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October 24, 2014
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Menem, Cavallo indicted on 1991 Rural sale

Former president Carlos Menem and his Economy minister Domingo Cavallo face embezzlement charges.
Former president is back on trial for the controversial Palermo neighbourhood land

Former president Carlos Menem and his former economy minister Domingo Cavallo were both formally indicted for embezzlement over the sale of the Rural Society property in Palermo neighbourhood in 1991 at a price the court yesterday described as “vile.”

The judges had strong words in describing the events which led to the sale of the 14-hectare Rural Society property and accompanying building, for which the men are now formally prosecuted — Cavallo for the first time on these charges, and Menem again since an original acquittal in his favour was yesterday reversed. Two other former government officials, two former Rural Society executives and six former private banking officials were also prosecuted yesterday, on a range of charges relating to the sale.

“The gathered evidence indicates that all accused took part in a jointly planned operation to bypass Congress,” judges Horacio Cattani, Martín Irurzun and Eduardo Fara wrote in their declaration, describing the sale as “a warped criminal manoeuvre with the aim of stripping state assets.”

They added that the price at which the Menem administration sold the building, which had previously been public property, was “vile.”

According to testimonies previously made by officials from the National Mortgage Bank, the property sold at around four times less than the market value of the building in 1991 when there was dollar-peso parity: in other words, it was sold for US$30 million when its real value was estimated at US$131 million.

The transaction had taken place on December 20, 1991, the day Menem announced Decree 2699, which fixed the price at US$30 million. The deal was then sealed with a mortgage, setting repayment at US$10 million payable immediately and the rest in monthly installments of US$2 million.

That mortgage had been prepared in just 11 days by three officials of Banco Ciudad’s Real Estate sector — Juan M Insua, Raúl O. Angelini and Ricardo I Shapiro — , on the orders of then head of the Economy Ministry’s Real Estate Sales Commission, Gastón Figueroa Alcorta.

They were also yesterday prosecuted, but for lesser crimes relating to the embezzlement, as were Matías L Ordóñez, also formerly of the Real Estate Sales Commission; Eduardo De Zavalía and Juan A. Ravagnan, president and secretary of the Rural Society of Argentina at the time of the sale, respectively; and Jorge Frost, Daniel I Ivakhoff and Carlos A Ratto, former advisors of the National Mortgage Bank.

From public to private hands

The judges yesterday observed that in the file of the mortgage for the building transferred from public to private hands, other legal officials from Banco Ciudad had noted a minimum price of US$60 million.

But, nevertheless, the sale never passed through Congress for approval, which in late 2012 led to the national administration of President Cristina Fernández de Kirchner attempting to re-appropriate the property by revoking Menem’s 1991 decree.

That move was blocked by the courts and the property remained in the hands of the Rural Society of Argentina, which sold 50 percent of the commercial concession of the building’s exhibition centre to businessman and Buenos Aires province dissident Peronist deputy Francisco de Narváez, from the then consessionaire, the firm Ogden.

De Narváez, seemingly one step ahead, sold his share of La Rural S.A. (Rural Society of Argentina) just before the CFK administration announced its plans to take back the property, to Fénix Entertainment, which almost immediately sold 25 percent of its share to IRSA group for US$32 million, the Noticias Argentinas agency reported.

Menem back in court

The decision by judges of the City’s Federal Court signified a reversal of a previous acquittal in favour of the embattled former president and now senator for La Rioja province, Carlos Menem, and represents just one of several legal cases he has faced since leaving office in 1999.

A federal court on March 6 rejected his appeal of a 2013 ruling that he allegedly “overlooked the statue of limitations” for the criminal charges he faces for alleged embezzlement stemming from the illegal sale of arms to Croatia and Ecuador in the 1990s.

He had been sentenced to seven years in prison for those crimes. However, as a senator he is immune from prison and at the age of 83 is eligible for house arrest.

The crime of embezzlement carries a sentence of up to 10 years in prison.

Herald with Télam

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