Paraguay Confronts Its Corruption : Latin America: Smuggling persists within nation 1 year after colonel reported it. But justice is beginning to take hold.

Col. Luis Gonzalez Rojas still wears his blue-green uniform with red trim and stars on the shoulders. But now he is an army outcast. Other officers shun him. Some would like to see him dead for what he did, Gonzalez Rojas says.

“Do you think they wouldn’t shoot me if they could?” he asks. “They can’t because of public opinion, international opinion.”

What Gonzalez Rojas did was to expose army participation in Paraguay’s mightiest underground institution: organized smuggling. He reported last year that officers were part of an international contraband ring, which slipped stolen vehicles across the Paraguayan border to be sold in Bolivia.

One of the officers was none other than Gen. Ramon Humberto Garcete, then commander of the Paraguayan army. Garcete, who has denied any wrongdoing, is under military detention and is being tried along with two other generals, three lieutenants and several other people.

Few Paraguayans doubt that powerful army generals have been deeply involved for decades in contraband and other corruption. What comes as a surprise for many is that a whistle-blower could put any high officer, let alone the army commander, on the criminal court docket.

“Everyone was electrified by the thing,” said Hermes Rafael Saguier, an opposition congressman.

But stunning as it was, the shock was not enough to stop the smuggling, Saguier said. “The structure of the car trafficking to Bolivia remains intact. They continue stealing cars, and they continue bringing them from Brazil,” he said.

Still, Gonzalez Rojas has sounded a signal of change in Paraguay and other Latin American countries. Corrupt officials are squirming around the region, increasingly exposed in the openness of developing democracy and bolder news media. In country after country, reports of official graft have raised waves of public indignation, sometimes followed by legal and legislative action--occasionally with major consequences. Brazil’s president was impeached for corruption last year; corruption charges now threaten the job of Venezuela’s president.

Nowhere in Latin America has corruption been more pervasive than in Paraguay, a landlocked South American nation of 4.4 million people. Its seeming favorite form is smuggling, a national industry that has enriched uncounted military officers and other government officials.

Under deposed dictator Alfredo Stroessner, an army general who ruled the country from 1954 to 1989, high military officials ran the racket, picking partners and handing out “concessions” for different kinds of contraband, customs agent Ruben Gonzalez said. “The generals handled everything. The military men were like gods,” he said.

Economist Ricardo Rodriguez Silveiro observed that “the Stroessner government made smuggling a lifestyle. He used to say that smuggling was the price of peace. He kept his generals with their pockets full from contraband.”

That did not suddenly change with the bloody coup that brought Gen. Andres Rodriguez to power in 1989, but change is in the wind. Rodriguez had been one of Stroessner’s rich generals, but as president, he has been going with the growing flow of freedom and democracy in Latin America.

Like other governments in the region, the Rodriguez regime has opened up the national economy to legal imports, sharply lowering import taxes. Lower customs duties make it less profitable to bring in merchandise illegally with rake-offs and bribes.

“In the Stroessner era, contraband easily represented 40% to 50% of international transactions,” Rodriguez Silveiro said. “Now it is about 20%.”

Meanwhile, after the stormy scandal unleashed by Gonzalez Rojas and the detention of the army commander, it is clear that the contraband racket is no longer untouchable. “The society is changing,” Rodriguez Silveiro said. “I think the Gen. Garcete thing is only the beginning of a story that hopefully will continue.”

Gonzalez Rojas, 53, was a division commander based in Paraguay’s sparsely inhabited Chaco region near the Bolivian border when he discovered the stolen vehicle traffic. He reported what he had learned to superiors, but they turned against him. “When I made the denunciation privately, they practically wanted to implicate me, so I had to make it public,” he said in an interview.

The story made a splash in the press, embarrassing the army. For talking to reporters, Rojas Gonzalez was detained in an Asuncion barracks. But public protests, including street demonstrations by thousands, forced the government to order his release in October after 44 days. When he left the barracks, cheering supporters lined the street.

“It was an incentive to continue in this struggle, a very beautiful incentive,” Gonzalez Rojas said.

He was detained again in January and held for 40 days. He has been passed over for promotion to the rank of general and has been assigned to a minor administrative post at a center for aging veterans of the 1932-35 Chaco War. “I am in active service, but I am not in the army,” said the colonel, a wiry man with close-cropped, graying hair.

The colonel’s lonely courage will not clean up smuggling and corruption in Paraguay, of course. Many fearless witnesses would be needed, and, so far, there is a notable shortage. Judge Jose Agustin Fernandez, who is conducting judicial proceedings in the contraband vehicles case, said that, except for Gonzalez Rojas, military men maintain a silence on the subject.

“They all are under pressure,” Fernandez said. “No lieutenant is going to testify against a general.”

The stakes are huge in the Paraguayan smuggling racket, and powerful people have much to lose if it is cleaned up. “Paraguay is a trampoline for contraband,” said Aldo Zucolillo, publisher of ABC Color, the country’s leading newspaper. “It is the paradise of corruption.”

More than half of the motor vehicles in Paraguay are believed to have been smuggled, many after being stolen in Brazil and Argentina. Electronic goods, such as television sets and stereos, are sneaked into the country, then smuggled out to be sold in Argentina and Brazil.

Contraband beef, soybeans, cotton, cement, steel and other goods come and go across Paraguay’s borders both ways, depending on profits to be made from pricing differences, currency exchange rates and customs duties on each side.

Paraguay is also believed to be a base for extensive arms trafficking. Recent reports have indicated that weapons shipments came through this country en route to Iraq and South Africa.

Although Paraguay produces little or no cocaine, it is a transit route for shipments of the drug coming from Bolivia en route to the United States and Europe. Bolivian cocaine reportedly is used sometimes to pay for stolen cars smuggled by Paraguayans.

“Corruption is a serious problem impeding narcotics control efforts,” said a State Department report on drug control strategy in Paraguay. “Paraguay’s extensive, unpatrolled land borders with Bolivia, Brazil and Argentina, and numerous unregulated airstrips, facilitate movement of contraband, including drugs.”

Francisco de Vargas, an opposition congressman who has been an outspoken critic of corruption and smuggling, said drug trafficking worsened after Stroessner. “You can talk with any police commissar and he will tell you, ‘We know who is trafficking drugs but we can’t do anything. We don’t have the support of our superiors,’ ” De Vargas said.

Whether Paraguay’s new president-elect, Juan Carlos Wasmosy, will work to dismantle the smuggling industry may be a key to future political and economic development. Democratic reforms and productive investment are unlikely to reach full bloom in a country dominated by corruption.

A key test for Wasmosy will be the vehicle smuggling case that began with the denunciations of Gonzalez Rojas. The new president will have the power to appoint new judges. Whether he does so could be crucial.

“If Wasmosy can govern independently, I think it can be corrected,” Gonzalez Rojas said. “But if he doesn’t have independence in his decisions, the problem will go on.”