Qecuador's Then-Chief Prosecutor, Ruth

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Thursday, April 11, 2019

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Corporate VP, Global Corporate Affairs Will an Investigation Pence Calls on Cargill U.N. to Boot Joyce Chang Global Head of Research, Derail the Agenda of Venezuelan Envoy JPMorgan Chase & Co. U.S. Vice President Mike Pence Marlene Fernández called on the United Nations to Corporate Vice President for Ecuador’s Moreno? Government Relations, revoke the credentials of Venezu- Arcos Dorados elan President Nicolás Maduro’s Peter Hakim ambassador to the body and seat President Emeritus, the envoy of the opposition’s Juan Inter-American Dialogue Guaidó, who is internationally rec- Donna Hrinak ognized as the country’s interim President, Boeing Latin America president. Jon Huenemann Page 2 Retired VP, U.S. & Int’l Affairs, Philip Morris International

James R. Jones BUSINESS Chairman, Monarch Global Strategies Prosecutors to Craig A. Kelly Director, Americas International Charge Brazil’s Gov’t Relations, Exxon Mobil Vale in Deadly John Maisto Ruth Palacios, who was replaced Monday as Ecuador’s chief prosecutor, last month announced Director, U.S. Education an investigation of President Lenín Moreno. // File Photo: Ecuadorean Government. Dam Collapse Finance Group The dam disaster killed approxi- Nicolás Mariscal mately 300 people in January. Chairman, Ecuador’s then-chief prosecutor, Ruth Palacios, announced Page 3 Grupo Marhnos last month that she had opened an investigation of President Thomas F. McLarty III Lenín Moreno and several others following an opposition Chairman, POLITICAL McLarty Associates Q lawmaker’s accusations regarding alleged links to offshore Carlos Paz-Soldan Julian Assange Partner, companies. The announcement came days after Palacios decided DTB Associates, LLP against probing Moreno’s predecessor, former President Rafael Correa, Arrested After Beatrice Rangel on allegations that he received some $281,000 from Venezuela to Ecuador Ends Director, AMLA Consulting LLC destabilize Moreno’s government. What’s behind the accusations against Embassy Asylum Jaana Remes the two leaders? Why did Palacios choose to investigate one but not the Police arrested WikiLeaks founder Partner, Julian Assange at Ecuador’s McKinsey Global Institute other, and where does public opinion stand? Will the scandals continue embassy in London, where he has Ernesto Revilla into the foreseeable future, and to what extent do they threaten to derail Head of Latin American lived since 2012, after Ecuador Economics, Citi Moreno’s agenda? withdrew his asylum. Gustavo Roosen Page 2 Chairman of the Board, Envases Venezolanos Ramiro Crespo, president of Analytica Securities in Quito: Andrés Rozental “Palacios decided not to investigate Correa because she President, Rozental & Asociados and Senior claimed the crime would have been committed in a foreign Policy Advisor, Chatham House jurisdiction, even though Russian and Venezuelan money Shelly Shetty A Head of Sovereign Ratings, reached Ecuadorean accounts. She did, however, start an investigation Latin America, Fitch of Moreno. She called on individuals close to Moreno, such as Santiago Roberto Sifon-Arevalo Managing Director, Americas Cuesta, an influential friend and aide, to detail their version of events Sovereign & Public Finance Ratings, without being under oath. The new chief prosecutor, Diana Salazar, will Standard & Poor’s decide whether to continue the case. Many believe that Palacios had wanted to demonstrate independence in order to win the nomination for the permanent chief prosecutor position. Moreno is weakened by the bad Assange // File Photo: Ecuadorean economic situation he inherited from the Correa administration, which Government. Continued on page 4

POLITICAL NEWS Samuel Moncada, Maduro’s ambassador to the NEWS BRIEFS United Nations, and said, “With all due respect, Assange Arrested Mr. Ambassador, you shouldn’t be here. You Cuba’s National Assembly should return to Venezuela and tell Nicolás Enacts New Constitution After Ecuador Ends Maduro that his time is up.” Moncada shook his head at the statement. Pence also called Cuba’s National Assembly on Wednesday Asylum at Embassy on the United Nations to recognize Guaidó as enacted the country’s new constitution follow- Venezuela’s president and “seat the representa- ing a speech by Raúl Castro, who heads the British police today arrested WikiLeaks founder tive of the free Venezuelan government in this Communist Party, state news agency Prensa Julian Assange after Ecuador withdrew the asy- body without delay.” Maduro later said the U.S. Latina reported. The constitution modifies the lum it had granted him in 2012 and which had vice president’s comments show U.S. leaders 1976 charter and includes changes such as the allowed him to live since then at the country’s “think they are superior to Venezuelans,” the creation of a prime minister position and the embassy in London. “Today, I announce that Associated Press reported. This week, the recognition of some forms of private prop- the discourteous and aggressive behavior of White House formally accepted Carlos Vecchio, erty. Castro said it will help the island nation Mr. Julian Assange, the hostile and threatening Guaidó’s appointee, as the country’s ambassa- achieve “an increasingly prosperous, sustain- declarations of its allied organization against dor to the United States, and the Organization able, inclusive and participative socialism.” Ecuador, and especially the transgression of of American States recognized another Guaidó [Editor’s note: See related Q&A in the Aug. 3 international treaties, have led the situation envoy, Gustavo Tarre, as the country’s ambas- issue of the Advisor.] to a point where the asylum of Mr. Assange is sador to the body. unsustainable and no longer viable,” Ecuador- ean President Lenín Moreno said in a video Peruvian Judge Brazil Will Focus statement posted to Twitter. Moreno said on Fighting Inflation: Assange has repeatedly violated the rules Orders Jail for Ex- surrounding his asylum, including by interfering Central Bank Chief in the affairs of other countries through his President Kuczynski The Brazilian central bank will prioritize work with WikiLeaks. “The patience of Ecuador keeping inflation under control, rather than has reached its limit on the behavior of Mr. A Peruvian judge on Wednesday ordered for- achieving economic growth, central bank chief Assange.” Moreno said Ecuador had requested mer President Pedro Pablo Kuczynski to spend Roberto Campos Neto said Wednesday during and received assurances from Britain that As- 10 days in jail and also ordered authorities a conference in New York, Reuters reported. sange would not be extradited to any country to search properties in connection with an Brazil registered annual inflation at 4.58 where he faces torture or the death penalty. investigation into a bribery scheme related percent in March, well above forecasts and the Video showed a bearded Assange yelling at to Brazilian construction firm Odebrecht, El highest in two years. Campos Neto identified officers as he was dragged out of the embassy Comercio reported. Police officials gathered three main fiscal challenges for the country, into a police vehicle. outside the former president’s home in Lima’s which include passing a pension reform, financial district and transported Kuczynski to capping public-sector salaries and reducing the the complex crime division of Peru’s National interest rate burden on the country’s debt load. Pence Urges U.N. to Police at around 9 a.m. local time. “I don’t Revoke Venezuelan have an opinion for now,” Kuczynski said in a phone interview broadcast on local TV channel Some 1,000 Hondurans Envoy’s Credentials Panamericana. The former president called the order “ridiculous,” Reuters reported. Kuczyns- Begin Trek Toward U.S. U.S. Vice President Mike Pence on Wednesday ki’s attorney, Nelson Miranda, said he would Nearly 1,000 Hondurans have gathered in the urged the United Nations to revoke the creden- file an appeal, and the former president’s party city of San Pedro Sula to begin a trek toward tials of Venezuela’s ambassador to the interna- on Twitter said the arrest order was “excessive the United States while thousands of other tional organization, painting him as a loyalist to and disproportionate.” Kuczynski, 80, narrowly Central American migrants remain waiting for President Nicolás Maduro, The New York Times won Peru’s election in 2016 but resigned less asylum hearings at the U.S.-Mexico border, BBC reported. The United States considers Maduro than two years into his presidency to avoid News reported Wednesday. More than 103,000 a dictator and, along with dozens of other a near-certain impeachment by the opposi- migrants were detained in March or deemed countries, recognizes National Assembly Pres- tion-controlled Congress. Prosecutors allege “inadmissible” when entering the United States ident Juan Guaidó as the country’s legitimate he was involved in “corrupt acts” in connection from Mexico, according to U.S. Customs and president. During his remarks, Pence turned to to public works contracts for highway and Border Protection.

COPYRIGHT © 2019, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Thursday, April 11, 2019 irrigation projects that Odebrecht won while Kuczynski was a cabinet minister in former President Alejandro Toledo’s administration, according to a judicial resolution, the wire service reported. Kuczynski’s secretary, Gloria Kisic Wagner, and his driver, José Luis Bernaola Ñuflo, were also ordered to spend 10 days in jail. While he initially denied any ties to the Brazilian construction giant, Kuczynski even- tually acknowledged that his consulting firm had received payments from Odebrecht before he became a minister. However, he says he no longer controlled the company once he took s office and denies the payments were bribes. 2019 BUSINESS NEWS The SWIFT Latin American Brazilian Prosecutors Regional Conference to Charge Vale in Deadly Dam Collapse SPEAKERS Brazilian prosecutors intend to file criminal charges against mining giant Vale and em- Maristella Aldana Sanin Claudio Irigoyen ployees of the company in connection with the Chief Compliance Officer, Head of Latin American Eco- January collapse of a mine-waste dam, which Bancolombia nomics and Foreign Exchange killed approximately 300 people, The Wall and Fixed Income Strategy, Irene Arias Street Journal reported Wednesday. Vale em- Bank of America Merrill Lynch CEO, IDB Lab ployees who were directly involved in the oper- J.F. Legault ation of the mine near the town of Brumadinho Cesar Cernuda Global Head of Cybersecurity knew that the dam was unsafe, alleged José President, Microsoft LatAm Operations, JP Morgan Adércio Leite Sampaio, the prosecutor heading George Doolittle the investigation, based on evidence that au- Humberto Lopez EVP-Head of Global Director of Strategy and thorities have collected. Sampaio did not name Payments, Corporate & Invest- Operations for Latin America, any specific individuals. “At this point, we know ment Banking, Wells Fargo World Bank that the operational side knew [that the dam was at risk of collapse], but did Vale’s directors James H. Freis, Jr. Margaret Myers Chief Compliance Officer and know?” he told The Wall Street Journal in an Director of the Asia & Latin Managing Director, interview. Charges in the case may include America Program, Deutsche Börse Group Inter-American Dialogue murder, manslaughter, false representation and environmental damage, he told the newspaper. Monica Garcia Beatriz Quevedo, Brazilian prosecutors also may file criminal Vice President of Finance, Regional Head of Client Man- charges against employees of German inspec- Banco Bisa agement Global Liquidity and tion firm Tüv Süd, which certified the dam as Cash Management for Latin safe just four months before its collapse. Both America, HSBC companies said they are cooperating with investigators. Vale was also involved in a deadly To learn more about the conference dam collapse in 2015, when a dam it co-owned and to register, click here with BHP Billiton in Minas Gerais State failed, killing 19 people.

FEATURED Q&A / Continued from page 1 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2019 has worsened with the postponement of well as the media. Those particular interests unpopular reforms until the state apparatus, have been imposed on the entire nation. Erik Brand the dysfunctional Congress and the accu- Under such conditions, the citizens’ reaction Publisher [email protected] sations of corruption are under control. He is still weak, but it will surely worsen as still has some citizen backing for his support Moreno advances the economic measures Gene Kuleta Editor for human rights, the break with Maduro and necessary for the agreement it reached with [email protected] the fight against the enormous corruption the IMF. At present, this is accompanied by Anastasia Chacón González of the Correa government. His agenda the galloping deterioration of the govern- Reporter will depend on the legislative assembly’s ment, which all polling agencies confirm.” [email protected] capacity to pass the reforms agreed upon with international organizations and on Walter Spurrier, president of

breaking the natural resources curse that Grupo Spurrier and director of Michael Shifter, President has degraded Ecuador since the discovery of Weekly Analysis in Guayaquil, Genaro Arriagada, Nonresident Senior Fellow oil: many people intervene in politics not to A Ecuador: “Palacios was interim Sergio Bitar, Nonresident Senior Fellow help the common good, but rather to make chief prosecutor and was lobbying to be con- Joan Caivano, Director, Special Projects big fortunes with state companies’ and firmed to the post, but CPCCS, the selecting Michael Camilleri, Director, Peter D. Bell Rule of Law taxpayers’ money.” body, did not shortlist her. She announced Program the hasty preliminary investigation of Lenín Kevin Casas-Zamora, Nonresident Senior Fellow Juan J. Paz y Miño Cepeda, Moreno as she was on her way out. So Ariel Fiszbein, Director, Education Program Ecuador-based contemporary far, there is no evidence that the offshore Peter Hakim, President Emeritus historian: “Lenín Moreno broke account held corruption money. The pres- Claudio Loser, Senior Fellow with the Citizens’ Revolution ident’s name is not linked to the account, Nora Lustig, Nonresident Senior Fellow A Margaret Myers, Director, Asia and movement and subordinated himself, in though his brother’s is. Palacios may have Latin America Program political matters, to right-wing forces; in acted out of spite. Venezuela paid Correa Manuel Orozco, Director, Migration, economic matters, to business associa- indirectly, through an NGO. It seems there is Remittances & Development tions; and internationally, to strategies of little ground for further action. The new chief Jeffrey Puryear, Senior Fellow conservative regionalism, an attack against prosecutor, Diana Salazar, previously headed Tamar Solnik, Director, Finance & Administration all Latin American progressivism. As a the anti-corruption unit of the prosecutor’s Lisa Viscidi, Director, Energy Program result, the institutions of the past decade office that put Vice President Jorge Glas in Denisse Yanovich, Director of Development and were dismantled, and a business economic jail. In appointing Salazar, CPCCS expects External Relations

model was imposed, in contradiction of the progress in stalled corruption cases involv- Latin America Advisor is published every 2008 Constitution. The corruption cases ing the Correa administration. Correa wants business day, except for major U.S. holidays, that affected the prestige of Rafael Correa’s to topple the government, but other political by the Inter-American Dialogue at 1155 15th Street NW, Suite 800 government have served to justify Moreno’s forces are unlikely to support measures to Washington, DC 20005 actions. Venezuelan funds to finance the unseat Moreno. The situation may change if www.thedialogue.org Eloy Alfaro Political Thought Institute have investigators find a smoking gun in the off- ISSN 2163-7962 also been criminalized. The prosecutor’s of- shore case. Moreno’s popularity is low. The Subscription inquiries are welcomed at fice dismissed it after finding no evidence of public is unhappy about the sluggish econ- [email protected] criminal responsibility. But it did initiate an omy, but the middle class appreciates him The opinions expressed by the members of the Board of investigation into the so-called INA-papers for having saved Ecuador from Venezuela’s Advisors and by guest commentators do not necessarily case, which involves Moreno. The confronta- path. Moreno’s agenda cannot be derailed represent those of the publisher. The analysis is the sole view of each commentator and does not necessarily tions between ‘morenismo’ and ‘correísmo’ because he does not have one. Moreno’s represent the views of their respective employers or firms. explains the climate of accusations that is weakness is his strength—in the recent The information in this report has been obtained from fostered daily on social media. This envi- elections, his party received only 5 percent reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have ronment will continue. It’s difficult to ask for of the vote, and he will be a non-factor in the any questions relating to the contents of this publication, prudence, rationality, objectivity and ethics. presidential elections two years from now. contact the editorial offices of the Inter-American Dialogue. Contents of this report may not be reproduced, stored in a The government decisively influences state Non-Correa political forces have their eyes retrieval system, or transmitted without prior written permis- functions and institutions and maintains the set on the succession.” sion from the publisher. support of economic and political elites, as