Swiss Freeze Bank Accounts as Probe of Ex-Spy Chief Widens

Swiss authorities Friday froze about $50 million in Swiss bank accounts that they believe belong to Vladimiro Montesinos, Peru’s fugitive ex-spy chief, and President Alberto Fujimori responded by promising to bring his former right-hand man to justice.

The Peruvian president issued his first unabashed condemnation of Montesinos since ousting the all-powerful advisor and calling for early elections seven weeks ago amid a political crisis.

“This money is surely illicit,” Fujimori told reporters. “I want to emphasize and clarify that I knew absolutely nothing about an act of corruption of this nature.”

The president spoke after Swiss justice officials said five accounts in three banks in Zurich were frozen in an investigation of suspected money laundering. The Swiss Embassy in Lima, the Peruvian capital, informed Fujimori’s government Thursday that the accounts were discovered Oct. 5. They were registered to apparent front companies controlled by Montesinos.

Fujimori’s announcement after the Swiss revelation was the latest offensive in his power struggle with Montesinos, 56, who has spent nearly two weeks in hiding after returning from exile in Panama.

In a move that critics have demanded for weeks, authorities have been ordered to arrest the fugitive ex-spymaster, Fujimori said. A commando unit hunting Montesinos has been reinforced, and police guarding highways, borders and airports are on alert. Fujimori disclosed that searchers believe that Montesinos is being accompanied by two retired military officers, one a lawyer and the other a telecommunications expert.

In addition, a special prosecutor has been appointed to investigate the Swiss accounts and what Peru’s justice minister called a “significant imbalance” in Montesinos’ finances. Montesinos may have used two front companies to conceal illicit enrichment, according to Justice Minister Alberto Bustamante.

The Swiss accounts offer potential support for accusations that Fujimori’s former right-hand man, a longtime CIA ally, got rich on corruption, drugs and arms trafficking.

The Times reported Wednesday that an arms dealer in Los Angeles accuses Montesinos of having set up a $5-million purchase of AK-47 assault rifles that were airdropped by Peruvian operatives to Colombian guerrillas. Former Peruvian military men jailed in the smuggling case also allege that Montesinos organized the deal, then publicly denounced it as a criminal conspiracy.

Making a carefully qualified comment on that case, Fujimori said Friday: “In principle, at the risk of being wrong, I dismiss the idea that there has been arms trafficking by Dr. Vladimiro Montesinos.”

The existence of the Swiss accounts also gives new significance to the recent disclosure to The Times by a former U.S. Embassy official that the Drug Enforcement Administration detected suspicious multimillion-dollar transfers to European--including Swiss--banks from Peruvian government coffers in the mid-1990s. DEA agents suspected that the transfers, including one for about $200 million, were money-laundering operations involving Montesinos or his spy agency, but the probe stalled.

U.S. officials had no comment Friday on reports that the DEA assisted the Swiss investigation. But officials praised the Peruvian government for the money-laundering investigation and other probes in seven criminal suits filed against Montesinos recently.

Montesinos suffered another blow Friday when Atty. Gen. Blanca Nelida Colan resigned. The political opposition has accused her of repeatedly blocking investigations into the former spy chief’s activities and of ensuring that Montesinos controlled the justice system.

During recent days, a heavily guarded Fujimori removed other Montesinos allies from military commands and put on combat boots to lead the manhunt for his former advisor. But Montesinos’ ability to elude pursuers--and the dearth of information on his whereabouts--suggested that he retains considerable influence.

Suspicions that the president was unable or unwilling to capture him increased last weekend after a brief uprising of 50 soldiers led by a lieutenant colonel diverted attention from the ex-spy chief.

Montesinos’ decision to defy the international community and return from Panama apparently angered Fujimori and unsettled the country. Yet Fujimori had sounded perplexingly ambiguous about the mysterious advisor he had defended for years, saying the objective of the manhunt was to “locate” rather than arrest him.

Friday’s developments seemed a genuine crackdown, however. Critics of the government said the special prosecutor, Jose Carlos Ugaz, has a reputation for being independent and aggressive.

Previous prosecutors shied away from Montesinos. In 1996, Colan dismissed a drug lord’s allegations that he paid monthly protection fees to the spy chief. More recently, prosecutors cleared Montesinos after media reports revealed that he was earning hundreds of thousands of dollars a year from unknown sources.

And in September, prosecutors outraged Peruvians by shelving an investigation of the scandal that caused Montesinos’ downfall: a videotaped scene in which he paid an apparent $15,000 bribe to a member of the Peruvian Congress.

The question now: How will the drama end? Fujimori’s methodical dismantling of Montesinos’ power network has set the stage for a showdown.

The denouement could be violent. Many Peruvians believe that more than two former members of the military are protecting him. There are even allegations that he has been hiding on a military base.

It is hard to imagine the former spy chief surrendering peacefully. Sociologist Raul Gonzalez, a well-connected expert on the security forces, has said the commandos have the order to capture Montesinos “dead or alive.”

But the regime’s history of media manipulation has made Peruvians suspicious. Even the seeming purge among chiefs of the security forces is questioned, because some new appointees are seen as Montesinos loyalists.

Some opposition leaders believe that the manhunt is a facade. Critics compare the president and his former advisor to feuding warlords and warn that the two may be negotiating secretly to find another country to shelter Montesinos or devise an amnesty for the ex-spy chief and his allies in the military.

“No one can seriously say that Fujimori does not know where he is,” Alejandro Toledo, a leading presidential hopeful, said in an Argentine newspaper Friday. “They are buying time, and that is where the idea of the negotiations come in.”

* FIRST DAUGHTERS RULE

In Latin America, leaders’ daughters take the place of first ladies. A15