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BANKING: WE'RE ALL GOING TO PAY
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Then things changed. In May 1993 Perez was impeached for corruption involving the misuse of public funds; he is currently on trial. In early 1993 the economy also took a sharp downturn. The crunch hit hardest at real- estate and construction companies. As they started to default, the banks attempted to compensate by offering sky-high interest rates--up to 18 percentage points above going levels--to attract new depositors and fresh funds. The most aggressive was Banco Latino. Within weeks of Banco Latino's takeover by the government, arrest warrants were issued for 82 of its directors and managers; many were believed to have fled the country. As bank after bank failed, the wanted list swelled. While some of the bankers turned themselves in and were released on bail to await formal indictments and trials, several set up in Miami. Among them: - Ricardo Cisneros, a former Banco Latino director who with his brother Gustavo runs Grupo Cisneros, a multibillion-dollar conglomerate that owns, among other things, the Spalding sporting-goods company. Cisneros, who is charged with fraud, contends that he did not serve on the management team that ran the bank's daily business and thus knew nothing of any improprieties. Gustavo, who has not been implicated in the scandal, told that his brother was ``an outside director who got minimal information and wasn't a member of any loan committee.'' Nonetheless a second arrest warrant was issued last week for Ricardo and 18 other former Banco Latino directors, this time for embezzling public funds. The new charges carry a prison sentence of two to 10 years. - Orlando Castro, a Cuban refugee who owned businesses in half a dozen countries, including the failed Banco Progreso and Banco Republica and 42 Venezuelan radio stations. He has lost all his Venezuelan holdings, which he had pledged as collateral for government loans to the banks. Charged with having violated an order not to leave Venezuela, Castro says he departed because the Caldera government's suspension of civil liberties denies him a fair hearing. He claims to be the victim of a vendetta by Investment Minister Carlos Bernardez, an old political enemy with whom he vied for control of Banco de Venezuela, one of the country's oldest banks, which is now in government hands. -Gustavo Gomez Lopez, Tinoco's successor as president of Banco Latino. He insists he is innocent and claims he is being targeted by Caldera, who, he says, is determined to punish the friends of his old foe Perez. Gomez Lopez says most of Banco Latino's losses can be attributed to the deteriorating economy, mismanagement and bad loans, not to theft and fraud. He was charged last week with embezzling public funds.
Will anyone wind up in jail? A year has elapsed since the scandal broke, and not a single individual has been formally indicted. Norys Aguirre, president of the State Deposits Guarantee Fund, which runs the nationalized banks, insists that charges will indeed be brought against those accused of fraud. Most of the money will never be recovered, she says, adding that in the long run, ``the people of Venezuela will pay, with inflation and more taxes. We're all going to pay.'' Reported by Greg Aunapu/Miami and Mary Matheson/Caracas
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