THE VESCO FACTOR IN COSTA RICAN POLITICS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP09-00956R000105640001-8
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 16
• Document Creation Date: December 23, 2016
• Document Release Date: August 1, 2013
• Sequence Number: 1
• Publication Date: August 7, 1973
• Content Type: CABLE

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I LIPIULAnnir mu I LU1FIUIM'1IAL 1-SECRET
OFFICIAL ROUTING SLIP
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NAME AND ADDRESS
DATE
INITIALS
1
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A/Chief, ELAD
Chief, Production Group
3
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5
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L116
ACTION
DIRECT REPLY
PREPARE REPLY
APPROVAL
DISPATCH
RECOMMENDATION
COMMENT
FILE
RETURN
CONCURRENCE
INFORMATION
SIGNATURE
Remarks:
Some months ago, LAB and FBIS became
involved in a potentially sensitive situation
revolving around reportage on the activities of
Vesco in Costa Rica. FYI, the attached indicates
continued, and,in factlgrowing interest in Vesco
and his impact on Costa Rican politica, especially
in view of the upcoming 1974 presidential elections
As our assets permit, we shall be reporting
on this campaign, letting the Vesco chips fall
where they may.
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Department of State
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PINT, EFIN, CS
AmEmbassy, NASSAU
AmEmbassy, SAN JOSE
DATE: August 7, 1973
The Vesco Factor in Costa Rican Politics
Robert Vesco's investments in Costa Rica and his relations with
President Figueres have been the object of great public and press
debate, mostly critical, since Vesco's name first appeared on the
public scene in September 1972. As 1973 moves past the half-way
mark and the tempo of the presidential election campaign picks up,
Vesco' s associations and influence have become an increasingly
Important political topic and promise to be a bio campaign issue.
Many believe Vesco has safeguarded his operations in Costa Rica
through partisan political investments and contributions. Whether
he has or not is almost moot since the widetpread perception that
he has is in itself the operative political consideration. Vesco
and his relationships for profit with high Costa Rican government
officials will certainly be a vulnerable issue for the PLN in the
upcoming campaign. This discussion looks at the impact of the
Vesco involvement in Costa Rican business and politics and
problems and opportunities it poses for the various candidates.
THE VESCO FACTOR IN COSTA RICAN POLITICS
The impact on Costa Rican politics of large amounts of offshore
mutual fund capital has been the object of speculation and
suspicion within Costa Rican public and political circles and,
FORM
10..64 DS -323
:mlm
CO
?.bre:JUNI Date:
7-19-73
Phoge No.:
254
Contents an
DCM.
STAT
For Deportment Usis Only
In
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Clearances:
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CONFIDENTIAL San Tose A-139 /
Page 2
despite a traditionally short Costa Rican memory for scandal,
appears to be a f8ctor of increasing significance in the upcoming
presidential campaign. The full weight of the $25 million to
$60 million invested by Vesco is, of course, impossible to measure
as any amounts invested directly in politics are difficult to
identify. Should Robert Vesco in fact eventually put $60 million ?
In Costa Rica, his investments would total more than 5 percent
of the Costa Rican gross national product. President Figueres has
said on several occasions, by way of explaining the non-political
character of Vesco's investments, that they have been placed more
on the opposition side than with undertakings affiliated with the
government. Observers do not doubt that these investments have
straddled the political fence for the purpose of securing political
Immunity regardless of which party emerges victorious in 1974.
The point is, in any case, that when such large amounts of money
are laid into this economy a political impact cannot be avoided.
The question is, therefore, not whether there is an impact, a
political impact, but what effect the perceived image of Vesco's
deals is having and will continue to have on Costa Rican politics
as they move into the homestretch of an election year.
Although there have been frequent private allegations to suggest
that one or another of the presidential candidates' campaign chests
has been enriched by Vesco (or Clovis MacAlpin of the Capital
Growth Fund), these have all met with adamant denials from the
parties involved. Obviously, with the popular mind sharply
sensitized by the domestic and international press to any suggestion
of involvement in Costa Rica by mutual fund operatbrs, acknowledge-
ment of such political contributions would be politically damaging
to say the least. However, Costa Rican politicians are past
masters at using the planted innuendo as a campaign device and
Costa Rica in an election year is fertile ground for juicy rumors.
The result is that, whether containing a grain of truth or not, the
Costa Rican public and many respected observers are quite con-
vinced that VescocIe?AJin are involved in the campaigns,
just as they are4invo ved in almost any large new investment project
under consideration or consummated. Inunderstarldingthe impact on
politics we are faced largely with the task of analyzing what people
perceive as reality and less what has actually, transpired.
CONFIDENTIAL
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CONFIDENTIAL Ott:Jose., A*4-39.,
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THE NATIONAL LIBERATION PARTY (PLN)
The presence in Costa Rica of large amounts of offshore mtittal
fund capital is openly acknowledged by the PLN patriarch and
President of Costa Rica .fose "Don' Pepe" Figueres. Don Pepe accepts
the funds' presence, as his responsibility and defends them as bring-
ing benefit to the country. In his several public defenses of the
funds, specifically Vesco's and MacAlpin's, he has said that he had
tried for several years to attract mutual fund capital and has only
now achieved some success from his efforts. It is commonly known
too that Figueres' chronically bankrupt firm, San Cristobal, Ltd.,
has been saved from bankruptcy on two occasions by injections of
mutual fund capital investment, once in 1968 by MacAlpin and another
time in 1972 by Robert L. Vesco.
Daniel Oduber, the PLN presidential candidate for the February 1974
elections and, at this early point, the odds on favorite, does not appear to
share the President's enthusiasm for Vesco and MacAlpin. Oduber is
sensitive to the implications for his campaign of attacks against
Egueres and the PLN on the mutual fund issue; specifically,
allegations of unethical collaboration between the President and the
mutual fund directors. The issue has caused and promises to continue
to cause strain between Don Pepe and Oduber, although publicly the
President has sought to take Oduber off the hook by accepting full
responsibility for offshore mutual fund's presence in Costa Rica.
Oduber is a one-time loser (1966), probably is facing his last chance
at the presidency and, consequently, is anxious to separate himself
from innecessarily vulnerable areas such as Figueres' fascination
with mutual fund capital. On the other hand, Oduber needs
Don Pepe's support to win in 1974. Oduber is not as appealing a
candidate as Figueres was in-his earlier years, including 1970 when
he was elected President by the greatest popular majority in
Costa Rican history. Oduber does not need Vesco's or MacAlpin's
financial support to run the kind of campaign he expects to mount
In his run for the presidency. However, Don Pep& s patriarchal role
in the PLN as its unquestioned leader, combined with his wish that
Daniel Oduber win in 1974--some say to guarantee protection for
questionable business enterprises as well as to maximize the
influence he hopes to maintain over the government when he is out
CONFIDENTIAL
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CONFIDENTIAL San Jose A-139
Page 4.
of office--render the relationship between the two highly interdependent.
While there probably have not been direct Vesco contributions to the
Oduber campaign there undoubtedly have been substantial investments
in business and projects which are ultimately beneficial to the PLN,
Oduber, and Don Pepe's economic and political future.
Figueres has often complained that development capital has not been
sufficiently available for Costa Rica to carry out the social programs
which Figueres believes are necessary. This is his public rationale
for bringing mutual funds to Costa Rica. Part of this capital has ended
up in the government bonds to help government agencies make ends
meet. Another portion has gone into a private undertaking, headed by
Figueres' son-in-law, to build low-cost pre-fabricated housing; some
Into real estate; some is said to be behind the Gulf distributorship
purchase by a Figueres ally; and some is probably behind the new
PLN-oriented newspaper, Excelsior. These are only to mention some
of the transitions more vigorously rumored about San Jose. Whatever
happens to Robert Vesco as a result ofreg-a-13 process in the US, both
Figueres and Oduber believe his invearnents in Costa Rica?s-ho?uld
remain and continue to provide economic underpinning to the
present and any incoming PLN Administration. (In this, they may be
right since many of these are not particularly liquid.) The pre-
fabricated housing project, under the direction of Danilo Jimenez,
President Figueres' son-in-law, is an example of fund investment
serving a PLN social objective, together with Figueres' personal
Interests. An investment more directly related to the campaign and
Figueres' deep-felt notion that he has long labored uphill against a
hostile press is the likely Vesco involvement in the new newspaper, ,
Excelsior, which is intended to reflect a favorable bias toward the
PLN. Figueres told a prominent San Tose editor that Vesco is
participating in this undertaking. Oduber is closely affiliated with
this project through Luis Burstin, the newspaper's director as well
as a confidant of Don Pepe. Also, them is some good evidence to
suggest the Vesco shell company, Costa Rican Communications S.A.,
Is a channel for mutual fund money into Oduber's media programs
which include extensive use of political campaign films and closed-
circuit television. Mario Sotela, Director of an important television
station in San Jose, is registered as one of the directors of the
Costa Rican Communications Company as is Burstin. A highly-placed
CONFIDENTIAL
\-i ?
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7.4
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CONFIDENTIAL SIM TOSS :AWL
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THE NATIONAL LIBERATION PARTY (PLN) '1171t5MSt:.?
The presence in Costa Rica of large amounts of offshore mUtbal
fund capital is openly acknowledged by the PLN patriarch and
President of Costa Rica Jose "Don Pepe" Figueres. Don Pepe accepts
the funds' presence as his responsibility and defends them as bring-
ing benefit to the country. In his several public defenses of the
funds, specifically Vesco's and MacAlpin's, he has said that he had
tried for several years to attract mutual fund capital and has only
now achieved some success from his efforts, It is commonly known
too that Figueres' chronically bankrupt firm, San Cristobal, Ltd.,
has been saved from bankruptcy on two occasions by injections of
mutual fund capital investment, once in 1968 by MacAlpin and another
time in 1972 by Robert L. Vesco.
? ?,
Daniel Oduber, the PLN presidential candidate for the February 1974
elections and, at this early point, the odds on favorite, does not appear to
share the President's enthusiasm for Vesco and MacAlpin. Oduber is
sensitive to the implications for his campaign of attacks against
lfgueres and the PLN on the mutual fund issue; specifically,
allegations of unethical collaboration between the President and the
mutual fund directors. The issue has caused and promises to continue
to cause strain between Don Pepe and Oduber, although publicly the
President has sought to take Oduber off the hook by accepting full
responsibility for offshore mutual fund's presence in Costa Rica.
Oduber is a one-time loser (1966), probably. is facing his last chance
at the presidency and, consequently, is anxious to separate himself
from trinecessarily vulnerable areas such as Figueres' fascination
with mutual fund capital. On the other hand, Oduber needs
Don Pepe's support th win in 1974. Oduber is not as appealing a
candidate as Figueres was inlis earlier years, including 1970 when
he was elected President by the greatest popular majority in
Costa Rican history. Oduber does not need Vesco's or MacAlpin's
financial support to run the kind of campaign he expects to mount
in his run for the presidency. However, Don Pepe's patriarchal role
in the PLN as its unquestioned leader, combined with his wish that
Daniel Oduber win in 1974-- some say to guarantee protection for
questionable business enterprises as well as to maximize the
influence he hopes to maintain over the government when he is out
CONFIDENTIAL
neclassified in Part - Sanitized Copy Approved for Release 2013/08/13: CIA-RDP09-00956R000105640001-8
Declassified in Part - Sanitized Copy Approved for Release 2013/08/13 : CIA-RDP09-00956R000105640001-8
CONFIDENTIAL San Jose A-139
Page 4.
of office--render the relationship between the two highly interdependent.
While there probably have not been direct Vesco contributions to the
Oduber campaign there undoubtedly have been substantial investments
In business and projects which are ultimately beneficial to the PLN,
Oduber, and Don Pepe's economic and political future.
Figueres has often complained that development capital has not been
sufficiently available for Costa Rica to carry out the social programs
which Figueres believes are necessary. This is his public rationale
for bringing mutual funds to Costa Rica. Part of this capital has ended
up in the government bonds to help government agencies make ends
meet. Another portion has gone into a private undertaking, headed by
Figueres' son-in-law, to build low-cost pre-fabricated housing; some
Into real estate; some is said to be behind the Gulf distributorship
purchase by a Figueres ally; and some is probably behind the new
PLN-oriented newspaper, Excelsior. These are only to mention some
of the transitions more vigorously rumored about San Jose. Whatever
happens to Robert Vesco as a result ofreg-al process in the VS,----both
Figueres and Oduber believe his invesiments in Costa Rica-6, ho-uld
_
remain and ?continue to provide economic underpinning to the
present and any incoming PLN Administration. (In this, they may be
right since many of these are not particularly liquid.) The pre-
fabricated housing project, under the direction of Danilo Jimenez,
President Figueres' son-in-law, is an example of fund investment
serving a PLN social objective, together with Figueres' personal
Interests. An investment more directly related to the campaign and
Figueres' deep-felt notion that he has long labored uphill against a
hostile press is the likely Vesco involvement in the new newspaper;
Excelsior, which is intended to reflect a favorable bias toward the
PLN. Figueres told a prominent San Tose editor that Vesco is
participating in this undertaking. Oduber is closely affiliated with
this project through Luis Burstin, the newspaper's director as well
as a confidant of Don Pepe. Also, there is some good evidence to
suggest the Vesco shell company, Costa Rican Communications S.A.,
is a channel for mutual fund money into Oduber's media programs
which include extensive use of political campaign films and closed-
circuit television. Mario Sotela, Director of an important television
station in San Jose, is registered as one of the directors of the
Costa Rican Communications Company as is Burstin. A highly-placed
CONFIDENTIAL
rTh
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CONFIDENTIAL San Jose A-139
Page 5
PLN offiaial?and other sources--told the Embassy in confidence
that Vesco had backed the purchase by CARI, S.A., of the Gulf
oil distributorship chain in Costa Rica. The purchase price was
said to be over $2 million.
What does all this mean for Oduber's campaign? In recent weeks
there have been increasing indications that Oduber is becoming
disturbed over the drumfire criticism Figueres, the PLN andr
his candidacy, have been receiving over the President's involve-
ment with Vesco. The Costa Rican rural voter does not understand
the complicated Vasco issue, but even PLN campaign workers
acknowledge some erosion caused partly by Vesco in traditionally
strong rural areas. In urban areas, where newspaper impact is
significant, steadily critical press treatment of the Vesco factor
has been steadily eroding an already none-too-strong PLN base.
In the 1966 elections Oduber did not do well among the traditionally
PLN-oriented campesinos, a deficiency which cost him the
presidency. Despite traditional PLN rural strength developed by
Pepe Figueres over the years, Oduber, fundamentally an
Intellectual candidate, appeals stronger in the cities.
Probably more important than the effect of the Vesco factor on the
PLN urban vote will be its impact upon the large, newly enfranchised
young voter group. The 18-24 year-old electorate is estimat ed to
comprise between 204000 and 250,000 voters. Among the youth
there has been noticeable disenchantment with Figueres over his
support of Vesco--a fact that worries Daniel Oduber. Costa Rican
youth might normally be expected to cast its majority vote for the
PLN, but the Vesco situation seems to have cooled them on the
PLN and may even push them to another candidate. Apathy is the
word that today characterizes Costa Rican youth's attitude towards
politics.
Another problem for Daniel Oduber is the attitude of his-so-.called
technocrats--men like ex7Minister of Economy Jorge/Sanchez Mendez,.,
Carlos Manuel Castillo, Rodolfo Solano Orfila, Femanao Naranjo,'
and Jose Manuel Setlazar Navaixiate, just to name a few. These
advisors are known to be increasingly disturbed with Figueres and
known to be urging Oduber to begin to put some distance between
himself and the President on elected and politically damaging issues.
While none of them have sufficient political clout with the candidate
to force the issue, their growing disenchantment may have some impact
on Oduber.
CONFIDENTIAL
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CONFIDENTIAL San Jose-A-l39
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Oduber expects 'this-I-finer partk_reaCtion to be manageable; lbut
Vesco-has provided the opposition with a specific and clearcut
focus on which it can attack his candidacy and the PLN for not
disavowing its relations with Vesco.
In the final analysis it all goes to how far Oduber thinks he can cr wants b
move from or against Figueres before encountering diminishing
returns. Given Figueres' strong personal interest in preserving
what he has built, ethically or less so, it may well be that Oduber
can move quite far. So far, Oduber has not been attacked directly
for involvement with mutual funds, so the issue also depends to
some extent on how deeply the opposition itself is involved and
thus how vulnerable its leaders estimate themselves to be if
the Vesco issue is thoroughly exploited as a campaign theme.
The National Unity Party (UN)
The disturbance within the top echelon of the UN party over the
signatures by UN deputies, Guillermo Jimenez Ramirez (Secretary
General of the Party) and Longino Soto Pacheco (a leading Trejos
booster) to the Vesco Commission Majority Report which exonerated
the mutual fund operations in Costa Rica, was severe and the
repercussions have not yet died down. The UN presidential
candidate claims, probably correctly, that he was not aware of the
intentions to sign the report of the two leading UN deputies,
Jimenez and Soto.
While observers find it incredible that two prominent members of
the UN party such as Jimenez Ramirez and Sote Pacheco, a one-
time opposition presidential candidate now supporting Trejos,
would take an action sodwiously detrimental to their candidate's
interest, it is altogether possible, given the power play going on
within the party, that Trejos was not consulted. Trejos told the
Embassy confidentially that this was the second time he has not
been able to control the opposition deputies on issues important
to his campaign. An earlier case occurred several weeks ago
when UN deputies split from his position and allowed an important
education bill to pass. Trejos said he has taken steps to improve
coordination between his people and the deputies to assure his
party fraction in the Legislative Assembly follows instructions on
future issues.
CONFIDENTIAL
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CONFIDENTIAL San Jose A-139
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Notwithstanding Dr. Trejos' explanation, based on the realities of his
poor relations with his deputies and other members of the "old guard"
UN party, there are rumors circulating in this town which suggest more
Insidious motives behind the UN signatures on the report. One persistent
story holds that Francisco "Paco" Calderon Guardiaithe? UN party chief)and
President Figueres have been in cahoots all along in a scheme that would
protect and preserve the UN as the country's secondary major party, but
with the immediate objective of securing Oduber's election in 1974. The
logic includes such factors as Trejos' greater affinity to his young
business-oriented economic advisors and financial contributors commonly
referred to in Costa Rica as the "Boy Scouts" than to the UN party
apparatus headed by "Paco" Calderon. Thus the UN ".old guard" is
concerned that a Trejos victory might mean their being sidelined from
crucial party decisions in the future. Supportive of this viewpoint is the
rumor that both Jimenez Ramirez' and Soto Pacheco's signatures to the
majority report were bought by Vesco through Figueres' crony Alberto
Inocente Alvarez to the tune of $50,000 each. Inocente Alvarez is also
alleged to have drafted the majority report in the Casa Presidential.
(Figueres' admission of having contributed key parts to Vesco's March 6
speech lends credence to this hypothesis in the view of some observers.)
Another story holds that the entire executive committee of the UN party
agreed to accept a substantial Vesco campaign contribution and also
allowed the payoff to the two deputies because of the precarious financial
footing of the UN campaign and the political risk taken by the two
deputies exonerating Vesco. There is no doubt that there has been at
least one meeting between Vesco' s people (Strickler) and the financial
managers of the UN campaign. However, in admitting the meeting, a
high level UN official denied to the Embassy that a deal had been struck
and maintained it would not be as long as the other possible sources of
money continue to be promising. These other sources had not borne
fruit as of mid-June, but with the heat now radiating from Vesco it is
highly doubtful that as a ,party the UN would care to run the risk of direct
involvement. The possibility, however, of a connection that avoids the
UN party structure, but includes Calderon and the deputies, has somewhat
higher probability, although the Trejos people doubt it and the likely
deputies involved categorically deny it.
As mentioned, one of the repercussions of the Vesco Commission Report
has been to further aggravate the already existing friction between Trejos,
his "Boy Scouts," and "Paco" Calderon Guardia. The indications are now
CONFIDENTIAL
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CONFIDENTIAL San Jose A-139
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that the "old guard" is as anxious as the "Boy Scouts" to avoid a rupture
as the party has now just about passed the point of no return for selection
of a candidate. The forum for the final test of strength prior to the
elections will be the UN National Assembly* which must be convoked
before the candidate can officially register his candidacy with the electoral
court (Supreme Electoral TribunAlt: The test will not be over Trejos'
candidacy for even if several significant old guard leaders are not exactly
enamoured with their candidate, they are forced to acknowledge that he
was selected in the open party primary on December 3, 1972, and was thus
the choice of the party's rank and file. The crunch, however, will be
over control of the Assembly's selection of the party's deputy candidates
and other lesser decisions relating to party patronage. Trejos says that
he is certain the majority of, the delegates to the new UN National
Assembly will be under his control and thus his word will determine the
selection of the rest of the candidates of the UN ticket. In reality, it
is likely that "Paco" Calderon and Trejos will work out a modus vivendi
whereby delegates to the National Assembly and thus the candidates
chosen by the Assembly will be generally acceptable to the two of them.
Trejos hopSdito convene the Assembly in July while the "old guard" wants
to hold off until September or October' in order to wait and see if
anything happens to Trejos or perhaps out of concern that an early Assembly
would prejudice its internal tactical position. The scheduling of the
Assembly, earlier or later, will suggest which group will have ultimate
control over the UN.
To sum up, although the Vesco factor impact has exacerbated existing
Inner party frictions, the time is short, and the party has begun to solidify,
if out of necessity rather than choice, behind Trejos. With the Assembly
near all factions will likely do their best to reach consensus solutions
and to avoid further difficulties in order to get on with the campaign and
preserve the integrity of the UN party.
THE NATIONAL INDEPENDENT PARTY (ND
The PNI and its candidate, 'ex-US citizen Jorge Gonzalez Marten, have
for some months loomed as the big question mark in the campaign for the
1974 elections. After the UN pulled out of the opposition primary race
set for May 20 Gonzalez Marten and his PNI seemed to lose animation;
publicity dropped off and rumors circulated that the party was in
*The party national assembly is required under the electoral code to be
convoked and re-elected once every four years. The new assembly must
ratify party candidates who must be inscribed before October 18, 1973.
/Th
rnl\rPTTIPI\TTTA T
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CONFIDENTIAL San Jose A-439
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financial straits. A strong rumor held that the credit of some $500,000
which Gonzalez Marten had obtained and had begun to put into an
aggressive primary campaign was conditioned by lenders in the
expectation that the primary would be held and that Gonzalez Marten would
win it. When 'IYejos pulled out of the primary, Gonzalez Marten was said
to have lost the line of credit he had been promised and was forced to cut
back sharply on his campaign efforts. By mid-May the PNI campaign had,
for these likely reasons, ground to a complete halt. Despite the change
In campaign vigor, Gonzalez Marten in June and July showed no signs of
giving up. He indicated to the Embassy that he was in for the long pull
In the hopes that local and hopefully foreign resources would begin filling
his campaign coffers.
Political observers, who had expected Gonzalez Marten to come out
strongly against the Vesco Commission Report, began speculating, when
he did not, that he too was on the take. The explanation offered by
Jorge Gonzalez Marten's opposition--PLN, UN, and PRD--is that
Gonzalez Marten was so low on money that he had thrown in with either
Vesco or MacAlpin--the logical price for their support being his agreement
to avoid harsh political criticism of mutual fund operations in Costa Rica.
To add credence to this theory there is some evidence to indicate that at
the end of May 1973 Gonzalez Marten travelled to Managua, Guatemala City,
and Florida with Clovis MacAlpin in the latter's private plane. Such a
risky venture would tend to confirm reports that the PNI is desperate for
financing and explains the lack of forceful PNI publicity critical of
mutual fund investment. Gonzales Marten has confirmed to the Embassy
his financial problems, particularly the drying up of his primary campaign
assets when Trejos withdrew. PNI insiders have said privately that
Gonzalez Marten has been urged by his Barahona Faction to jettison
Carlos Manuel Rojas, the party's current candidate for first vice-president.
Rojas is a personal friend and business partner in some ventures with
Clovis MacAlpin. Within the party, the Rojas matter is causing frictions
and suspicions that Don Jorge's desperate need for money has indeed
caused him to cast his lot with the devil.
THE NATIONAL RENOVATION PARTY (PRD)
The PRD, and its presidential candidate Rodrigo Carazo Odio, is the only
political group of the top four which has managed to maintain itself
unblemished by the Vesco Factor. Carazo is also the least important of the
CONFIDENTIAL
n,,,,i,cifica^1 in Part - sanitized CODV Approved for Release 2013/08/13 : CIA-RDP09-00956R000105640001-8
Declassified in Part - Sanitized Copy Approved for Release 2013/08/13: CIA-RDP09-00956R000105640001-8
?41,
CONFIDENTIAL San Jose A-139
Page 10
four, but is included in any analysis of the first line candidates because
he could be the recipient of a large chunk of disgruntled PLN votes which
may decide to leave the PLN over Oduber' s apparent unwillingness to
vigorously put daylight between himself and the President. Carazo knows
his chances of winning the 1974 elections are slim, but he believes they
are improving in direct proportion b the moral disintegration of the PLN
under the impact of the Vesco factor. In Carazo's view the dissatisfied
PLN voter will rarely turn to the UN and is even less likely to be attracted
by the hard right image of Gonzalez Marten. Thus a badly split opposition,
combined with a morally shattered PLN, could afford the PRD an opening to
possibly emerge with Carazo as a strong candidate.
In a possible runoff for the presidency, in the event no candidate acquires
40 percent of the vote on February 4, Carazo, if not one of the two in
the runoff, could provide a powerful assist to the opposition candidate
in exchange for consideration in the incoming government. Carazo would
not collaborate with Gonzalez Marten and would only agree to help Trejos
if the UN presidential candidate assured him that key UN party leaders,
who have been suspected of a deal with Vesco will be sidelined when
Trejos comes to power.
Carazo has so far been the only political candidate to vigorously attack
the Vesco factor, although Trejos says he will begin such a campaign
beginning in August or September.
CONCLUSIONS:
Most of the substantial information about the Vesco factor is rooted in
speculation and hearsay, but even this has had an unmistakable effect
on Costa Rican public opinion, especially since facts have not been
presented to clear the air or the persons implicated have been evasive
or have been proved to have misrepresented themselves. The Costa Rican
public seemed about fed up with the series of critical but inconclusive
revelations over Vesco when the July 9 disclosure that ligueres drafted
key parts of Vesco's speech asgrav&ed the issue. This proof of presidential
Involvement with Vesco in the hands of opposition politicians will, in the
days to come, tend to heat up, perhaps prematurely, the temperature of
the electoral campaign. This kind of material could normally have been
expected to emerge in December or January when maximum campaign effect
would be sought by the opposition.
CONFIDENTIAL
narlaccifiPri in Part - Sanitized CoPv Approved for Release 2013/08/13 : CIA-RDP09-00956R000105640001-8
Declassified in Part - Sanitized Copy Approved for Release 2013/08/13 : CIA-RDP09-00956R000105640001-8
CONFIDENTIAL
San ?
Jose A-139
Page 9
financial straits. A strong rumor held that the credit of some $500,000
which Gonzalez Marten had obtained and had begun to put into an
aggressive primary campaign was conditioned by lenders in the
expectation that the primary would be held and that Gonzalez Marten would
win it. When Trejos pulled out of the primary, Gonzalez Marten was said
to have lost the line of credit he had been promised and was forced to cut
back sharply on his campaign efforts. By mid-May the PNI campaign had,
for these likely reasons, ground to a complete halt. Despite the change
In campaign vigor, Gonzalez Marten in June and July showed no signs of
giving up. He indicated to the Embassy that he was in for the long pull
In the hopes that local and hopefully foreign resources would begin filling
his campaign coffers.
Political observers, who had expected Gonzalez Marten to come out
strongly against the Vesco Commission Report, began speculating, when
he did not, that he too was on the take. The explanation offered by
Jorge Gonzalez Marten' s opposition--PLN, UN, and PRD--is that
Gonzalez Marten was so low on money that he had thrown in with either
Vesco or MacAlpin--the logical price for their support being his agreement
to avoid harsh political criticism of mutual fund operations in Costa Rica.
To add credence to this theory there is some evidence to indicate that at
the end of May 1973 Gonzalez Marten travelled to Managua, Guatemala City,
and Florida with Clovis MacAlpin in the latter' s private plane. Such a
risky venture would tend to confirm reports that the PNI is desperate for
financing and explains the lack of forceful PNI publicity critical of
mutual fund investment. Gonzalez Marten has confirmed to the Embassy
his financial problems, particularly the drying up of his primary campaign
assets when Trejos withdrew. PNI insiders have said privately that
Gonzalez Marten has been urged by his Barahona Faction to jettison
Carlos Manuel Rojas, the party's current candidate for first vice-president.
Rojas is a personal friend and business partner in some ventures with
Clovis MacAlpin. Within the party, the Rojas matter is causing frictions
and suspicions that Don Jorge's desperate need for money has indeed
caused him to cast his lot with the devil.
THE NATIONAL RENOVATION PARTY (PRD)
The PRD, and its presidential candidate Rodrigo Carazo Odio, is the only
political group of the top four which has managed to maintain itself
unblemished by the Vesco Factor. Carazo is also the least important of the
CONFIDENTIAL
narlaccifirari in Part - Sanitized Copy Approved for Release 2013/08/13: CIA-RDP09-00956R000105640001-8
Declassified in Part - Sanitized Copy Approved for Release 2013/08/13: CIA-RDP09-00956R000105640001-8
? CONFIDENTIAL San Jose A-139
Page 10
four, but is included in any analysis of the first line candidates because
he could be the recipient of a large chunk of disgruntled PLN votes which
may decide to leave the PLN over Oduber' s apparent unwillingness to
vigorously put daylight between himself and the President. Carazo knows
his chances of winning the 1974 elections are slim, but he believes they
are improving in direct proportion b the moral disintegration of the PLN
under the impact of the Vesco factor. In Carazo's view the dissatisfied
PLN voter will rarely turn to the UN and is even less likely to be attracted
by the hard right image of Gonzalez Marten. Thus a badly split opposition,
combined with a morally shattered PLN, could afford the PRD an opening to
possibly emerge with Carazo as a strong candidate.
In a possible runoff for the presidency, in the event no candidate acquires
40 percent of the vote on February 4, Carazo, if not one of the two in
the runoff, could provide a powerful assist to the opposition candidate
in exchange for consideration in the incoming government. Carazo would
not collaborate with Gonzalez -Marten and would only agree to help Trejos
if the UN presidential candidate assured him that key:UN?party leaders.
who have been suspected of a deal with Vesco will be -sidelined when
Trejos comes to power..
Carazo has so far been the only political candidate to vigorously attack
the Vesco factor, although Trejos says he will begin such a campaign
beginning in August or September.
CONCLUSIONS:
Most of the substantial information about the Vesco factor is rooted in
speculation and hearsay, but even this has had an unmistakable effect
on Costa Rican public opinion, especially since facts have not been
presented to clear the air or the persons implicated have been evasive
or have been proved to have misrepresented themselves. The Costa Rican
public seemed about fed up with the series of critical-but inconclusive
revelations over Vesco when the July 9 disclosure that Ilgueres drafted
key parts of Vesco's speech aggravated the issue. This proof of presidential
involvement with Vesco in the hands of opposition politicians will, in the
days to come, tend to heat up, perhaps prematurely, the temperature of
the electoral campaign. This kind of material could normally have been
expected to emerge in December or January when maximum campaign effect
would be sought by the opposition.
CONFIDENTIAL
Declassified in Part - Sanitized Copy Approved for Release 2013/08/13: CIA-RDP09-00956R000105640001-8
_
Declassified in Part - Sanitized Copy Approved for Release 2013/08/13: CIA-RDP09-00956R000105640001-8
,
CONFIDENTIAL San Jose A-139
Page 11
Despite Figueres' vulnerability, Rodrigo Carazo, alone among the
presidential candidates, probably will be able to fully exploit the issue.
The others may have to pull their punches in fear of eliciting counter ?
attacks in kind. Of course, an important mainspring still behind the
Vesco factor is not in Costa Rica, but in the United States. Trejos
and others opposed to Oduber cannot help but benefit from aspects of
the Vesco story as it is bound to unravel in the US courts. Any further
legal proceedings would simply extend and deepen Oduber's difficulties,
as would evidence that Robert Vesco has decided to permanently locate
In Costa Rica.
VAKW
CONFIDENTIAL
Declassified in Part - Sanitized Copy Approved for Release 2013/08/13: CIA-RDP09-00956R000105640001-8