Edition: U.S. / Global

Fallen Banker Courted in Jail Cell

Published: May 27, 2003

SANTO DOMINGO, Dominican Republic, May 23 — Chatting easily with the scores of visitors he receives daily seated on a bench outside his cramped police cell, Ramón Báez Figueroa, the man accused of masterminding this country's most spectacular financial swindle, has the air of a prince holding court.

The royal demeanor is no accident. The scion of one of the oldest and most prominent Dominican families — his great-grandfather Buenaventura Báez was five times president — Mr. Báez Figueroa was, until a few months ago, lionized here as the island's own King Midas, ruling an empire built on banking, media outlets and gas.

Then his crown slipped. Mr. Báez Figueroa was arrested May 15, along with two executives of his family's bank, Banco Intercontinental, on charges that he had schemed to embezzle 55 billion Dominican pesos ($2.2 billion). The arrests and accusations have shaken the Dominican economy to the core.

Government officials said that two-thirds of the money that customers had deposited in the bank, known as Baninter, had been kept off its official books by a custom-designed software system. The money, they said, went instead to finance a clandestine bank-within-a-bank that Mr. Báez Figueroa is accused of using to enrich himself, his friends and political figures. Banking regulators and the bank's auditor, PricewaterhouseCoopers, were deceived for years, the officials said.

Mr. Báez Figueroa's lawyer, Marino Vinicio Castillo, said in an interview that the whole affair had been trumped up for political reasons, and that the claim that 55 billion pesos had been embezzled was "a fable." Mr. Báez Figueroa himself, approached outside his jail cell, declined to comment and referred inquiries to his lawyers.

A $2.2 billion fraud would be big anywhere, but it is overwhelming for the Dominican Republic, equivalent to two-thirds of its national budget. While outsiders are shocked by the charges, many Dominicans are not, because, they say, the country's political and business elite long ago honed corruption and rule-bending into an art.

Mr. Báez Figueroa, 47, would seem to be a classic example. An aggressive deal-maker and former golf champion, he appeared to build Baninter up almost by magic into the country's No. 2 private commercial bank, in the process amassing a sprawling empire of businesses. Among others, Baninter controls the largest media group in the country, including Listín Diario, the leading newspaper; four television stations; and more than 70 radio stations. (Listín Diario publishes a weekly supplement of news and features from The New York Times in Spanish.)

Mr. Báez Figueroa also acquired a taste for luxury. He kept at least four yachts and four private planes, and was about to expand his fleet of helicopters from four to six when he was detained last week.

His generous gifts to friends, business partners and top politicians of all parties over the years became legendary. The current president, Hipólito Mejía, got a bulletproof sports utility vehicle; so did his predecessor, Leonel Fernández. Col. Pedro Julio Goico, who served as Mr. Mejía's chief of security and who guarded Bill Clinton and the Spanish Infanta on recent visits here, got 10 solid-gold Rolex watches worth $15,000 each and, for a time, the use of a credit card that the bank would pay off, government investigators say.

Aptly, perhaps, Baninter's advertising slogan can be translated as "everything is possible."

How, then, did Mr. Báez Figueroa fall from grace so quickly?

The government says the scale of the fraud is what did him in. But his defenders say that President Mejía and his family saw Mr. Báez Figueroa as a threat to their wealth and influence and to the president's ambition to win another term in office in the face of opposition even from within his own party. Taking control of Baninter's media properties and using them to win over public opinion, not cleaning up a scandal, was what the government was after, Mr. Báez Figueroa's backers say.

Rumors that Baninter might be in trouble began circulating as early as last fall, and depositors started to withdraw their savings. The central bank stepped in to support the bank by giving it new lines of credit. Anxious for a more permanent solution, the government announced early this year that Banco del Progreso, run by Pedro Castillo, the brother of Mr. Mejía's son-in-law, would acquire Baninter. But Banco del Progreso abruptly withdrew from the deal.

In April, the government took control of Baninter, which is more than 80 percent owned by Mr. Báez Figueroa's family. By then, a deeper examination of the books, supported by the International Monetary Fund and the Inter-American Development Bank, had begun to reveal the scale of Baninter's problems.

At this moment the president of the central bank, Francisco M. Guerrero Prats, and the banking superintendent, Alberto Elías Atallah, were replaced — though hardly demoted. Mr. Guerrero Prats is now the country's foreign minister. Mr. Atallah now works directly for the president.