TIME: Almanac 1993/TIME Almanac 1993.iso/time/062491/0624003.000

Text File | 1992-08-28 | 7.0 KB | 151 lines

                                                                                WORLD, Page 33

NICARAGUA

Keeping It All in the Family


President Chamorro promised to run an open government, but
cronyism and dealings by her son-in-law (and chief adviser) have
muddied that pledge

By JOHN MOODY/MANAGUA -- With reporting by Jan Howard/Managua


    With his owlish gaze, lithe step and limber tongue,
Antonio Lacayo Oyanguren looks and acts like the Jesuit-trained
postgraduate of M.I.T. that he is. For most of his 45 years, he
has labored in profitable obscurity. During nearly 11 years of
rule by the Sandinista National Liberation Front, Lacayo, the
son of one wealthy family who married into another, tended to
business, leaving Nicaragua's treacherous politics to others.

    He could no longer maintain that low profile after his
mother-in-law, Violeta Barrios de Chamorro, defeated the
Sandinistas and became President of Nicaragua in April 1990.
Lacayo, who served as Chamorro's campaign director, immediately
began shaping the new administration; according to insiders, he
picked the President's Cabinet and made the controversial
decision to retain Sandinista General Humberto Ortega Saavedra
as head of the armed forces. Lacayo's official title is Minister
of the Presidency, but some feel he might as well be called Mr.
Presidency. "Dona Violeta conferred absolute power on Antonio
from the beginning," says a longtime family friend. "He's
running the country."

    Lacayo toils 14 hours a day in an office that would be
used by Vice President Virgilio Godoy Reyes if he and Chamorro
were on better terms. Until this month, Lacayo's sister Silvia
was the country's treasurer, and her husband Alfredo Cesar
Aguirre is president of the National Assembly. Lacayo's cousin
heads the Central Bank, and all three national newspapers are
directed by Chamorros, including the pro-government La Prensa,
where Lacayo's wife Cristiana is president. During a two-hour
interview, Lacayo bristled at the suggestion that he and his
family wield inordinate power. "We are still in an emergency,"
he says. "To compare the form of government we have in Nicaragua
with the U.S., or Costa Rica, or Switzerland, which have
traditions of democracy, is infantile."

    But Lacayo presides over an insiders' network that mocks
Chamorro's vows to run a "transparent" administration. Last
November the government ordered 400,000 new passports, claiming
that the old documents were no longer any good because the
Sandinistas, in their final months of power, had issued papers
to non-Nicaraguans with no right to citizenship. Under
Nicaraguan law, the printing contract, worth more than $1
million, should have been open for public bidding. It was not.
Although at least one other company made an unsolicited offer
to do the job more cheaply, the contract was awarded to
Continental Trading, which is a subsidiary of OCAL, a company
owned by distant relatives of Lacayo's. The deal was approved
by the Minister of Finance, who once served OCAL as an adviser.
Lacayo insists there is nothing wrong with using business
contacts to get fast results. "This government is composed of
businessmen," he says. "We're used to the working methods of the
private sector."

    Welfare Minister Silviano Matamoros, an optician, last
year closed two state-run shops that made eyeglasses for the
poor, and sold their inventory to a private optical-supply
company -- his. The controller general cleared Matamoros, who
paid fair market prices, of wrongdoing, but the minister at the
very least had an inside track on purchasing the spectacles.

    Lacayo's own business ventures suggest a possible conflict
of interest, although he has never been accused officially of
impropriety. Gracsa, a company of which he is a stockholder and
former general manager, is part of a cartel of cooking-oil
companies that benefited from foreign donations of cooking oil
last year. The government sold the oil to the firms at below
market price; they turned around and sold it to consumers for
nearly twice what they had paid. While admitting the companies
turned a handsome profit, Alfredo Marin, Gracsa's general
manager, maintains, "The government has done nothing, nothing,
nothing, for this company."

    In 1989 Lacayo bought a stake in San Felipe, a failing
state-run chicken farm. Since then it has made a remarkable
comeback. Marin, who also sits on its board of directors,
predicts that San Felipe will be the country's No. 1 chicken
producer in three years.

    Lacayo attributes his success in business to financial
acumen and patriotism during the Sandinista regime. Says he:
"Everyone said that to invest in Nicaragua meant supporting the
Sandinistas. I believed that it would lead to victory against
the Sandinistas. So I opted to invest."

    Competitors remain skeptical. Observes Octavio Alvarado,
president of the Association of Aviculture: "All private
producers fear competition from businesses protected by the
government. It doesn't look right that members of the government
also have business interests." Guillermo Arostegui, vice
president of Gracsa's main competitor, the Numar Group, is in
agreement: "It's obvious Lacayo has an advantage. He used to run
Gracsa; now he runs the country."

    Nicaraguans agree that Chamorro -- guided by Lacayo -- has
kept her two central campaign pledges: to end the nine-year
conflict between the Sandinista army and the U.S.-backed
contras, and to eliminate the military draft. Her administration
is also slowly repairing the economic meltdown produced by
Sandinista mismanagement, the war and a U.S. embargo on trade
that was lifted only last year.

    But to win peace with the Sandinistas, Lacayo has dealt
with them very gingerly, opening him up to another set of
criticisms and splintering the 14-party coalition that supported
Chamorro's candidacy. Francisco Mayorga, who served as Central
Bank president, resigned last October after stormy clashes with
Lacayo. Says he: "Antonio can't make any decision without the
acquiescence of the Sandinistas."

    The brashest critic of the administration's soft policy on
the Sandinistas is its own Vice President. Godoy remains
outraged that General Ortega held on to his army post and has
repeatedly called Chamorro and Lacayo "prisoners of the
military." Lacayo pounces on such overheated rhetoric. "How much
accommodation with the Sandinistas is too much?" he asks. "If
we're too generous, that's better than not being generous
enough. The gains we've made by negotiating with the Sandinistas
are enormous. For a start, we're not killing each other
anymore."

    That argument may temporarily assuage war-scarred
Nicaraguans, who yearn for prosperity and peace. But investing
a single unelected official -- even one as able as Lacayo --
with so much authority is contrary to the spirit of democracy,
and calls to mind Lord Acton's theorem about the corrosive
effect of absolute power.