This success story has been provided by the Costa Rican Anti-Corruption Authority and is posted on this site in its original form.

 

Juan Carlos Cubillo Miranda. Prosecutor

1.Case Description/Context:

Facts.

In year two thousand two, co-defendant Rafael Angel Calderón Fournier, Former Executive Director of the Costa Rican Institute of social security, Former President of the Republic and leader of the Unidad Social Cristiana Party, colluded with co-defendant Walter Reiche Fischel, President of Fischel Corporation plan crime using mixed credit (capital paid by Costa Rica and interest paid by the government of Finland) for the purchase of medical hospital equipment for the Costa Rican Institute of Social Security. Said purchase was to adjudicate to the Finland consortium Instrumentarium Corp- Medko Medical, whose distributed in Costa Rica was Fischel Corporation; this, in exchange to the granting economic retribution. (2% of the contract) The aforementioned plan required of the active participation of co-defendant Eliseo Vargas Garcia, Gerardo Bolaños Alpizar, Juan Carlos Sanchez Arguedas , all of them public officers, as well as co-defendant Marvin Barrantes Vargas, executive of Fischel Corporation. The plan was developed in two different stages in which each of the defendants from their different positions played a role previously determined to achieve the distraction or subtraction of public founds by taking advantage of a line of credit.

The above becausethe accused learned the possibility of granting a concessionary credit by the government of Finland to the government of Costa Rica, oriented towards the purchase of goods and services companies of the country granting the credit, with the condition that those goods and services in this case would consist in medical hospital equipment, with a percentage of Finnish components. If the criminal plan materialized and if the Finnish consortium Instrumentarium Corp- Medko Medical -whose distributor in Costa Rica was Corporation Fischel- was adjudicated the purchase, it would produce high illicit profit for all the defendants. In a first moment, it was necessary to obtain the approval of a law that would allow the materialization of the credit. To get the illcit payments the bidding had to be adjudicated to Instrumentarium Corp-Medko Medical and for this reason Walter Reiche paid to Rafael Angel Calderón Fournier, who manage people of his political party that hi lead to ensure theadjudication of thebidding of purchase to the Finnish consortium Instrumentarium Copr- Medko Medical and the extension of the agreement using public funds.

In the first stage, the promise of illicit retribution made by Rafael Angel Calderón, Walter Reiche Fischel and Marvin Barrantes Vargas to Eliseo Vargas Garcia and now extensive to Gerardo Bolaños Alpizar and Juan Carlos Sanchez Arguedas pretended that the last three process and vote (Sanchez Arguedas, Bolaños Alpizar and Vargas Garcia) the adjudication of the public bidding an behalf of the consortium instrumentarium Medko Medical in order to obtain the two percent of the illicit payment. This way, in May, 2002, co-defendant Eliseo Vargas Garcia became President of the Board Directors of the Costa Rican Institute of Social Security and from that position he had to make sure that said organization knew of the Finland Project and to approve the whole purchase to the consortium Intrumentarium Corp-Medko Medical in accordance with the criminal plan. Besides, there was active participation of co-defendant Gerardo Bolaños Alpizar, who after being a congress advisor between May first, nineteen hundred and ninety-nine and the month of April, two thousand and two, partner of Rafael Angel Calderón Fournier at the Calderon & Asociados Law Firm, congressman of the Unidad Social Cristiana Party for the period 1990-1994 during the administration of Rafael Angel Calderon Fournier, on April sixth, two thousand and two, became part of the Board of Directors of the Costa Rican Institute of Social Security as representative of the state ; he had already held this position from June first, nineteen hundred and ninety-eight to December twenty-second, two thousand. It was also essential to have the criminal participation of Juan Carlos Sanchez Sanchez, known as Sanchez Arguedas as Manager of Modernization of the Costa Rican Institute of Social Security since that office was created, due the fact that the adjudication process started then.

The bidding cartel was published in accordance with the guidelines set forth by law 8202 according to the plan of the co-defendant to obtain the distraction and subtraction of public founds in the purchase of equipment in order obtained the illicit payment promised by Reiche Fischel, Calderon Fournier and Barrantes Vargas who were fully aware of the condition of public officers held at the time by Vargas Garcia, Sanchez Arguedas and Bolaños Alpizar and of the existing of the legal prohibition of performing said illicit acts. On the other hand, Walter Reiche and Marvin Barrantes were in charge of preparing the offer on behalf of Consortium Instrumentarium Corp-Medko Medical for said bidding. Within the division of duties, Eliseo Vargas Garcia as Executive President, Gerardo Bolaños Alpizar as representative of the State and Juan Carlso Sanchez Arguedas as Manager of Modernization were to maintain control of the board of Directors of the Costa Rican Institute of Social Security and top conduct the vote according to the criminal purpose toward the adjudication of the bidding to the consortium Instrumentarium Corp-Medko Medical. In august, 2002, the Board of Directors of the Costa Rican Institue of Social Security, with headquarters in San Jose and presided by Eliseo Vargas Garcia and integrated by Bolaños Alpizar, adjudicated the purchase of the medical equipment included in the cartel to Consortium Instrumentarium Corp-Medko Medical, represented in Costa Rica by Fischel Corporation, for an amount close to thirty-two millions dollars ($32.000). During the debates that ended with said adjudication, co-defendant Vargas Garcia, Bolaños Alpizar and Sanchez Arguedas strongly defended the project and this way they achieved the approval from the Board of Directors of the institution to adjudicate the aforementioned company, notwithstanding the inexistent of feasibility studies or real technical reports recommending both the equipment to be purchased as well as the amount. The constituted a complete lack of probity in the exercise of public duties by co defendant Eliseo Vargas Garcia, Gerardo Bolaños Alpizar and Juan Carlos Sanchez Arguedas in consumption with Calderon Fournier, Reiche Fichel, Barrantes Vargas and Valverde Rojas.

During the third stage, and before a new promise of illicit retribution made by Rafael Angel Calderon Fournier, Walter Reiche Fischel with the cooperation of Marvin Barrantes Vargas and Eliseo Vargas Garcia, Gerardo Bolaños Alpizar and Juan Carlos Sanchez Arguedas were to request the extension of the public bidding to Consortium Instrumentarium Corp- Medko. This extension was made by directly distractingfounds from the budget of the Costa Rican Institute of Social Security that they were under obligation of managing with probity, integrity and transparency. However, in order to obtain the improper financial benefit, co-defendants Juan Carlos Sanchez Arguedas, Eliseo Vargas García and Gerardo Bolaños Alpizar brought to the Board of Directors a proposal of extension for an amount close to $8 million on the agreement signed with consortium Instrumentarium Corp- Medko Medical of the Board of Directors of the Costa Rican Institute of Social Security and voting in accordance with the criminal crimes planned with co-defendant Walter Reiche Fischel, Rfael Angel Calderon and Marvin Barrantes, who were fully aware of the condition of public officers the first ones had and of the illicitness represented by favoring a company in exchange remuneration.

All of the above was planned, prepared and executed in detail by the co defendant in order to achieve a complex modality of distraction of public founds, at the end which public officers Eliseo Vargas Garcia, Gerardo Bolaños Alpizar and Juan Carlos Sanchez Arguedas recivied payments delivered by Walter Reiche Fischel, Marvin Barrantes Vargas and Rafael Angel Calderon Fournier, as agreed from the begging. For this facts the defendants received on illicit payment a total of $ 8. 689. 302,80. In the case of the Former President Calderon hi received $380.000 for the adjudication of the bidding and $140.500 for the extension.

2. Description of your intervention: (This may be enforcement action, policy, legislative amendment, launching investigation, institutional development among any other anti-corruption intervention)

Leader prosecutor on:

  1. The investigation.
  2. Trial –one year-.
  3. Appeal –casacion.

3. Key result (s) achieved: Sentence N° 370-2009 14:30 hour 10.05.2009

Rafael Angel Calderón Guardia

5 years

$ 520 000 Confiscate

Eliseo Vargas García

5 years

6 years disabled

$104.829.85. Payment of social damage. House.

 

Walter Reiche Fischel 4 years  

Marvin Barrantes

3 years and 6 months  
Juan Carlos Sánchez

3 years and months 

6 years disabled

 
Gerardo Bolaños Alpízar

3 years and months

6 years disabled

28.434.475.00   Social

32.223.040.00   Damage

Solicitor General Office $ 639. 981. 90 per concept  of social damage $ 52. 516. 67  Balance uncovered

In the first instance, the Tribunal reclassified the facts accused by us from bribery to embezzlement, whereas the action of the co-defendant a distraction of public funds (article 354 penal code of Costa Rica).

4. What are the key challenges remaining?

The confirmation of the sentence by the Superior Court

5. Any potential or actual impact on the national anti-corruption momentum beyond the results of the case:

The credibility and effectiveness of the judiciary system against the corruption, on people with high profile, specially political.

6. How much information was shared nationally and internationally?

To recover all of the probatory material necessary to the case, we used two different conventions: the Mutual Legal Assistance Treaty in Criminal Matters between the Republics of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua y Panamá and the United Nations Convention Against Corruption. Also we made request via rogatory letter to Finland, Bahamas and United Stated of America. The evidence founded in Panama, related to the money payments route via different societies founded byWalter Reiche was brought to Costa Rica in application of Mutual Legal Assistance Treaty. Complementary evidence was brought also from United States of America in application of United Nations Convention Against Corruption. Both procedures werecertified as valid by the Tribunal after multiple objections of the defense. For example we had to brought to testify witnesses from Panama and bring the District Judge of United Stated using the United Nations Convention against Corruption. Counteract, by given some press declarations and general guidelines to the press ( it is a public trial).

Source: The World Bank Department of Institutional Integrity