fund. The IMF should not be free to use public money to pay salaries to people charged with serious corruption, ignore international warrants placed on them and cover their legal costs if they get arrested.
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