luxury house at a cut-price rate from the Fischel Corporation. The company had used a series of firms registered in Panama to buy the property. Vargas resigned in April 2004, after the scandal erupted. A further investigation was also opened into alleged irregularities in medical equipment purchases using money from foreign loans, from Finland and Spain. Medical equipment worth US $39.5 million had been bought using a Finnish loan that was conditional on the CCSS using at least half of the money on Finnish medical equipment, even though much of the equipment listed in the terms of the loan did not correspond to the priority needs of CCSS hospitals. The company that was eventually given the supply contracts was Instrumentarium-Medko Medical, a Finnish consortium that was represented by Fischel Corporation. The president created a special commission of four well-respected individuals from the government, judicial, medical and business communities to investigate both allegations. The commission’s three-month investigation ran parallel to a legislative inquiry and investigations by the public prosecutor’s office, which began in December 2003. This has caused problems: when called to testify before congress, the accused have tended to refuse on the grounds that their statements could be used against them in the parallel criminal process. A second problem is that, according to the chief prosecutor, a number of CCSS officials have been threatened with dismissal or other sanctions if they denounce acts of corruption in the sections where they are employed. The case has been widely publicised and public pressure generated by the scandal contributed to the decision by the legislature to begin the process of adopting the law against corruption and illegal enrichment, which had been languishing in the legislative assembly for nearly six years. The case also highlights the important role of investigative journalists, who uncovered the links between the Fischel Corporation
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and CCSS directors who were involved in the scandal.
Technical oversight promises to help uncover corruption Kilometres of pot-holed highways and bridges that remain incomplete years after they were started beg questions about the administration of public resources and the effectiveness of the contracting and construction processes in Costa Rica. In 2002 the legislature appointed a technical institute to oversee CONAVI, the state body responsible for building and maintaining the country’s roads, and to investigate the shoddy construction practices that shortened the useful life of the road network. The oversight body is the National Laboratory for Structural Materials and Models (LANAMME) of the University of Costa Rica. Since being assigned with the monitoring role, LANAMME has produced a number of reports criticising the quality of roadworks – both their construction and maintenance – which have served as the basis for allegations of conflicts of interest and political interference. The response from CONAVI to the new monitoring body has been lukewarm at best. By law, CONAVI should transfer 3 per cent of its annual budget to LANAMME, but in 2004 it was projecting a total transfer of only 2.1 per cent for the year. With each critical report from LANAMME, payments have tended to be delayed or cancelled, making it difficult for the oversight body to carry out its work. LANAMME looks at the technical aspects of projects. Its reports show clearly where substandard, cheaper materials have been used and where feasibility studies have not been carried out. One case worth mentioning is the Barranca-Peñas Blancas highway. In this case, the technical specifications of the contract were modified by government officials who wanted the job finished quickly, even though this would mean cutting corners that would create potential problems in the future.
Country reports
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