Analysis: Honduran military's secrets

TEGULCIGALPA, Honduras, Dec. 30 (UPI) -- The all-powerful image of the Honduran armed forces is in its final stage of demystification. An organization more feared than respected, the military's image began to crack with the country's return to democracy in the 1980s, but the final blow was dealt by the attorney general's anti-corruption office when it announced an exhaustive investigation into the two past administrations' handling of the budget.

The creation of a Military Social Security Institute allowed the military to operate a business empire of 19 companies that included cement works, insurance and construction companies, banks, funeral services and arms sales. According to unofficial data, the military had $280 million in fixed assets. Political analysts have concluded that the military's agreement to hand power back to civilians at the end of the Cold War involved a compromise that granted them special favors and enabled them to create this business success.

These favors included the ability to compete on advantageous terms in the national market without being required to account for funds used to construct their financial empire, which according to some economists became the third greatest commercial consortium in Central America.

Nevertheless, the corruption that characterized the military administration's rule threw their business build up into such a crisis that of the 19 companies that once comprised the assets of the military, only five remain. The most important concerns, like the Armed Forces Bank and the Incehsa cement company, either disappeared or merged with other companies.

As the military's influence over the state decreased with the end to mandatory military service, the reduction of the military budget and the creation of a Ministry of Civil Defense, complaints from industrialists also increased over what they perceived as unfair competition from the military's conglomerate. Both phenomena helped lead to the consortium's decline, which occurred as quickly as it had risen.

According to some conglomerate members, one of the main figures responsible for this economic setback was Gen. Mario Raul Hung Pacheco, the last head of the armed forces, whose administration of the companies meant the beginning of the end for the military's financial success.

Former military officers and others that were part of the conglomerate's administration are currently in court. The list of charges includes fraudulent negotiations, swindles and other crimes, which weakened the military syndicate, such as selling assets to a bankrupt company owned by Hung Pacheco.

Additional criminal charges include the diversion of $293,000 issued for the payment of taxes that were never paid, the use of company resources for the personal benefit of the directors, the sale of deliberately undervalued companies, and the purchase of overvalued ones.

The Superior Court of Accounts is also investigating whether part of the budget assigned by the government for the armed forces was diverted to finance the conglomerate instead. Soraya Morales, the special public prosecutor against corruption, has stated that according to preliminary inquiries there is overwhelming evidence to launch investigations of the last two military administrations.

The proposed investigations would be the first step in uncovering the best-kept secrets in the national economy: how in less than a decade the military could amass so much wealth and acquire so many companies, and how in just as short a time, they could lose all that enormous economic power.

(Julio Medina Murillo is a writer with Tiempos del Mundo)