<a href=www.lapress.org>LatinoAmericaPress.orgAndrés Cañizález.  May 6, 2003

Democratic Coordinating Group loses influence and moderates stance.

Since the unsuccessful coup attempt against President Hugo Chávez of April 22, 2002 (LP, April 22, 2002), the opposition Democratic Coordinating Group (DCG) has tried in various ways to bring about the downfall of the President: proposals to cut short the presidential term; constitutional reform; the creation of a new Constituent Assembly. None of them have worked.

Now, following an April 11 preliminary agreement between the government and the opposition, a referendum is likely to be held on the future of Chávez as President. It was Chávez who incorporated this mechanism in the 1999 Constitution, applicable to any elected public figure (LP, Dec. 27, 1999).

05/05/2003 - Source: <a href=www.latintrade.com>LatinTrade-BNamericas US Power company AES Corporation (NYSE: AES) expects to receive US$125mn net income from its Latin American subsidiaries in 2003, the company said in supplementary information to its first quarter results. AES' Latin American subsidiaries contributed only about US$1mn in the first quarter, accounting for less than 1% of the company's US$180mn income from subsidiaries. But by year end AES expects to receive US$30mn from Chilean subsidiary AES Gener, US$30mn from Argentina's Alicura, US$30mn from Puerto Rico, US$20mn from Brazilian thermo plant Uruguaiana, and US$15mn from other income. "The rest is very minimal, we expect nothing else from Brazil, or Argentina," CEO Paul Hanrahan said during a conference call to discuss first quarter results. AES recently announced that it would use its 2002 profits from AES Gener to pay interest on its US$300mn debt to that company, which is due in early 2004. But AES still expects to receive US$30mn net income from its subsidiary by the end of the year. "We have confidence we can do it, but to get that operating cash flow out of the business we have to smooth out the maturities at a Gener level," Hanrahan said. Meanwhile, Venezuela's exchange controls will prevent AES from receiving any income from its power utility Electricidad de Caracas (EDC) this year, Hanrahan said. EDC closed its collection offices during the national strike, and sales were hit by the general reduction in demand, he said, adding that demand has started to recover since the end of the strike in the first quarter and EDC has resumed collecting payments. "The real question is when will exchange controls end, and when will the economy get back on track in terms of growth," Hanrahan said, adding that by 2005 he expects EDC to earn US$150mn-200mn net income annually for AES. In Brazil, AES continues to negotiate with national development bank BNDES to refinance its US$1.2bn debt. The debts were primarily taken on to pay the government for ordinary and preferred shares in Sao Paulo electric power distributor Eletropaulo, in which AES owns a 74% stake. "We are confident that a workable solution could work to the benefit of AES and the Brazilian government," Hanrahan said, but cautioned that, "we are negotiating but there is no assurance we will be successful." According to local newspapers, AES VP Joseph Brandt was scheduled to meet Friday with BNDES to discuss his company's US$1.2bn debts with the bank. Proposals presented until now by both parties have been "minimally acceptable," BNDES finance director Roberto Thimoteo said, quoted by O Estado de Sao Paulo. One of AES' local subsidiaries, AES Elpa, has exceeded a 90-day grace period on its defaulted debts, and BNDES has taken "preliminary" steps to foreclose on the shares that it holds in Eletropaulo, Hanrahan said. Earlier this week, BNDES asked the securities clearinghouse, CBLC to begin the sale process for preferred shares held by a second subsidiary, AES Transgas. The bank is not keen to become a shareholder in Eletropaulo, but will do so if it believes that is the best way to recover the debts, Thimoteo said. AES' Brazil holdings currently represent a negative affect on the company's equity of about US$1bn per year, so the sale of some of its Electropaulo shares would actually have a positive effect on equity, Hanrahan said, adding that BNDES could sell as much as 54% of AES' stake in Electropaulo. AES income from continuing operations fell 38% to US$73mn, or US$0.13 per share, for the first quarter 2003 compared to US$118mn, or US$0.22 per share, in the same period last year. Net income for the quarter was US$93mn up from a US$313mn net loss in the first quarter of 2002. The net loss for 1Q02 included a charge for the cumulative effect of an accounting change. Revenues for the first quarter of 2003 were US$2.2bn.

<a href=www.latintrade.com>LatinTrade May, 2003

Javier Corrales, associate professor of political science at Amherst College, begins his book with a troublesome fact: According to a survey by Latinobaró-metro in 2001, less than 5% of Latin Americans have a high level of confidence in political parties. In some countries, political parties are among the most discredited institutions, ranking well below the armed forces.

Even with those results, Corrales rails against the theory that political parties are coming to an end. He believes they continue to play a fundamental role in governing a country. He also maintains that political institutions do not reflect society’s sentiments but, rather, mold the preferences and attitudes of the population, serving as the architects of public opinion. At the same time, they are a channel of communication between citizens and the executive power, possibly the main conduit of communication.

The author looks at the period when free market reforms were implemented in Latin America and the role of political parties in that process. Several studies regarding that era focus on the conflict between the government and political opposition, or between the government and interest groups. But Corrales believes the most crucial relationship is between the executive branch and the ruling party. “If the president manages to get the ruling party to cooperate with the reform process, the state’s capacity to govern the economy will increase,” he writes. To prove his hypothesis, he dedicates a large portion of the book to two countries that launched free market reforms under similar conditions in 1989 yet yielded different results: Argentina and Venezuela.

That year, the newly elected governments of Carlos Andrés Pérez in Venezuela and Carlos Saúl Menem in Argentina initiated similar economic reforms. Both presidents belonged to populist political parties: Pérez to Acción Democratica (AD) and Menem to the Peronist Party (PJ). During his first term, Menem was able to rein in a huge fiscal deficit and eradicate the inflation that had plagued the government of his predecessor, Raúl Alfonsín. This miracle won him PJ approval for his privatization plans and deregulation even though the free market practices Menem implemented differed from the ideology of his own party. Menem knew it would be difficult to rule without the support of the Peronists. In 1990, he declared: “There will be no national unity if there is no unity within the party.”

In Venezuela, on the other hand, philosophical differences between Pérez and AD led to the country’s worst political crisis in 30 years, characterized by explosive popular protests, two coup attempts, changes in the cabinet, interruption of reforms, an increased crime rate and economic woes. Pérez was finally forced out by the Venezuelan legislature in 1993, replaced by another former president, Rafael Caldera, who sunk the economy further when he curtailed reforms then later tried to implement them again under Agenda Venezuela. Hugo Chávez, Caldera’s successor, has opted to attack the party system, depending instead on the military. The current crisis in Venezuela, according to Corrales, exemplifies the problems caused by the weakening role of parties in political life.

The author applies his theory to eight other Latin American countries, including Cuba. When Fidel Castro lost subsidies from Moscow at the beginning of the 1990s, he had to adopt market reforms, open the country to foreign investment, allow certain independent businesses and legalize the dollar. Many believed such reforms would make the system crumble as it broke the structure of privileges. But the Cuban leader maintained strong state participation in new capitalist corporations, restricted private activity and even controlled the hiring of staff in foreign companies, which allowed him to place the most loyal government supporters in the best jobs, thus consolidating his support. 

Presidents Without Parties revives the theory that political parties are indispensable in order to rule. As he concentrates on the relationship between ruling parties and the executive power, however, Corrales fails to place enough emphasis on current economic phenomenon present in the crisis in Venezuela and the disaster in Argentina. Nevertheless, in a period when traditional political parties are distrusted and there is a boom in popular or marginal institutions, this book addresses an important issue in the debate about the future of Latin America.

Author: Andrés Hernández Alende

theregister.co.uk By Andrew Orlowski in San Francisco Posted: 05/05/2003 at 08:32 GMT

The President's favorite database company, Choicepoint Inc., has acquired personal data on hundreds of millions of citizens in ten Latin American countries without their knowledge or consent. Data includes Mexico's Federal Electoral Register, details of drivers in Mexico City and Colombia.

"This is a corporation that works hand in glove with, and is politically connected to the administration, and does things that the US dare not do," Greg Palast, who uncovered Choicepoint's role in the 2000 election, told The Register last week. Choicepoint had been given a $67 million contract for data gathering on September 25, 2001. The contract lasts until 2005.

"It's doing this everywhere," said Palast, "but in Mexico it was caught out."

The scandal broke three weeks ago after an investigation by Mexican newspaper Milenio, although it received scant attention Stateside. But a report in today's Guardian should give it fresh impetus.

From the Guadalajara Times we learn that the company has been active in Brazil, Colombia, Venezuela, Costa Rica, Guatemala, Honduras, El Salvador and Nicaragua. However, the Times reports that Choicepoint has discontinued its role in Argentina, "due to lack of demand and a strict new law relating to privacy".

But ChoicePoint isn't shy about boasting of its Latino assets.

"You know the value of ChoicePoint's domestic data," begins a 2001sales brochure for its 'AutoTrack XP' product uncovered by privacy group EPIC under the Freedom of Information Act. "Now you can locate and identify business assets in foreign countries with ChoicePoint's new International searches".

"ChoicePoint gives you the most comprehensive online International data available, with individual and business information from Mexico, Colombia, Argentina [oops? - ed.] Brazil and Costa Rica."

"ChoicePoint is the only vendor capable of providing online access to the following data sets and/or functionality: a) complete listings of all Mexican, Colombian and Argentine citizens b) inclusion of unlisted numbers in telephone files in Mexico, Brazil and Argentina c) inclusion of Mexican vehicle and driver license data d) complete listing of Columbian company data e) inclusion of personal identification information for Brazilian business people f) full usability in English language

(Go here [200kb PDF] and here [292kb PDF] for the documents.)

The second document records that the US Department of Justice paid $11m for "access to ChoicePoint databases."

Now, you might ask, doesn't the US have official agencies that are supposed to undertake a much more focused version of this intelligence gathering? Indeed, it does, and being conscientious government agencies, the staff (in our experience) take information integrity pretty seriously. The value that ChoicePoint's places on data integrity is quite germane, as we shall see.

Who is Choicepoint Inc.? In a letter to SEC last year, ChoicePoint described itself as "a leading information company with a long history of developing products and services for federal and state government agencies to locate individuals, businesses, and assets and to authenticate individuals' identities."

That long history goes back less than six years to August 1997, when Choicepoint was spun off from Equifax, where it was Equifax's Insurance Services Group.

An early earning statement described how "in business and government markets" it provided services including "pre-employment and drug testing, public records information, UCC search and filing."

A more recent statement is both fuzzier and warmer:

"ChoicePoint (NYSE :CPS) is the leading provider of identification and credential verification services for making smarter decisions in today's fast-paced world, serving the information needs of business, government and individuals."

"ChoicePoint is committed to protecting personal privacy and promoting the responsible use of information to help create a safer world."

But ChoicePoint's credentials as a responsible user of information were tested in its role in Florida, in the 2000 Election - a story that's probably more familiar to readers outside the United States than in.

ChoicePoint was given a contract to maintain Florida's electoral rolls and conveniently managed to scrub as many as 91,000 voters most of whom were poor or black. A complex and determined effort to disenfranchise a small number of people.

Standards body But ChoicePoint has another role to play in a quite unexpected way. It's the guardian of our commercial data integrity. The "Providing Appropriate Tools Required to Intercept and Obstruct Terrorism" (PATRIOT) Act 2001 blessed the company as a kind of standards setter. Banks have been instructed to issue data in a format ChoicePoint likes, which will come as a surprise to the IETF, or the W3C, or OASIS, next time a web standard has to be set. But there you go. And ChoicePoint was singled out by name.

The commercial potential of this new PATRIOT-compatible standard was illustrated here by Sybase which is suddenly falling over itself to help the Homeland. Over at Choicepoint there's a handy compliance brochure you can read advising you how to comply with the PATRIOT Act. And not to complicate the picture too much, Marv Bush, one of the aforementioned Bush family, channeled money to Sybase via his job as a VC at Winston Partners. So you can see how they gamble, these Bushes.

With an essential part of US intelligence gathering now privatized, which we didn't know before - what else does this tell us? Palast reminds us that the state can now demand and control information flows without a warrant. Which is one of those nice 'Thank You's' that we expect, and would appreciate.®

Oliver Burkeman in Washington and Jo Tuckman in Mexico City Monday May 5, 2003 The Guardian

Governments across Latin America have launched investigations after revelations that a US company is obtaining extensive personal data about millions of citizens in the region and selling it to the Bush administration.

Documents seen by the Guardian show that the company, ChoicePoint, received at least $11m (£6.86m) last year in return for its data, which includes Mexico's entire list of voters, including dates of birth and passport numbers, as well as Colombia's citizen identification database.

Literature that ChoicePoint produced to advertise its services to the department of justice promised, in the case of Colombia, a "national registry file of all adult Colombians, including date and place of birth, gender, parentage, physical description, marital status, passport number, and registered profession".

It is illegal under Colombian law for government agencies to disclose such information, except in response to a request for data on a named individual.

One lawyer following the investigations described Mexican officials as "incensed", and experts said the revelations threatened to destroy fragile public trust in the country's electoral institutions. In Nicaragua, police have raided two firms believed to have provided the data, and the Costa Rican government has also begun an inquiry. Other countries involved include Brazil, Guatemala, Honduras, El Salvador, Argentina and Venezuela.

The identities of the firms supplying ChoicePoint with the data are unknown, since the company says its contracts ensure confidentiality, although it insists all the information was obtained legally.

Exactly how the US government is using the data is also unknown. But since it focuses so heavily on Latin America, it would appear to have vast potential for those tracking down illegal immigrants. It could perhaps also be used by US drugs enforcement agents in the region.

ChoicePoint, though, which is based near Atlanta, is far from unfamiliar to observers of the Florida vote of 2000 that decided the US presidency in George Bush's favour. Its subsidiary Database Technologies was hired by the state to overhaul its electoral registration lists - and ended up wrongly leading to the disenfranchising of thousands of voters, whose votes might have led to a different result.

Investigations in 2000 and 2001 by the Observer and the BBC's Newsnight programme concluded that thousands of voters had been removed from the lists on the grounds that DBT said they had committed felonies, preventing them from voting. In fact, the firm had identified as "felons" thousands of people who were guilty of misdemeanours, such as, in at least one case, sleeping on a park bench.

Then it produced a revised list of 57,700 "possible felons", which turned out to be riddled with mistakes because it only looked for rough matches between names of criminals and names of voters. James Lee, a vice-president of ChoicePoint, told Newsnight that Florida, governed by Mr Bush's brother Jeb, had made it clear that it "wanted there to be more names [on the list] than were actually verified as being a convicted felon". Mr Bush's eventual majority in Florida was 537.

Since the election, ChoicePoint has been the beneficiary of a huge increase in the freedom of government agencies to gain access to personal data. The USA patriot act, passed after September 11, allows government investigators to gain access to more information on US citizens without a search warrant, and to see data on private emails with such a warrant but without a wiretap order. The act also means banks must make their databases accessible to firms such as ChoicePoint.

In Mexico, the president of the federal electoral institute, Jose Woldenberg, revealed that his investigators had talked to the Mexican company that said it paid a "third person" 400,000 pesos (£24,500) for a hard disk full of personal data drawn largely from the electoral roll. It sold this to ChoicePoint for just $250,000, indicating the huge profitability of ChoicePoint's contracts - last year's $11m payment was part of a five-year contract worth $67m.

"The companies had to know that it is forbidden to use the information in the electoral register for any other purpose than elections," said Julio Tellez, a specialist in Mexico's information laws at the Tec de Monterrey University. "It is a federal crime to misuse the information, and they did that by selling it and putting it in the hands of a foreign government."

Mr Tellez said he believed that this makes the companies and the US government liable to prosecution.

The sale of information from the electoral register is particularly devastating in Mexico, because the electoral institute enjoyed a close to unique reputation for honesty and transparency in a country plagued by corruption.

"We feel betrayed. The IFE [federal electoral institute] was the only Mexican organisation we could trust," said Cesar Diaz, a Mexico City supermarket administrator whose feelings were echoed by many. "I mean, if we can't trust them who can we believe in? I think it will have repercussions in the next elections."

Britain's much stronger data-protection framework probably means ChoicePoint could not make similar wholesale purchases of databases from the UK, and a similar situation exists across the rest of the EU. But the Latin American states "don't have data protection on the level of Europe", said Chris Hoofnagle, deputy counsel at the Electronic Privacy Information Centre, a Washington-based pressure group which obtained the purchasing and advertising documents.

ChoicePoint was taking advantage of those more relaxed laws to profit from the US's "increasing reliance on private companies to obtain data on persons of interest to law enforcement", he said.

But the US government has shown itself eager to enhance the amount of data it can gather on people across the world, including those in the UK. In February, Washington announced that it would be seeking access to credit card details and other information on all travellers entering the US. Britain, too, is proposing laws which would give state agencies wide-ranging access to information regarding telephone and email use, though ministers insist their plans will not now include the content of such communications.

In a statement provided to the Guardian, ChoicePoint strongly denied breaking any laws and said it was cooperating fully with Mexican authorities. "All information collected by ChoicePoint on foreign citizens is obtained legally from public agencies or private vendors," the statement said.

The statement insisted that "ChoicePoint did not purchase election registry information and our vendor has verified that the information we purchased was not from the padron electoral [Mexico's central registry of electors]". But that claim is called into question by the company's advertising documents. Those documents, dated September 2001, explicitly boast that ChoicePoint can offer a "nationwide listing of all Mexican citizens registered to vote as of the 2000 general election - updated annually".

Asked how the US government is using the data, Greg Palmore, a spokesman for the bureau of immigration and customs, said it was helping to trace illegal immigrants but only if they were guilty of another crime. Asked to confirm whether the data was used by his bureau only to pursue criminals, he said: "Mainly."

ChoicePoint insists that it requires all its subcontractors to sign pledges that they are not breaking the law. But legal experts say that would offer it scant protection if the Latin American police inquiries were to result in others being convicted.

"If you know that a practice is actually illegal, you can't immunise yourself" with a pledge, said Mr Hoofnagle. "There's a strong principle in US law of being responsible for the actions of your agents."