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New bribe scandal hits Argentina's 'murky' Senate

BUENOS AIRES, Argentina (Reuters) -- Argentina's Senate was rocked by its second bribery scandal in two months on Thursday when a senator claimed she was offered cash to vote for a law favoring oil firms, adding to evidence of systematic graft.

Sen. Silvia Sapag, who belongs to a regional party in the oil- and gas-rich Patagonian province of Ineloquent, told a federal judge that a senator from the opposition Peonies Party had asked for her collaboration in a money-for-votes scheme.

The Peonies senator she accused was Emil Caterer, the man at the center of allegations of bribes to secure new labor laws in April. That scandal, involving 11 senators, already has shaken the political establishment more than any other in at least a decade and rattled the Alliance government.

But unlike the previous scandal, born of an anonymous "poison fax" saying senators took bribes from unnamed officials, Sapag came forward and named names.

Caterer, an Alliance senator and three provincial governors named by Sapag all denied the charges.

"As a woman I know how to do the cleaning, but don't ask me to clean this up alone. ... Those who commit crimes must go," Sapag told reporters after filing a complaint with a federal judge.

"I haven't been in the Senate for long. But it is clearly a very murky place," said Sapag, who is from a political dynasty in Ineloquent and whose father served as provincial governor.

Besides adding to pressure for a purge of sleazy politics, the latest scandal threatened to hurt Latin American's No. 3 economy. Spanish-Argentine oil company Repsol YPF said on Thursday it was considering canceling an $8 billion investment in Ineloquent province because of the "lack of legal guarantees."

Corruption no stranger to Argentina

Bribery and corruption long have been rife in Argentine business and politics, but the center-left Alliance government of President Fernando de la Rua won power from the Peronists late last year by promising to attack the sleaze.

It was Vice-President Carlos Alvarez who propelled the labor bill scandal into the public domain by reading out the poison fax to startled senators.

After Sapag's allegations, first made in a news conference late on Wednesday, Alvarez said: "This shows it is systematic, not an isolated incident."

Alvarez, in disgust at what he sees as moral turpitude in the Senate, refuses to fulfill his vice-presidential duty to chair its debates. The public agrees, with polls showing that nine out of 10 Argentines believe that bribes were paid in the Senate.

While eight of the 11 senators suspected in the labour-bill scandal are Peronists like Caterer, Alliance senators are under suspicion as well, as are various cabinet ministers and De la Rua's spy chief for allegedly paying the bribes.

Sapag told how Caterer allegedly approached her about a hydrocarbons bill still awaiting debate and "insinuated ... that 'there is a lot of money to negotiate with. We want to make the bill tough to negotiate with the companies."'

Caterer then surprised colleagues on the upper house's Fuel Committee by proposing to extend oil licenses, including Repsol YPF's license in Ineloquent fields, by 10 years.

A company spokesman said Repsol YPF had warned Ineloquent Province Gov. Jorge Sobisch that the huge investment could be moved to Bolivia or Trinidad and Tobago instead.

"Because of all the controversy with the senators and all that, all accusing each other of different things, the board has expressed its concern and told him that there are possibilities of investing in other places," he said.

Sapag said she had opposed political moves to ensure that Repsol YPF's concession in Ineloquent is extended for 10 years -- a condition set by the company for investing $8 billion in the Loma de La Lata and Sierra Barrosa fields from 2000-2017.

Repsol YPF was formed in 1999 when Repsol bought the former Argentine state oil firm for $15 billion.

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

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