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Nicaragua Today a Republican Staff Report Commi'itee On S. PRT. 102ci Conareu } COMMITl'EE PRINT SdSeuion { 10~102 NICARAGUA TODAY A REPUBLICAN STAFF REPORT TO THE COMMI'ITEE ON FOREIGN RELATIONS UNITED STATES SENATE AUGUST 1992 Printed for the use of the Committee on Foreign Relations U.S. GOVBBNMENT PRINTING OFFICE fi8-3S1ee WASHINGTON: 1992 RECOMMENDATIONS These conditions and others that will be discussed in this inves­ tigation demand that dramatic changes be made before further United States aid is provided to that country. The following condi­ tions should be met before the resumption of any United States as­ sistance to Nicaragua: I. No direct assistance should go to the Government of Nica­ ragua in FY 1992 and no assistance in FY 1993 until: A All American citizens' property claims have been re­ solved. No claim should be considered solved until the claimant has si~ed a "finiquito" for each piece of stolen property. An independent commission of non-Sandinista personnel should be established to adjudicate claims for those properties destroyed or reduced in value. This com­ mission should be totally unbiased and acceptable to the Department of State. B. A fair process for resolving Nicaraguan citizens' prop­ erty claims, under the same process as those of American citizens, is in place and operatin~. C. The leadership of the Sandmista Popular Army is re­ placed. A commission is established under Cardinal Obando y Bravo consisting of representatives of human rights organizations, the former Nicaraguan Resistance and the Nicaraguan private sector personnel to oversee the all aspects of the transition. D. A non-Sandinista official, which must include former Resistance combatants as candidates, has been named to command the Armed Forces, the National Police, and the Vice-Ministry of the Interior. The Sandinistas may not fill more than 40.8 percent (the exact percentage they received in the 1990 popular election) of the posts on the General Staff or in any military or civilian organization of the Gov­ ernment. Former ReSIstance combatants and other mem­ bers of the society approved by the commission established in paragraph (C) above will fill the remaining positions. E. President Chamorro has named as many new justices as necessary to the Supreme Court so that the Sandinistas do not retain control of that court. In addition, the entire court system should be reformed so that it is not domi­ nated by the Sandinistas. These new members must be ~p­ proved by that commission established in paragraph I (C). F. Thorough and professional investigations and pros­ ecutions have been carried out for the torture and murders of members of the Nicaraguan Resistance. These must in­ clude the murder of former Resistance commander Enrique (xi) xu.. Bermudez and the torture of Resistance leader Aristides Sanchez. These investigations must be conducted under the leadership of the Organization of American States, a foreign government, or another unbiased group, approved by those Nicaraguans in the commission established in paragraph I (C). G. A complete and thorough investigation has been con­ ducted of the murder of Jean Paul Genie by a group simi­ lar to that in paragraph I (F). An alternative is to accept the investigation Venezuela has already conducted. In ei­ ther case, the family of Jean Paul Genie must be satisfied with the objectivity of the inspection group. II. The AID Inspector General will make a detailed study of where the more than one billion dollars of U.S. aid has gone in Nicaragua. III. Request that the U.S. IMF Director provide a report on Nicaragua's economic policy reforms and its ability to comply with IMF policy reform benchmarks prior to release of IMF loans. IV. Fifty million dollars ($50,000,000) may be made avail­ able directly to international financial institutions from the U.S. Treasury on behalf of Nicaragua, provided that by Sep­ tember 20, 1992: A The Government of Nicaragua has replaced the San­ dinista-dominated leadership of the police with non-Sandi­ nista professionals. The approval process for those replace­ ments should be under the same commission delineated in paragraph I (C). The ground rules outlined in paragraph I (D) must be maintained. B. The Government of Nicaragua has established an in­ flexible timetable that will demonstrate that paragraph I (A) and I (B) will be accomplished in an expedited manner. This timetable must be acceptable to the Department of State. C. The Government of Nicaragua has established an in­ flexible timetable acceptable to the Department of State and the commission delineated in paragraph I (C), that will accomplish each of those actions called for in para­ graphs I (D), I (E), I (F) and I (G). This timetable must be in an expedited basis. V. The ~ency for International Development shall monitor and track all disbursements of aid to ensure that U.S. fund$, or goods purchased by the United States, are not diverted to support Sandinista-owned businesses or organizations. Fur­ thermore, AI.D. shall monitor and track local currencies gen­ erated by U.S. economic assistance programs. Quarterly re­ ports will be submitted to the AID Inspector General and the Department of State of these actions. VI. The Department of State should provide all foreign ~ov­ ernments giving aid to Nicaragua and all Latin Amencan presidents a copy of this report. VII. The Department of State should stress to the Govern­ ment of Nicaragua the importance that should be placed on im­ xiii plementing Constitutional changes on which the UNO coalition ran in the 1990 elections. VIII. Any future U.S. bilateral assistance that does go to Nicaragua should go through private non-Sandinista controlled banks, not state-owned banks nor the Central Bank. DEBORAH L. DE Moss. L President Chamorro's First Two Years Sandinista President Daniel Ortega lost the 1990 Nicaraguan Presidential elections to Violeta Chamorro, wife of Pedro Joaquin Chamorro, the late publisher of Nicaragua's oldest newpaper, La Prensa. Ortega received only 40.8 percent of the vote compared to Mrs. Chamorro's 54.7 percent. The United Nicaraguan Opposition (UNO), the coalition which backed Mrs. Chamorro, won a majority in the National Assembly. Despite losing by a wide margin, Daniel Ortega vowed over Radio Sandino two days after the election, that the Sandinistas would "rule from below." From the day after the election until Mrs. Chamorro was inaugurated, Sandinista officials worked to make sure that they would accomplish that goal. A LACAYO-ORTEGA Mrs. Chamorro's first act as President was to announce that San­ dinista General Humberto Ortega would remain as Commander-in­ Chief of the Sandinista Popular Army. She then appointed her son­ in-law, Antonio Lacayo, as her most senior advisor and gave him the title of Minister of the Presidency. This position is equivalent to that of United States' White House Chief of Staff. Antonio Lacayo was born in 1947, and was trained by the Jesu­ its. He remained in business in Nicaragua throughout the Sandi­ nista regime. According to his friends, Lacayo prospered signifi­ cantly during that time by conducting buoiness with the Sandi­ nistas. Lacayo's unclassified biography from the Central Intel­ ligence Agency confirms accounts of his financial success with the Sandinistas. Friends of Lacayo confirmed to the Senate Foreign Relations Committee (SFRC) Republican staff that he became involved in cot­ ton seed oil and poultry ventures on the basis of contracts and mo­ nopolies granted by the Sandinista dictatorship. Nicaraguan sources claim that Lacayo's partners in some of these ventures in­ cluded Commander Jaime Wheelock, one of the nine original Sandi­ nista Commanders, and General Humberto Ortega. Man~ of Lacayo's relatives and friends have confided to the SFRC Republican staff that Lacayo maintains a close business and personal relationship with the Ortega brothers. A member of Anto­ nio Lacayo's staff told us that in 1990 he formed CODISA, a meat packing business, with General Humberto Ortega and Bayardo Arce, one of the nine original Sandinista Commanders. This com­ pany allegedly exports meat to Mexico and is operated bY' Mr. Ramiro Contreras, who handles General Ortega's business deals. Preliminary investigations of Mr. Lacayo's business interests re­ veal that he has already received financing to operate a shrimp farm on confiscated property. This information has been con­ (1) 2 firmed to SFRC Republican staff by two sources with direct knowl­ edge of this business deal. A source close to Lacayo confided that former President Daniel Ortega shares a social friendship with Lacayo. According to this source, on December 24, 1991, the biggest holiday of the year in Nicaragua and one spent only with very close friends, Daniel Or­ tega and his wife were dinner guests in the home of Antonio Lacayo and his wife Cristiana, the daughter of President Chamorro. Lacayo also maintains a close relationship with other Sandinista officials. Several sources in the Nicaraguan Government have con­ firmed to us that Lenin Cerna, Sandinista intelligence chief, has an office near to Lacayo's on the fourth floor of the Presidency. B. CHAMORRO'S AGREEMENT WITH THE SANDINISTAS Before the inauguration, Mrs. Chamorro appointed Antonio Lacayo to represent the UNO coalition (which supported Mrs. Chamorro in the elections) in transition negotiations with the San­ dinistas. General Humberto Ortega represented the Sandinistas. In the final a~eement on March 27, 1990, known as the "Proto­ col of Transition " Lacayo disregarded the platform of the UNO coa­ lition on which Mrs.
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