Untangling Peru’s Alleged Web of Crime

During the decade that his leadership of Peru’s spy agency won U.S. praise and support, Vladimiro Montesinos built a billion-dollar criminal empire based on drug trafficking, arms dealing and judicial and political corruption, Peruvian investigators alleged Thursday.

Describing the progress of a three-month mega-investigation of the regime of former President Alberto Fujimori, aspecialprosecutorpaintedasadlyillustrativepictureofhowglobalization and gangsterism have intertwined in Latin America.

Peruvian investigators are using new laws and tactics modeled on Italy’s prosecutions of Mafia kingpins and politicians to target about 100 suspects, including a who’s who of the Peruvian ruling class. Among those behind bars are at least eight generals, plus former Cabinet ministers, businesspeople and a mayor. Other suspects--including prominent judges and media executives--are fugitives or have been barred from leaving the country.

“In the notable space of less than a month, there have been energetic actions to investigate and eventually punish the members of Montesinos’ organized-crime group,” Justice Minister Diego Garcia Sayan said this week. “These are people who until recently ran the country.”

Prosecutors said they are convinced that Montesinos participated in drug trafficking and used drug money to fund a death squad. Special prosecutor Jose Ugaz said Thursday that his team also suspects that illicit funds financed Fujimori’s political activities, including his reelection campaign last year.

Fujimori’s 10-year regime won fame for modernizing the economy, opening markets and fighting terrorism and drugs. In reality, prosecutors allege, Montesinos institutionalized a kind of hyper-corruption linked to Colombian cartels, Russian gangsters and, especially, international arms traders whose deals with the government were worth $1 billion, according to authorities.

The double-edged experience recalls those of countries such as Mexico, where then-President Carlos Salinas de Gortari, a self-styled neoliberal reformer, oversaw economic modernization even as the power of Mexican drug lords reached unprecedented heights.

Montesinos’ alleged crimes cast a negative light on U.S. depictions of Peru as a law enforcement success story. Because of the longtime alliance between Montesinos and the CIA, the U.S. has a “moral and political responsibility” to cooperate with the anti-corruption fight, Justice Minister Garcia said.

“The survival of Montesinos in the highest levels of power was the responsibility for years of the U.S. government,” he said. “At least one agency confided in him and made him a partner. Montesinos used that relationship as a reaffirmation of his power here.”

Last week, in what Ugaz called an important advance, FBI agents in Miami arrested a Peruvian suspected of acting as a top money-launderer and bagman for Montesinos. After arresting businessman Victor Alberto Venero, agents discovered that he had made a $15-million bank deposit in Miami and carried documents related to $30 million more, according to officials.

An FBI agent has spent the past three weeks in Lima, the Peruvian capital, as part of a multi-agency U.S. effort to assist the investigation and the manhunt for Montesinos, who has been on the lam since October.

The investigative blueprint laid out to The Times by Peruvian authorities alleges that Montesinos used drug corruption to found his criminal network after becoming unofficial chief of the National Intelligence Service, or SIN, in 1990.

Montesinos worked in the 1980s as a lawyer for Colombian drug lords who smuggle coca paste from Peruvian jungle valleys and refine it into cocaine. Testimony from former military officers links Montesinos and Peru’s former armed forces chief, Gen. Nicolas Hermoza, to protection offered air and river smugglers in exchange for kickbacks and to transportation of drugs in army helicopters, according to prosecutors.

Drug profits financed the Grupo Colina death squad, a paramilitary unit allegedly set up by the former spy chief that is accused of massacring university students and slum dwellers, Ugaz said.

Prosecutors have not yet confirmed an allegation that Montesinos funneled a million-dollar “donation” from Pablo Escobar, the boss of Colombia’s Medellin cartel who was killed in 1993, to Fujimori’s first campaign. But they accuse Montesinos of protecting Medellin cartel operations while cracking down on rivals.

“We have no doubt that Montesinos and his people received money to allow the smuggling of drugs by river or the landings and takeoffs of planes,” Ugaz said. “Part of the deal appears to have been precisely that he was the point man here for the Medellin cartel to weaken the [rival] Cali cartel.”

The existence of corruption among Peruvian military commanders in the Upper Huallaga Valley, a prime coca-growing area, is not news to U.S. drug agents, who preferred to work with specially trained units of the Peruvian police.

Another military suspect under investigation, Gen. Eduardo Bellido, was singled out by U.S. Drug Enforcement Administration agents in 1993 as the alleged protector of a clandestine airstrip when he was the commander in the Upper Huallaga region, according to a former U.S. Embassy official. U.S. complaints about military corruption in the area spurred Fujimori to order a shoot-down policy against drug-smuggling planes, the former embassy official said.

Nonetheless, U.S. officials have said that there was no hard evidence against Montesinos himself. They have lavished praise on Peru for eradicating more than 60% of its coca crop.

Asked how the impressive statistics are compatible with alleged corruption, a senior U.S. official said in a recent interview: “There was still lots of opportunity for corruption, as there was lots of trafficking going on. It’s not as if there were no moneymaking opportunities.”

In the second half of the 1990s, investigators said, the Montesinos mob shifted its focus to arms trafficking and money-laundering. Much of $80 million detected in Montesinos’ bank accounts in Switzerland and other countries was allegedly kickbacks related to the acquisition of air-defense systems from Belarus and Russian-made arms, authorities say.

Moreover, during initial questioning by Ugaz in Los Angeles last month, a Turkish-born Lebanese arms trafficker confirmed an account he had earlier given to The Times that he brokered a $5-million deal with Montesinos to acquire 50,000 assault rifles from Jordan. Peruvian operatives allegedly airdropped the guns to Colombian guerrillas in an arms-for-drugs deal with Russian gangsters, causing a scandal that hastened Montesinos’ fall.

The investigations and trials will last years. There is no hard evidence yet that Fujimori enriched himself, but prosecutors have asked Japanese authorities for help in checking banks in Japan, where the former president now lives.

“Either he did things very well, which would be the hypothesis, or, as some naive people say, he didn’t know anything” about the corruption, Garcia said. “The question of Fujimori will take a long time.”

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Rotella was recently on assignment in Peru.