Envío Digital
Central American University - UCA  
  Number 269 | Diciembre 2003



The FACS: A Microcosm of National Ills

The FACS, one of the most important Nicaraguan NGOs, is going through a crisis that mirrors the national crisis in several ways. Henry Ruiz has been linked to the FACS since it started up and is currently vice president of its board of directors. He talked to envío about the situation there.

Envío team

On November 28, the Nicaraguan public was just recovering from the shock of Arnoldo Alemán being transferred from his jail cell to a novel form of “house” arrest that confined him to the municipality where he lives, when it was further stunned by another unwonted ruling from the much-questioned national courts. Henry Ruiz, a member of the FSLN’s historic National Directorate and the legendary Comandante “Modesto” of the insurgence against the Somoza dictatorship, had been sentenced to a year in prison for supposedly falsifying public documents.

The same sentence also applied to José Ángel Buitrago, Pedro Antonio Blandón, David Callejas and Ramiro Bermúdez, who along with Ruiz make up the five-member board of directors of the Augusto C. Sandino Foundation (FACS). It was the result of just one of 50 civil and penal cases introduced in different Nicaraguan courts by former FACS director Edwin Zablah after the board had presented evidence to the Public Ministry accusing him of money laundering, fraud, conspiracy to commit a crime and connivance in the embezzling of up to US$2 million of the institution’s funds.

The owners of justice

On Saturday November 29, the board members held a press conference to explain the situation. Back in August 2003, as soon as word of the conflict reached the media, Henry Ruiz had stated that the people “behind this” were former Sandinista state security chief Lenín Cerna and FSLN general secretary Daniel Ortega. He repeated the same accusation during the press conference: “They, the owners of justice in Nicaragua who have lost their morals and trampled over the country’s institutions, are behind this. At the same time as Daniel Ortega is freeing Alemán, he wants to jail us. Even if we wanted to cover up that reality, we’ve already started to be its victims.”

Ruiz and the other directors, who appeared alongside him and were equally forceful, explained that they were being punished for fighting for institutionality and against corruption, the same banners being raised during those very days by the many people protesting the reactivation of the Ortega-Alemán pact. “The fight against corruption,” said Ruiz, “is a political struggle that has now also become a moral and ideological one. It’s moral because you have to hold on fast so as not to be swept away by the mass corruption. And it’s ideological because after having defended values based on ‘us’ during the revolution, we’re seeing the imposition of values based on ‘me, me, me.’ And it’s the inversion of those values that has us sitting in the dock today.” Ruiz concluded by stating, with his habitual calmness and without raising his voice, “I’m not afraid of jail. I’m an old fighter, I’m part of a novel political process that wanted to transform this country and give it a different face. In jail, wherever, I’ll continue preserving the values for which I once took to the mountains and for which I once worked as an official of the Nicaraguan state.”

Getting involved

Ruiz’s valiant words and the effects that the sentence against him and his colleagues—all former Sandinista government officials—had in the country in general and Sandinismo in particular, forced Ortega to release a communiqué. In it, he expressed his “total rejection of the insinuations of supposed interference” in the FACS case, affirming “his express backing for Comandante of the Revolution Henry Ruiz Hernández” and making “the most vehement call to put an end to the controversy and stop airing it in the common courts,” where he himself had placed the matter as the power behind Zablah.

Modesto refused to keep silent. On December 4, with the political atmosphere tenser than ever, he and the other four board members formerly appealed the sentence. The case first went to Sandinista Judge Julia Mayorga, who passed it on to none other than Judge Juana Méndez, who was busy deciding her verdict in Alemán’s “guaca” case. Henry Ruiz responded to Ortega within earshot of the media waiting outside the court: “The statements we’ve made are true. It’s not a question of saying ‘It wasn’t me, I didn’t stick my nose in to it,’ because lots of people have stuck their nose in and still are, not just in the FACS case, but in the whole judicial system as well.” And he made the following clarification: “If Daniel Ortega supports me, then he has to support all of the members representing the Foundation’s institutionality. He should start thinking things over, and not just in this case. He should start thinking over all the other problems this country is facing that he’s to blame for.”

He confessed that the crisis Nicaragua was experiencing during those days (see “There’s No Quick Way Out of This Crisis” in this issue), had re-awakened his “passion” for returning to politics “as a Sandinista, but not in the FSLN, because there’s nothing to be done there.” He expressed the same idea in an extensive television interview that he gave around the same time, the first he had ever given.

Born of the revolution

The FACS has its roots in the Sandinista revolution and defines itself as a “nongovernmental organization and, as such, private, non-profit, a-party and democratic.” Created as an NGO in March 1980, the Sandinista leadership gave it the objectives of “helping to transform Nicaraguan reality, improve the living conditions of the most impoverished rural and urban populations and accompany the comprehensive development of the grassroots sectors, without political, religious and ethnic distinctions.” The real aim, however, was to attract the large amount of private resources flowing in mainly from the United States and Europe in the name of solidarity with Nicaragua that the donors wanted to be transferred directly to the communities.

Between its founding and 1990, the FACS was politically attached to the FSLN’s Department of International Relations, whose last head was Henry Ruiz. In formal terms, the Foundation had a members’ assembly, a general secretary and undersecretary, an administrative council and a counterparts’ assembly until March of that year. The real power in the FACS always resided in the figure of the general secretary, who was invested with broad powers to represent, administer and take on various commitments. Edwin Zablah had been named to that post at the end of the eighties, after the Honduran government expelled him for supposedly using his post as Nicaraguan ambassador to that country for espionage. That was the period in which US-financed groups of Nicaraguans known as contras were sheltering in Honduras to wage war against Nicaragua.

As a result of the FSLN’s electoral defeat in February 1990, the Foundation became part of what was known as the party’s patrimony. And according to the distribution of areas of influence among the main Sandinista leaders, the FACS remained under Ruiz’s control. Between 1991 and 1994, an internal crisis developed within the party that ended up with the exit of an important group of former revolutionary government ministers and intermediary cadres headed up by former Vice-President Sergio Ramírez. During that period, Henry Ruiz and the FACS distanced themselves from the party’s influence, but the Sandinista leaders have never abandoned the idea of “recovering” the NGO to use its prestige and funds to further their political and personal objectives.

Doubts and suspicions

In the last 13 years, the Foundation became Nicaragua’s most important national NGO due to the enormous amount of donations it administered and its national and international influence and prestige. And all this in a country with a particular abundance of NGOs. According to figures provided by the group currently supporting Zablah, “In its 23 years of existence, the FACS has mobilized some $70 million through 800 development projects that have directly benefited some 900,000 families and indirectly benefited over 2 million people.”

But starting in 1996, increasingly frequent rumors of obscure dealings in the FACS began to circulate in restricted circles of Nicaraguan civil society, and those rumors particularly centered on its manager and general secretary Edwin Zablah. The funds he used to open a currency exchange bureau and an exclusive German restaurant, for example, generated suspicions, as did his sumptuous mansion. To silence the suspicions, the habitual response in the world of national NGOs was that “Zablah was always a very wealthy man.” But the bankruptcy of Interbank in August 2000 would confirm the suspicions about Zablah’s management and increase the level of concern within FACS’s members’ assembly.

The collapse of Interbank

From here on, Henry Ruiz synthesizes and comments on key moments of the FACS crisis. “For several years, the Augusto C. Sandino Foundation had been in crisis due to a lack of management and the way its resources were handled. This could be seen in the reduction of the projects portfolio, which was the first sign of the internal crisis. The second was the bankruptcy of Banco Intercontinental (Interbank), as a result of which the Foundation lost resources and had to lay off around 40 workers.

“It shouldn’t be ignored that Interbank was a project of FSLN management. As it started with limited capital, the most intimate Sandinistas were asked to contribute money, and that included the FACS. They asked me and I told them they should talk to the manager, to Edwin Zablah. ‘If there’s money available,’ I told them, ‘it seems normal to invest part of it to increase the initial capital.’ Interbank grew and there came a moment in which Zablah had turned into a banker, which led some, including colleagues from the members’ assembly and myself, to tell him he shouldn’t stay there, that he had to withdraw that money, which was needed to extend projects, but he didn’t want to. I think that’s when the crisis deepened, because he never withdrew the money and we were hardhit by the bankruptcy, which led to the laying off of part of the qualified personnel that had formed within the Foundation over a number of years.

“When Interbank went under, all of the assembly members, who up until then only had a consultative role as a result of the powers we had granted to the manager, to Zablah, started turning up at the offices to help deal with the crisis. It was then that we found out a lot of things we didn’t like that led us to promote substantive changes in the FACS. We found out, for example, that Zablah was using three FACS vehicles for personal or family purposes and that his sons ordered FACS officials about as if they were part of their own family business. Zablah even had a truck at his disposal for his own business activities or any other private matter. It was much later, when the statutes had been reformed and a new board of directors elected, that we discovered Zablah had also committed other kinds of abuses, such as using the Foundation’s credit cards as well as cards in his own name paid with Foundation funds to benefit companies linked to him and his family.”

When criminal behavior is called “courage”

“One of the measures we took, even before the Interbank collapse, was to contract an outside consultant, Marvin Ortega, to assess the Foundation’s organization and propose a work strategy, a vision, a mission and possible reforms of the statutes. He interviewed us all and in 1999 spent many months earning a great deal of money, but in the end we never saw the results of his work. During that time Zablah failed to provide the assembly with any reports of his administrative activities or his trips abroad in search of financing.

One other element provides a good example of the methods that Zablah himself has revealed in recent months. When Interbank was on the verge of bankruptcy, he withdrew the Foundation’s shares in the bank to subsume them. He created an NGO in Panama—let’s call it that—and put them in his name without asking permission from anyone. We reproached him for this and told him that an executive in any other organization would have lost their job for that kind of activity, or even less. He told us it had been an act of courage. He even said he knew I would have said no if he’d asked me. So he ran off! That’s criminal behavior! I reminded him then that he hadn’t sold the shares we had in Interbank, despite the fact that we’d been telling him to for two years.”

Total reform at the FACS

“Because of all of this, we decided to reform the statutes. From the very beginning, the FACS was governed by very simple bylaws, providing extremely broad powers to the general secretary. At first the idea was to make a partial reform, but in the process it became total, because it touched the essential nature of the doctrine and gave the institution a direction, a mission and objectives to follow. We defined what the Foundation should be and how it should be governed. The reform did away with the figure of a general secretary with broad powers, introduced the concept of a board of directors and approved the policy of increasing the Assembly. The whole reform package was sent to the National Assembly, which had to legally approve it. Once passed by the legislative branch, the new statutes were published in the official government journal, La Gaceta, and thus legally came into force. All of that work was done in 2002, the statutes were published in March 2003 and in May the new members took their place in the Members’ Assembly and the board of directors was elected.

“Zablah has said that he participated in this process, which is true. But he also claimed to have promoted the reform, which is not. It was the political circumstances—the fact that the assembly members didn’t want to continue in the same way—that obliged him to participate. Although we never said so, we had decided to leave the FACS if the reforms didn’t go through. I had even said I wouldn’t continue two years earlier, not because I knew about the corruption, but because I didn’t like the style of leadership that had effectively created a family foundation that was no longer the FACS. If that had been the aim, I would never have got involved.

“With the statute approved and published, we called a meeting to organize the new, bigger assembly. Zablah had let it be known that he was planning to be president of the board of directors, under the logic that the new legal concept didn’t matter as long as he could control it. At the end of the day, he considered himself to be the executive figure, the lord of the decisions.

“But when it came to the elections, absolutely no one nominated him for a post on the board. In fact, I think that he had a mental burnout at that point, because he didn’t even propose himself. I’m sure that if he’d proposed himself for a post, everybody would have said yes, but in the event he ended up without one. Well, that same day, while I was watching what was taking place there, I raised my hand and asked the assembly to order the board to make its first administrative act and designate an administrative director, and proposed that if my suggestion was approved Edwin should be named, to give him a post.”

August 7: The crisis explodes

“As the days went by, Zablah realized he no longer had the same authority, no longer had absolute power. So he failed to disseminate the statutes and started to threaten—as he tends to do—the administrative and financial control cadres and the accountant. He told them, ‘Nothing’s happened here, nothing’s changed,’ and started to conceal information. That’s what the officials told me.

“So as a member of the board, as vice president, I asked president José Ángel Buitrago to take possession. José Ángel made several fruitless attempts, but Zablah was never in the office, promising to be there the next day or the day after, but always dodging any meeting because it implied the immediate transfer of authority to the board of directors. Then, suddenly, Zablah disappeared. He went to Spain and from there managed to get an embargo placed on the properties and assets belonging to the FACS and FIDESA, a finance company linked to the FACS that offered credits under favorable conditions. In this operation, Zablah appeared as the owner of both institutions and was named the depositary of the goods involved, in collusion with the judge. And we’ve been in the courts ever since. We still haven’t been able to annul that embargo.”

The backing of Daniel Ortega and Lenín Cerna

“There are currently several legal cases. One of them has been brought by Francisco (Paco) del Teso, a Spaniard who is demanding a large amount of money for services rendered to FACS-Nicaragua for work carried out in Spain with FACS-Europe. I had never heard about this and the FACS assembly was supposed to have been informed about this kind of thing. Even if we only met once a year, we had to be informed. And if we did have a debt, we were never informed of that either. The internal auditor says that no such debt exists and the accountant says that it doesn’t appear in the books.

“Then a lady called Lucrecia Guerrero appeared as a supposed financial specialist responsible for conducting a market study for FIDESA. She doesn’t have the academic training required for such a job, but tends to lend herself to this kind of underhanded situation. We now know that Zablah got her out of the country, because we summoned her to court and if we prove that this work wasn’t done, we’ll effectively annul the embargo and be able to enter the FACS buildings and look at the accounts.

“On August 7, the same day Zablah succeeded in imposing the embargo from Spain, FIDESA’s director Alfredo Alaniz received a call from Zablah’s office, telling him that FIDESA’s accounts had been embargoed. Alaniz had his own idea about why this had happened, but he talked to Zablah to find out what was going on. Zablah told him that he had taken the decision to embargo the goods because the board was deviating from FACS’s objectives! And he asked for the heads of three FIDESA directors: José Ángel Buitrago, Yamil Zúñiga and Casta Zepeda. He also called for the resignation of “all Henry Ruiz’s people” from the FACS. Hours later, he also said that I should resign. Alaniz asked what had gotten into him, and Zablah replied that he had the backing of Daniel Ortega and Lenín Cerna.”

A well-planned surprise attack

“That backing had been gestating for a long time. Zablah was always talking contemptuously about Daniel Ortega, saying that the FACS should be an a-political entity like all organizations, even when it had a certain inclination. And then one day, Ortega appeared at the inauguration of some houses built with FACS support in Chiltepe. I was told by Lautaro Sandino, FACS’s projects director. Nobody knew beforehand that he was going to turn up. Zablah was upset by two things: a lot of money was spent paying homage to Daniel and as always Ortega turned up two or three hours later than had been arranged. I didn’t pay much attention to what they told me because I didn’t think it very important. But now I think that’s when Zablah and Ortega made contact again, and I think this whole crisis is a well-planned surprise attack.

“When the problem blew up, Zablah’s lawyer, Mario Cruz Rosales, started calling all of the directors he could asking, ‘Are you a party militant? Are you a Sandinista?’ Then he would say, ‘Comandante Ortega is handling this directly and I’m speaking in his name when I say, resign your post on the FACS board of directors in the name of the party.’ He said the same thing to each of the directors. Then Lenín Cerna called the president of the FACS board, José Ángel Buitrago, to ‘negotiate’ the resignations of all the directors. That’s why I’ve talked of the presence of the ‘celestial court’ in this conflict. In FIDESA’s case, there’s a permanent negotiator called Luis Lacayo Debayle, who I respect a lot, who’s been negotiating with the FSLN authorities for the FIDESA moneylenders. And the person he’s had to deal with is Lenín Cerna.

“Without wishing to seem unloyal, even the president of the FSLN’s Ethics Commission, Emilio Rapaccioli, a man I trust, has had to sit down with Daniel Ortega and Lenín Cerna to discuss the FIDESA and FACS affair. So, although Daniel says he’s not involved, and always has the nerve to deny what he’s doing, I can state that he is directly involved in the Foundation’s crisis.”

Not just a matter for the bosses

“The FACS workers have been manipulated, and to some extent they’ve displayed a degree of docility. But there are people who didn’t support Zablah. The accountant didn’t, and Zablah fired the auditor, the administrator, the director of emergency programs, the cashier and even the receptionist, because she might have been “a spy.” He has also sown terror among the employees, who are hanging on to their jobs for dear life. On the other hand, the workers haven’t had the chance to meet with the board members; they’ve only heard Zablah saying that we’re going to kick everyone out. And of course, they want to defend their jobs.

“Meanwhile, some of the international donors have tried to get in touch with us. But I also have to protest about Juanjo Molina, the head of projects in Nicaragua from CIC Batá, a development NGO from Andalusia in Spain, who talked to me, sought me out as an authority, as a member of the board. We had a very open and frank conversation and he also talked to José Ángel Buitrago. But in the end, he turned tail and bowed to all of the paid ads that have appeared in the newspapers supporting Zablah.

“The same happened with Stefan Declerc of OXFAM Belgium, who came to the country but hid himself away. He asked for a private interview, but we don’t consider this to be a private matter. We’re involved in a quarrel over legality and institutionality, and it’s not a question of resolving things with me. I still have my friendships and don’t have any problem with them, but this is not a question of friendship. The fact is that certain decisions have been made. The Foundation has its norms that have to be respected so that its members know what to abide by and so people will respect us. Neither is it just a matter for the bosses. It’s a question of legality and institutionality.”

An idea of the man’s moral stature

“Zablah has brought 50 cases against us and in only one has a first ruling been made, with the judge sentencing the five of us on the board to a year in prison. The outlook is arduous to say the least. We face trials for coercion, fraud and a number of other crimes, which are demonstrating all the characteristics of the judicial system in Nicaragua. On Thursday December 4, we saw that Mario Cruz Rosales, the same lawyer who threatened us in Daniel Ortega’s name, had introduced a document in one of the trials withdrawing the accusations against one of the directors, Dr. Joaquín Solís Piura, because he was supposedly deceived by the rest of the board. So now it happens that even this scientist of notoriously sound mind, a former fighter for democracy and in the struggle against the Somoza dictatorship, has supposedly been deceived by us ‘malefactors’ from the board of directors. It was a complete manipulation and Joaquín was furious when he found out.

“In one of the cases, Zablah accused me of slander for a declaration published in La Prensa in which I said that he had turned the FACS into a personal modus vivendi. Now we know even more: it’s not just his modus vivendi, but also his modus operandi.

“Recently, Zablah called Ramiro Bermúdez, another of the directors, and asked him for a meeting. Ramiro consulted with our president, José Ángel, and agreed. Ramiro says he talked to Zablah for two-and-a-half hours, during which time Zablah asked us all to resign. It’s quite incredible. After doing all of this, which has sullied our dignity and honor, he’s now saying that he’s been slandered, that we should resign and leave him the FACS and FIDESA. That gives you some idea of the man’s moral stature.”

That’s where we’re at

José Angel Buitrago, president of the FACS board, summed up the situation in the following way: “If we have discovered in just two months that Mr. Zablah misappropriated funds, misused credit cards for his own benefit and used straw men to impose self-embargoes and transfer important amounts of money to foreign bank accounts that are not in FACS’s name, all without the board’s authorization, then we feel that the best thing would be to investigate what happened during the 18 years that Zablah was acting as manager. The struggle for institutionality and against corruption demands that we do so. And that’s where we’re at.”

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The FACS: A Microcosm of National Ills

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