Nicaragua: Keeping It All in the Family

By John Moody/Managua

With his owlish gaze, lithe step and limber tongue, Antonio Lacayo Oyanguren looks and acts like the Jesuit-trained postgraduate of M.I.T. that he is. For most of his 45 years, he has labored in profitable obscurity. During nearly 11 years of rule by the Sandinista National Liberation Front, Lacayo, the son of one wealthy family who married into another, tended to business, leaving Nicaragua's treacherous politics to others.

He could no longer maintain that low profile after his mother-in-law, Violeta Barrios de Chamorro, defeated the Sandinistas and became President of Nicaragua in April 1990. Lacayo, who served as Chamorro's campaign director, immediately began shaping the new administration; according to insiders, he picked the President's Cabinet and made the controversial decision to retain Sandinista General Humberto Ortega Saavedra as head of the armed forces. Lacayo's official title is Minister of the Presidency, but some feel he might as well be called Mr. Presidency. "Dona Violeta conferred absolute power on Antonio from the beginning," says a longtime family friend. "He's running the country."

Lacayo toils 14 hours a day in an office that would be used by Vice President Virgilio Godoy Reyes if he and Chamorro were on better terms. Until this month, Lacayo's sister Silvia was the country's treasurer, and her husband Alfredo Cesar Aguirre is president of the National Assembly. Lacayo's cousin heads the Central Bank, and all three national newspapers are directed by Chamorros, including the pro-government La Prensa, where Lacayo's wife Cristiana is president. During a two-hour interview, Lacayo bristled at the suggestion that he and his family wield inordinate power. "We are still in an emergency," he says. "To compare the form of government we have in Nicaragua with the U.S., or Costa Rica, or Switzerland, which have traditions of democracy, is infantile."

But Lacayo presides over an insiders' network that mocks Chamorro's vows to run a "transparent" administration. Last November the government ordered 400,000 new passports, claiming that the old documents were no longer any good because the Sandinistas, in their final months of power, had issued papers to non-Nicaraguans with no right to citizenship. Under Nicaraguan law, the printing contract, worth more than $1 million, should have been open for public bidding. It was not. Although at least one other company made an unsolicited offer to do the job more cheaply, the contract was awarded to Continental Trading, which is a subsidiary of OCAL, a company owned by distant relatives of Lacayo's. The deal was approved by the Minister of Finance, who once served OCAL as an adviser. Lacayo insists there is nothing wrong with using business contacts to get fast results. "This government is composed of businessmen," he says. "We're used to the working methods of the private sector."

Welfare Minister Silviano Matamoros, an optician, last year closed two state-run shops that made eyeglasses for the poor, and sold their inventory to a private optical-supply company -- his. The controller general cleared Matamoros, who paid fair market prices, of wrongdoing, but the minister at the very least had an inside track on purchasing the spectacles.

Lacayo's own business ventures suggest a possible conflict of interest, although he has never been accused officially of impropriety. Gracsa, a company of which he is a stockholder and former general manager, is part of a cartel of cooking-oil companies that benefited from foreign donations of cooking oil last year. The government sold the oil to the firms at below market price; they turned around and sold it to consumers for nearly twice what they had paid. While admitting the companies turned a handsome profit, Alfredo Marin, Gracsa's general manager, maintains, "The government has done nothing, nothing, nothing, for this company."

In 1989 Lacayo bought a stake in San Felipe, a failing state-run chicken farm. Since then it has made a remarkable comeback. Marin, who also sits on its board of directors, predicts that San Felipe will be the country's No. 1 chicken producer in three years.

Lacayo attributes his success in business to financial acumen and patriotism during the Sandinista regime. Says he: "Everyone said that to invest in & Nicaragua meant supporting the Sandinistas. I believed that it would lead to victory against the Sandinistas. So I opted to invest."

Competitors remain skeptical. Observes Octavio Alvarado, president of the Association of Aviculture: "All private producers fear competition from businesses protected by the government. It doesn't look right that members of the government also have business interests." Guillermo Arostegui, vice president of Gracsa's main competitor, the Numar Group, is in agreement: "It's obvious Lacayo has an advantage. He used to run Gracsa; now he runs the country."

Nicaraguans agree that Chamorro -- guided by Lacayo -- has kept her two central campaign pledges: to end the nine-year conflict between the Sandinista army and the U.S.-backed contras, and to eliminate the military draft. Her administration is also slowly repairing the economic meltdown produced by Sandinista mismanagement, the war and a U.S. embargo on trade that was lifted only last year.

But to win peace with the Sandinistas, Lacayo has dealt with them very gingerly, opening him up to another set of criticisms and splintering the 14- party coalition that supported Chamorro's candidacy. Francisco Mayorga, who served as Central Bank president, resigned last October after stormy clashes with Lacayo. Says he: "Antonio can't make any decision without the acquiescence of the Sandinistas."

The brashest critic of the administration's soft policy on the Sandinistas is its own Vice President. Godoy remains outraged that General Ortega held on to his army post and has repeatedly called Chamorro and Lacayo "prisoners of the military." Lacayo pounces on such overheated rhetoric. "How much accommodation with the Sandinistas is too much?" he asks. "If we're too generous, that's better than not being generous enough. The gains we've made by negotiating with the Sandinistas are enormous. For a start, we're not killing each other anymore."

That argument may temporarily assuage war-scarred Nicaraguans, who yearn for prosperity and peace. But investing a single unelected official -- even one as able as Lacayo -- with so much authority is contrary to the spirit of democracy, and calls to mind Lord Acton's theorem about the corrosive effect of absolute power.

With reporting by Jan Howard/Managua