De la Rua returns to Argentina to handle scandal

BUENOS AIRES (Reuters) -- Argentine President Fernando de la Rua returned to the South American nation Friday to deal with an ongoing vote-buying scandal in the Senate and speculation he may dismiss key cabinet members.

"Our institutions have worked and responded to these problems and I thank the vice president (Carlos Alvarez) for having handled things well and with a firm hand, maintaining a clear and unwavering level of transparency," said De la Rua, flanked by his entire cabinet upon landing at Buenos Aires' airport on a flight from China.

Talk of a cabinet shuffle and dismissals have run rampant in local media since the 63-year-old leader of the center-left coalition government left for the U.N. Millennium Summit on Sept. 4 followed by a trade mission to Canada and Asia.

"There are no changes. I repeat, as I've said before, so that there will be no speculation nor worries over the weekend," De la Rua told reporters.

Meanwhile, his personal friend and former banker turned spy agency chief Fernando de Santibanes, a member of De la Rua's centrist Radical Party, and Labor Minister Alberto Flamarique of the left-leaning Frepaso movement told Congress they never paid bribes to ensure passage of controversial labor reforms.

There have been media reports that both Santibanes and Flamarique could be ousted. Cabinet Chief Rodolfo Terragno and presidential spokesman Dario Loperfido also were named by media as facing reassignment or expulsion from the 10-month-old administration.

"The worst-case scenario would be that doubts linger, because when there's suspicion people will remain convinced a crime occurred and that it was covered up," Terragno told reporters at Government House, where the president works.

Alvarez last month blew the whistle on alleged Senate vote-buying in what is perhaps the greatest blow to public confidence since former Economy Minister Domingo Cavallo quit the last government in 1994, alleging corruption.

The scandal exposed deep fault lines in the center-left Alliance government and has put to the test De la Rua's top election promise to end the corruption that flourished under Peronist President Carlos Menem, who served from 1989 to 1999.

In the latest fallout from alleged corruption committed during the Menem administration, Jose Alberto Uriburu, Menem's last labor minister, and a dozen other public servants were indicted Friday by a federal judge for "fraudulent administration."

Interior Minister Federico Storani said last week that ministers could yet lose their jobs over the Senate scandal. De la Rua, then in New York, said no resignations were expected.

The Alliance government sent the labor reforms to Congress to overhaul laws passed in the 1940s and 1950s by Gen. Juan Peron and his wife Evita in a bid to lower the cost of hiring and firing and loosen the grip of unions in wage talks.

That bill, among others, was bogged down in the opposition-dominated 69-member upper chamber but finally passed in April.

"It's essential Congress continues to deal with legislation," De la Rua told reporters at the airport.

The scandal has spurred the legislature out of its torpor with the Senate approving a long-languishing anti-tax evasion bill aimed at generating an estimated $40 billion in revenues.

The lower house alone passed 122 bills in the space of four hours Thursday.

De la Rua signed the draft 2001 budget upon landing and had it sent to Congress for debate.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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