Salvadoran Government Shows Signs of Losing Interest in Bank-Looting Scandal : Politics: It once seemed officials were cracking down on the elite in the Banco Agricola case. But no one has been arrested.

What initially appeared to be a successful, unique attempt to punish several important businessmen for allegedly looting one of El Salvador’s banks has turned into a symbol of the continuing inability or refusal of the government to control the political and economic elite, according to diplomatic, banking and judicial sources.

The case, involving El Salvador’s biggest banking scandal, has resulted in arrest warrants for some of that country’s most prominent, powerful figures, including two major financial supporters of President Alfredo Cristiani. They allegedly defrauded Banco Agricola Comercial of up to $50 million.

When Judge Daniel Gonzalez ordered the arrests last month, it marked the first instance of members of the Salvadoran elite being charged with serious crimes and was seen as a signal that the Cristiani government was cracking down on corruption and privilege.

But none of the 21 people indicted has been arrested, and the suspected masterminds of the alleged bank fraud have fled to the United States and Guatemala.

In the view of many experts, the government is no longer seriously pursuing the case, at least in terms of punishing anyone.

“There’s a sense the show is over,” said one source, who pointed out that it is up to Cristiani’s executive branch to enforce the arrest warrants. “The police are not breaking down doors. The indictments are enough; the security forces just don’t care.

“I thought this was a clean blow for justice,” the source said. “But now things are murkier and murkier.”

In reality, the scandal was clouded from its beginning in 1985, when some of the country’s most powerful figures founded a shrimping company, Pesce S.A., and began borrowing millions of dollars from Banco Agricola, one of Salvador’s eight national banks, then owned by the government. The loans ultimately totaled $50 million, none of which has ever been repaid.

According to banking sources, only about 15% of the money was used to operate the fishing fleet. The rest, converted from Salvadoran colones to dollars at a black-market rate twice the official conversion figure, went to private bank accounts in Miami, they said.

The loans were given in large amounts without serious scrutiny, sources said. “They virtually were approved the day they were requested, and these often ran into millions (of dollars) at a time,” said one banking source. “Nobody’s credit was checked, and no one was required to prove he could repay the loan.”

The indictment charges that the partners of Pesce S.A., led by Rafael Escalon Lopez, conspired with Banco Agricola President Rafael Carbonell to defraud the bank.

Escalon, who controls a major insurance company here, is a member of one of the oldest, richest and most powerful Salvadoran families and is a prominent Cristiani supporter. Carbonell, 50, has major ties to the Christian Democratic Party, the country’s major opposition party, and was named head of Banco Agricola by former President Jose Napoleon Duarte in 1984.

Others charged in the case include:

* Mauricio Samayoa, head of an insurance company partly owned by Cristiani’s in-laws and a close friend of the president.

* Juan Wright, a permanent resident in the United States who lives in Miami. He is a wealthy cotton-plantation owner here, the former father-in-law of Escalon and a major financial supporter of Cristiani’s National Republican Alliance party (Arena). Wright, through his Salvadoran attorney, argues that, since he never signed any of the loan applications, he cannot be prosecuted. But prosecutors assert that he was a major recipient of the borrowed money and was an integral part of the alleged fraud.

* Roberto Mathies Regalado, onetime president of National Electrical Co. and a graduate of Georgetown University in Washington. He was among the most generous of Cristiani’s financial supporters in the 1989 presidential campaign.

Although rumors of the alleged scheme surfaced almost as it went into operation in 1985, it was not until 1989 that an investigation was ordered. In what diplomats say was an efficient, methodical probe, the U.S.-trained Special Investigative Unit headed by Army Col. Manuel Antonio Hermenegildo Rivas took a year to build the case.

Much of the initial information came from Escalon and Wright, who apparently felt they were being set up to take most of the blame, sources said. They hoped to head off any punishment by exchanging information and promising to pay back the loans.

Under Salvadoran law, jail terms can be avoided, even in criminal fraud cases, if the money is repaid. There are theories that the charges were filed as a pressure tactic to force repayment.

Once Rivas concluded his investigation, the case lay dormant for nearly a year, when the arrest warrants suddenly were issued.

Politics are blamed by some for the delay. “Some (of the accused) are close to Cristiani,” said one source. “He had no interest in pressing this case. He wasn’t asked (to approve the prosecution), but he hasn’t pushed for it, either.”

Most sources say two reasons were behind the sudden charges.

One was pressure from American Congress members and senators who felt this was a test case for the government’s promise to reform the judicial system. Since the United States provides $430 million in aid annually to Salvador, including large credits to the banking system, the U.S. Congress has been pressuring the government to speed up the judicial process.

According to diplomatic banking experts, few if any U.S. funds were involved in the alleged fraud. An audit, one source said, showed that--of the $150 million in U.S. money provided to the banking system during the targeted time--only 1% “had potential” for misuse. He said the Salvadoran Central Bank had commercial banks repay that sum to the United States.

Another reason given for the sudden charges was pressure from the head of the Salvadoran Supreme Court, Mauricio Gutierrez Castro. A former right-wing vice president, Gutierrez has presidential ambitions; sources say the court president was seeking to build a reputation as honest and determined to enforce justice.

These sources also theorize that Gutierrez wants to weaken the more moderate Cristiani, even though he cannot run for reelection, to gain influence in Arena at a time when the party’s leadership is in disarray because of the illness of its leader, Roberto D’Aubuisson.

Whatever the reasons for the move against the elite and privileged charged in the case, it appears that the sloth and corruption that have defined Salvador’s judicial system in the past still hold.

“Something will have to happen,” said one source. “But it will be a whimper, not a bang.”