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Daily News - 15 May 2003

Listín taken over by government
At the close of this edition around noontime, reports are that the Central Bank implemented its announced takeover of the Listin Diario and RNN, among other media owned by the Baninter group. The newspaper has for years been regarded as the leading newspaper because it receives the most advertising and has the largest paid circulation. It recently, though, lost its claim to the largest circulation newspaper with the appearance of the Diario Libre, a free newspaper. RNN is the technologically most advanced Dominican television station. 
Rumors had circulated yesterday that the newspaper would not be printed, but today's edition came out defiant, bringing out the big guns in the shape of the local branch of the Inter-American Press Association (IAPA) which called on President Hipólito Mejía to refrain from invoking measures that will compromise the freedom of the press. The fear is that the government would take over, or indeed close, the newspaper, which is owned by the intervened Baninter group. 
CDN reports that sociologist Frank Marino Hernandez, refused to accept the post of editor of the Listin under the Central Bank intervention because of the way the takeover was carried out by representatives of the District Attorney’s office.

Báez Figueroa in custody
Ramón Báez Figueroa and two other Baninter executives have spent their first night in jail. This follows Tuesday night's revelations of the unprecedented scale of alleged fraud within the collapsed bank. Báez Figueroa, along with the bank's vice presidents, Vivian Lubrano de Castillo and Marcos Báez Cocco, are being held in cells at the Palace of Justice in Santo Domingo. Quoted in Hoy newspaper, Báez Figueroa affirmed his faith in the justice system while he was being led to the cells yesterday evening. Diario Libre reports that electricians and other laborers worked non-stop in order to install such amenities as air conditioners and washbasins for the detained bankers. The three, who were taken to the cells amidst heavy security and interrogated for the better part of the day, are accused of defrauding clients to the tune of as much as RD$55 billion.

Vincho criticizes handling of Baninter case
Ramón Báez Figueroa is being represented by well-known lawyer Marino (Vincho) Castillo, who has strongly criticized the Central Bank’s handling of the case. The defense machinery rolled into action the moment Central Bank Governor José Lois Malkum's speech confirmed that the case would not be swept under the carpet and escalated its activities yesterday, when Báez Figueroa and two others were interrogated and imprisoned by the judicial authorities. Using Baninter-owned media such as Listín Diario and the RNN news channel, Vincho Castillo launched a searing attack on the authorities, claiming that there was a “perverse, terrible and unjustified” conspiracy against his client, and that Báez' detention was illegal. Castillo described Lois Malkum's speech as “arrogant”, and pointed a finger at government economic advisor Andy Dauhajre, who he cited as having a key role in the supposed conspiracy. Former Central Bank Governor Guillermo Caram was interviewed in the Listín Diario’s financial section and suggested that the accusations against the Baninter executives are a “smokescreen” for the government to cover up failures of its economic policy.
As is common in cases involving white-collar executives, one of the accused, Baninter vice president Vivian Lubrano, has been examined by a doctor, which leads to speculation that she is likely to claim ill-health as a way of evading custody.

Short-term ambassadorial stay
International businessman Luis Alvarez Renta, who has accompanied President Hipólito Mejía on many of his trips abroad, was appointed ambassador to France on 2 April. Yesterday, however, following the Governor of the Central Bank’s announcement that Alvarez Renta was involved in the Baninter debacle, President Hipólito Mejía dismissed him from that post by way of Decree 493-03. 
Businessman Luis Alvarez Renta has taken out full-page advertisements in the press today, in which he declares he is innocent of all the charges made by the Central Bank. He claims to have ended his dealings with Baninter almost two years ago. 
Alvarez Renta is the only Dominican businessperson, other than Baninter majority shareholder, Ramón Báez Figueroa, who is mentioned by name in the Central Bank report. The report says that overdrafts and loans totaling RD$3.83 billion were erased at the start of this year in favor of the company Bankinvest, S.A., presided and managed by Luis Alvarez Renta. 
Alvarez Renta alleges that he sold all his shares in Bankinvest, S.A. to an unnamed company represented by Holland & Knight, a prestigious Florida law firm, on 13 August 2001 -- almost two years ago. He said that he delivered documents that evidence the sale to Central Bank Governor Jose Lois Malkum on 2 May. 

Baninter Group's assets will not fill the gap
El Caribe crunches the numbers of Baninter's liquid assets, concluding that they do not fill the gap left by the mega-fraud allegedly perpetrated by Baninter. The assessment is that the US$113.6 million (just under RD$3 billion) is nowhere near the RD$55 billion required. The list of companies that could be liquidated to cover the void reads like a directory of household names. As well as Baninter itself, the list includes insurance company Intercontinental de Seguros; RNN TV; radio stations Channel 7, Channel 21 and Channel 33; TV cable and internet company Aster; daily newspaper Listín Diario; Financiera Bonaop; Reliance Watchman; upmarket beverage distribution company Marcas Premium; the Fujifilm concession; publishing house El Siglo; Inter Duty Free; pensions fund AFP Porvenir; Delta Comercial and Taylor Nelson Lozano. According to El Caribe, Báez Figueroa himself assessed their collective total value at just under RD$40 billion — but did not include the Listín Diario in his calculations. 
The papers report that José León Asencio, the president of business giant the E. León Jimenes Group (Marlboro cigarettes and Presidente beer), has expressed interest in buying up some of the companies of the Baninter Group, with the exception of the Listín Diario and the television channels.

Business community with government
The leading private business association CONEP released a statement yesterday, voicing support for, and offering co-operation with, the government's handling of the Baninter affair, while calling on the judicial process against the accused individuals to be handled fairly and independently. Labeling the Baninter collapse as an isolated case that should not shake faith in the rest of the Dominican business sector, CONEP president Elena Viyella de Paliza expressed confidence in the Dominican financial sector and praised the “integrity, professionalism and responsible administration” of savers' resources. Viyella de Paliza attributed the country's recent economic ills to the Baninter situation, and warned that effects such as the continuing devaluation of the peso could only worsen the plight of the country's most vulnerable sectors. She called for more regulation of financial institutions, and said that the “full weight of the law” should be brought down on those connected in any way to the alleged fraud at Baninter.
Similar communiqués were put out by other leading private sector bodies, such as the Dominican Republic Association of Commercial Banks (ABCRD) and the National Association of Young Entrepeneurs (ANJE). For his part, the executive vice president of the American Chamber of Commerce, William Malamud, stressed the need for more transparency and called for renewed confidence in the finance sector.

Subero Isa on gifts from Baninter
Chief of the Supreme Court, Judge Jorge Subero Isa, is among the first of a list of high-profile figures that are coming forward to deny they benefited from Báez Figueroa's “generosity”. Subero Isa said that Central Bank Governor José Lois Malkum's Tuesday night speech, in which the magnitude of the scandal was revealed, came as a surprise to him. He denied that he, his family or the Supreme Court itself had received any contributions from Baninter and expressed his hope that investigations would uncover whether any individual members of the Supreme Court had any links to the collapsed bank.
For his part, Senate president Andrés Bautista García (PRD) admitted that certain politicians had received donations from Baninter, but denied any knowledge of whether the money came from savers' funds.

Who is misinforming the public?
Hoy newspaper’s editorial today says that the Baninter situation, which it describes as shameful and the worst financial scandal ever to shake the Republic, was not caused by rumor or hearsay. The writer says that whenever any rumor reached the press, the monetary authorities chose to deny the news of difficulties at the bank. The newspaper says that the country has legal dispositions in place to penalize false rumor-making and calumny. The newspaper says that the Central Bank’s governor is not giving good advice when it asks the Executive Branch to establish any type of censorship with the pretext of avoiding damages to the financial system of the country. 
“On the contrary, what is needed is an authority that fulfills the Constitution so that all sources -- public and private -- have free access. And, above all, the proper authorities should not be the ones that misinform, to try to hide what is visible,” writes the newspaper. 
The newspaper expresses the hope that, finally, the authorities may have learned a lesson and that they proceed to supervise, as is their duty, the operations that are carried out without hiding what eventually will be known.

IAPA criticizes Central Bank request
As reported in El Caribe, Dominican newspaper editor Rafael Molina Morillo, president of the Freedom of Press Commission of the Interamerican Press Association (IAPA), requested yesterday that President Hipólito Mejía “refrain from invoking measures of national security to limit the practice of journalism and impose previous censorship in the country.” Yesterday in his report to the nation on what he called the Baninter embezzlement, Malkum had stated: 
“I would also like to issue a warning, so that ignorance may not be alleged, while recognizing the transcendent importance of having a healthy banking system in any country, that we have requested that the Executive Branch consider any statement, or affirmation, by any person, designed to cause disturbance or uncertainty regarding the Dominican banking system as a threat to national security. 
In consequence, we will uphold the request of the Monetary and Financial Administration, the Executive Branch, under the Constitution and the laws of the Republic, and would immediately bring any person to justice who partakes in such activity and crimes. The country will not allow that any person, with public statements, destabilize the financial system of the country.” 

Business community supports dollarization
Former CONEP president Marino Ginebra and Pablo Linares of the Association of Foreign Investors (ASIEX) have added their voices to the call for the dollarization of the Dominican economy, as originally proposed by the IMF. Ginebra believes dollarization to be the only option for the government if it wishes to progress without encountering major obstacles. According to him, the move would stabilize the economy and create a favorable climate for investors. The main argument business sectors have for dollarization is that it would discipline government overspending.

Organization to fight sexual exploitation of children
Attorney General Victor Céspedes Martínez announced the creation of a new government body aimed at combating the sexual exploitation of minors. Its tasks will include investigating accusations, tracking down offenders, and the design of strategies aimed at preventing child prostitution. The department will be part of the Attorney General's office and will employ a lawyer, a psychologist and special agents with investigative skills. Its scope will cover the closure of prostitution centers, deportation of any foreigners discovered engaging in such offences and will also involve rehabilitation programs for minors affected by sexual abuse and/or involvement in child prostitution.

JCE presses to promote overseas vote
Nelson Gómez, president of the Administrative Chamber of the Central Electoral Board, has called on President Hipólito Mejía to provide more funds for the promotion and administration of registering Dominicans residing abroad to vote in the 2004 presidential election. Gómez is claiming that the 2003 budget allocation of RD$39 million is insufficient to cover the requirements of this project. His declaration comes on the eve of a campaign to motivate more Dominicans to register, which is being launched in New York, home to the largest Dominican expatriate community, this Friday.

Just 50 applications were binned
According to Labor Minister Milton Ray Guevara, the thousands of applications submitted by people hoping to work in Spain that were discovered in garbage bins had already been processed, with the exception of fifty. Total applicants for the special work permits, which are to be issued following an agreement with Spain, numbered 12,000. The minister assured that the fact that some unprocessed applications were tossed in the garbage means that the investigations into this much-publicized blunder will continue.

Protesting Placer Dome contract
Former Minister of Foreign Relations Pedro Manuel Casals Victoria, in a letter made public in Hoy newspaper, protests the contract signed by the Dominican government with the Placer Dome mining firm of Vancouver, Canada. The lawyer criticizes the government for accepting 3.2% on net earnings, instead of the gross earnings of the venture. It also says that this could be wiped out because the contract authorizes Placer Dome to borrow to finance its operations in the Dominican Republic. The lawyer emphasizes that the contract was negotiated without a previous feasibility study having been carried out to establish cost and earnings parameters. Furthermore, he chastises the director of the governmental Corporate Mining Unit (DUCM), Miguel Peña, for not having negotiated for the State a similar system to that which benefited the country when Rosario was privately owned, when Peña was an employee of the company. Casals says then the government’s benefits in taxes increased in direct relation to the increase in the price of gold on world markets, contrary to the US$270 benchmark now included in the contract. 
Casals is also criticial of the Placer Dome provision for the management of sulfide toxic wastes, which is estimated at around US$50 million, especially when the monetary responsibility for the toxic-waste damage already suffered is left to the Dominican State. The company will assume this role once it begins to exploit the gold, which will not be for another three years. 
Casals mentions that Placer Dome in Venezuela had an exploitation contract and committed to invest US$500 million, and after years desisted from doing so and sold its concession to another Canadian firm for US$5. The lawyer says that these observations are just a few of the many disadvantageous aspects to the contract. He urges that the contract be annulled when a responsible and honest government is elected. 

Streakers held in the nude, say relatives
The nearest and dearest of the six youths arrested for exhibitionism after their nude parading up and down Ave. Abraham Lincoln in an SUV on Sunday evening are rallying to their defense. Some relatives are alleging that the accused are being kept in their cells naked, and that they are being denied visiting rights. The six young men have been under arrest for the legal 48-hour period, after which formal charges should be filed and the right to post bail granted. One of the parents of the detainees visited the offices of Diario Libre newspaper to explain that his son's behavior had been affected by childhood meningitis, and that they were considering the services of a psychologist to help him with his problems. The police are still investigating the case, and are awaiting the results of drug tests carried out on the youths, which Diario Libre says their sources say were negative. 
The newspaper also continues to make the point that there were seven youths, not six, involved in the incident. In a report yesterday, Diario Libre showed a photograph with a Presidential Palace tag hanging from rear view mirror, which has led to speculation that the seventh offender could be the offspring of a government employee.
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