Former Philippines president arraigned in plunder case

The former president of the Philippines refused to enter a plea Monday in a Quezon City courtroom to accusations that she diverted nearly $9 million from a government office that raises money for charity.

It was a small act of defiance from Gloria Macapagal Arroyo against a case her attorneys denounce as political persecution. The court entered a “not guilty” plea for her, following its usual rules. Such silence is not unusual in Filipino courtrooms, said Ramon Casiple, executive director of the Institute for Political and Electoral Reform based in Quezon City.

But in this closely watched case, “she is projecting among the people that she is being forced to be there, being persecuted,” Casiple said. “Staying silent is an advantage for her.”

The case has transfixed the Philippines as the latest test for a government that has vowed to quash corruption, with local media breathlessly covering every step of the Monday hearing. If convicted, Arroyo would be the biggest fish yet netted so far in the government crusade against graft. Besides the case of plundering state funds, she also faces separate charges of election fraud.

“It’s always been an issue here in the Philippines that the rich can get away with murder while the poor are always put into jail,” said Harvey Keh, founder of the nonpartisan Kaya Natin! Movement for Good Governance and Ethical Leadership. Putting Arroyo on trial, he said, would show the country is moving past that. “People want Arroyo to answer the charges against her.”

Italy's Berlusconi found guilty of tax fraud, sentenced to prison

LONDON -- Former Italian Prime Minister Silvio Berlusconi was found guilty of tax fraud Friday and sentenced to four years in prison, a stunning setback for the media mogul-turned-politician who has dominated Italy's political landscape for the last 20 years.

But Berlusconi, 76, will almost certainly appeal the verdict and is not expected to go to prison anytime soon -- and possibly not at all because of Italian restrictions against putting someone his age behind bars, analysts say.

Still, the conviction is a blow for a man who only a few months ago floated the idea of a comeback as Italy’s leader after having been forced to step down last November. Earlier this week, Berlusconi ended speculation by announcing that he would not run for reelection after all but would focus on grooming younger leaders.

Whether the decision to retire from elected office was made in anticipation of a guilty verdict in the tax fraud trial is unclear. Besides the prison term, the sentence handed down Friday in Milan bars Berlusconi from holding public office for three years, the Italian news agency Ansa reported.

The case centered on purchases by Berlusconi’s company, Mediaset, of television rights for American movies. Prosecutors argued that Mediaset bought the rights through offshore entities and then falsely declared those payments in order to avoid paying taxes.

The trial began six years ago but made only spasmodic progress, partly because of delaying tactics by Berlusconi’s defense team and because of an on-again, off-again immunity law for certain elected officials. He has two levels of appeal open to him, meaning that the case could drag on for some years.

Many Italians believed that Berlusconi would never be convicted for his alleged offenses because of the way his government tried to manipulate the judicial system and because of his vast fortune and political connections.

Aside from the case decided Friday, Berlusconi is also on trial on charges of paying for sex with an underage girl whom he later allegedly tried to spring from police custody by using his political influence. That influence is likely to diminish significantly now, analysts say.

When the flamboyant and controversial former leader announced Wednesday that he would not stand for reelection, Berlusconi told Italian media that his decision to step back was motivated by the same patriotism that induced him to go into politics nearly 20 years ago.

“For love of Italy one can do crazy things and wise things,” he said. “Now I want to take a step back with the same love that moved me to act then.”

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Photo: Then-Prime Minister Silvio Berlusconi in July 2011, four months before he resigned under fire. Credit:  Reuters

Mexican union reform effort stays alive -- for now

MEXICO CITY — A dramatic vote in the Mexican Senate has kept alive a plan to reform this country’s corrupt and politically powerful unions, despite opponents’ attempts to smother the idea in the legislature.

But the senators' move late Tuesday could also torpedo a broader labor-reform bill, of which the union reforms are only one part. That left Mexicans pondering two very different futures Wednesday: one that could see a diminished role for the country’s king-making union bosses and another in which nothing much changes.

The reforms in question would require union elections to be held with secret ballots and open the books of big labor to public scrutiny. That, in theory, could undermine the virtual fiefdoms of labor leaders like Elba Esther Gordillo, the head of Mexico’s national teachers union, whose salary is unknown, but who is known to carry $5,000 Hermes purses and once gave out Hummers to loyal followers.

The reforms could also undermine an important source of political power for the Institutional Revolutionary Party, or PRI, which managed to co-opt big labor for most of the 20th century, when it ran Mexican society in a top-down, semi-authoritarian manner.

The teachers union and the powerful syndicate representing workers in the state oil company, PEMEX, both remain closely linked to the PRI. Critics consider both unions to be warrens of corruption, and hindrances to the modernization of two key elements of Mexican society: the poorly managed state oil and gas monopoly and the underperforming educational system.

Both Gordillo of the teachers union and Carlos Romero Deschamps, the longtime leader of the oil company union, were reelected over the weekend, clear indications that labor’s old guard was not planning on going gently.

That only intensified the drama facing Mexico's president-elect, Enrique Peña Nieto of PRI, who rode to victory in July promising sweeping government reforms, but heads a party that may not be so eager to give up its ways.

Peña Nieto, who takes office Dec. 1, has supported the idea of labor reform in general. He has declined, however, to take a strong stand on the union reform effort: In Madrid this month, he said he was in favor of greater union “transparency,” but added that the “autonomy” of the unions must also be respected.

His fellow party members are dominant in the Mexican Chamber of Deputies, and last month they stripped the broader labor-reform bill of its union-reform provisions before it passed the lower chamber.

On Tuesday, however, the union reforms were reintroduced in the Senate version of the bill, thanks to an ad-hoc coalition of senators from the left-wing Democratic Revolution Party, or PRD, and the right-wing National Action Party, or PAN. The bill passed on a 100-28 vote after 12 hours of debate.

Now, under Mexican law, the bill goes back to the lower chamber, which will consider the Senate’s alterations.

If the lower house approves the Senate’s changes, the altered bill will go to the desk of outgoing President Felipe Calderon, who introduced it.

But if disagreement remains, there is a chance the bill could languish in legislative limbo.

There is also a third possibility: The legislation could be approved by both houses, but without the union-reform provisions. Even in that scaled-back form, the bill could bring historic change to Mexico’s traditionally rigid labor market, making it easier for businesses to hire and fire workers, formalizing the outsourcing of work in some cases, and allowing for the payment of an hourly wage.

Those proposals infuriated some on the Mexican left, who worried that the bill only weakened the position of workers whose guaranteed minimum wage is about 60 cents per hour.

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PHOTO: A demonstrator shouts slogans against proposed labor reforms outside Congress in Mexico City on Sept. 27. A proposal to reform Mexico's 1970s-era labor laws, loosen work rules and increase union democracy split Mexican political parties, threatening to create the first big political battle for President-elect Enrique Peña Nieto. The banner reads, "No to labor reform." Credit: Alexandre Meneghini / Associated Press

 

Sanctions, currency chaos igniting unrest in outcast Iran

Soaring prices at Tehran's cavernous Grand Bazaar have ignited violence this week as money traders and vendors clashed with riot police over the plummeting value of the Iranian currency, which is being gutted by international sanctions and mismanagement by the Islamic regime.

What for most Iranians has been an abstract political dispute between their leaders and Western countries concerned about Tehran's nuclear ambitions has suddenly hit them in their wallets and pushed them to lash out. The rial has lost 80% of its value against the U.S. dollar in the last year, a decline accelerated by tightened U.S. and European Union sanctions now depriving the regime of half the hard currency it was earning from oil exports.

Iranian President Mahmoud Ahmadinejad blamed the deepening economic chaos on foreign enemies, contending there is "no economic justification" for the public scramble to dump rials in favor of dollars, euros and gold. Supreme leader Ayatollah Ali Khamenei also struck a defiant pose, reasserting Tehran's right to enrich uranium and vowing that Iranians "will never surrender to pressure."

But Iranian exiles and scholars see the angry outbursts in the marketplace as a sign that ordinary Iranians are finally fed up with a regime that has brought them isolation, insecurity and eroding living standards. They see a population, resentful of a crackdown on dissent three years ago, now edging toward rebellion.

The unrest also demonstrates that the U.S. policy of letting sanctions and diplomacy undermine popular support for the regime is having the desired effect, confronting Tehran with its gravest challenge since Islamic clerics came to power in a  1979 revolution, the experts say.

The street value of the rial has dropped by half in the last two months and plunged 18% on Monday alone. The unofficial exchange rate for the dollar -- more than 35,000 before back-alley trading halted -- is almost three times the official rate of 12,260. But that subsidized exchange rate is available only from state banks to a limited and shrinking number of key importers.

Money traders stopped selling dollars Tuesday, confused over how to price the swiftly deteriorating rial. Some vendors closed their shops in protest of the government's failure to intervene and prop up the currency; others boosted prices beyond what many shoppers can or will pay.  

Before harsher sanctions kicked in three months ago, Iran's government had been using a sizable share of its $100-billion annual oil earnings to subsidize dollar-denominated food and consumer goods, to keep prices stable and placate the population, said Abbas Milani, a Tehran-born academic who directs Iranian studies at Stanford University.

Milani said he suspects the government was initially using the economic downturn brought on by the sanctions to put an end to the costly dollar subsidies. But he now concludes that the regime has been forced to let the rial tumble because it has run out of the hard currency needed to stop the slide.

"We're not talking about a billion dollars or 2 billion to stabilize a currency that has gone down so far. The government would have to find enormous sums of money to pour in, and if they had it they would have done it by now," Milani said.

"I don't think the regime can survive this one," he said, unless Khamenei does the unthinkable and meets Western demands that Iran cease enriching uranium beyond levels needed for civilian nuclear programs.

Tehran officials recently told the International Monetary Fund that they had $50 billion on hand, enough to see Iran through the sanctions bite for at least four or five months, Milani said. He calculates that the regime should have saved about $300 billion in a rainy-day fund over the last eight years. That no intervention in the currency crisis has been forthcoming tells him that much of the oil windfall has been squandered or siphoned off into private accounts of the Revolutionary Guards and government leaders.

"Social and political cohesion in Iran will be deeply disturbed by this economic crisis," predicted Alireza Nader, senior policy analyst on Iran for Rand Corp. "And it's not just the economic crisis -- you saw Iranians take to the streets in 2009 for a number of reasons, and those tensions have been simmering below the surface. We see them coming up now."

Nader pointed out that protesters at the bazaar this week have shouted denunciation of the regime's politics as well as soaring inflation. Shouts of "Leave Syria alone and think about us!" could be heard in clandestinely shot video footage of the angry crowds, he said.

 The Iranian government has been the sole regional supporter of Syrian President Bashar Assad and his brutal suppression of a rebellion now in its 19th month.

"Eventually this is going to put enormous pressure on the Iranian government to concede on a number of issues, not just the nuclear programs but domestic political issues as well," Nader said. "It's already gotten to the point where people's livelihoods are at stake and they're not going to tolerate that situation. We can definitely expect to see more unrest in the coming months."

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Photo: An Iranian shopper on Wednesday pays a fruit seller at the Grand Bazaar in Tehran with 50,000-rial banknotes. The sanctions-battered Iranian currency has lost 80% of its value in the last year, spurring inflation and social unrest. Credit: Abedin Taherkenareh / European Pressphoto Agency

Insert: Riot police block an approach to the Grand Bazaar on Wednesday after arresting money traders and dousing fires lighted in protest of the falling rial currency. Credit: European Pressphoto Agency

Ex-presidential candidate in Egypt faces fresh corruption charges

CAIRO -- Former Egyptian presidential candidate Ahmed Shafik and 10 other ex-officials were ordered Sunday to face trial on corruption charges.

The defendants were accused of profiteering from public funds and corruption within the Ministry of Civil Aviation, according to Egypt’s state-run news agency.

The case, which was referred to trial by Judge Hisham Rauof, involves accusations that the officials exploited their positions of authority to allocate lands owned by the government to private companies without calling for public tenders as Egyptian law requires.

Earlier this month, Egyptian authorities placed Shafik, who is believed to be in the United Arab Emirates, on a watch list over another criminal case accusing him of selling land owned by the government well below its market value to Alaa and Gamal Mubarak, sons of ousted Egyptian leader Hosni Mubarak.

Shafik, who was the elder Mubarak's last prime minister and close friend, left Egypt after losing the presidential election to Mohamed Morsi in June. He was a controversial candidate for many Egyptians, who accused him of seeking to continue Mubarak’s regime.

From abroad, Shafik has recently promised he would help establish a political party as an alternative for Egyptians who oppose the rule of Islamists such as Morsi. Shafik's supporters have defended his decision to leave Egypt, while activists and revolutionaries accuse him of fleeing in the face of corruption charges.

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Photo: Former Egyptian presidential candidate Ahmed Shafik is shown speaking with the media in a file photo from May 26. Credit: Khalil Hamra / Associated Press.

Expelled South African activist Malema in court on corruption case

JOHANNESBURG, South Africa — Firebrand activist Julius Malema traded his usual revolutionary beret and T-shirt for a crisp business suit Wednesday when he appeared in a South African court to face charges of money laundering.

Malema, tossed out of the ruling African National Congress in April for sowing divisions, is accused of receiving in a family trust about $500,000 tied to fraudulent government tenders. He appeared in a court in Polokwane, capital of Limpopo, his home province.

He denied the charges and was freed on $1,250 bail. Outside the court he claimed the charges against him were pushed by senior government officials and mounted a virulent attack against South African President Jacob Zuma, a man he helped propel to the leadership of the ANC.

Malema called Zuma the illiterate leader of a banana republic and said Zuma had been charged on 700 counts of corruption and fraud, compared with only one count against him. The charges against Zuma were dropped by prosecutors just weeks before the 2008 election, won by the ANC.

Ehud Olmert, ex-Israel leader, gets light sentence for corruption

This post has been updated. See below for details.

JERUSALEM -- Former Israeli Prime Minister Ehud Olmert was sentenced Monday to a suspended one-year jail term and a $20,000 fine in the high-profile corruption case that drove him from office nearly four years ago.

Olmert was convicted in July of breaching public trust for using his previous position as trade minister to help a business associate. But an Israeli court cleared him of the most serious charges in the case, including fraud, double-billing for travel expenses and concealing large cash gifts.

Olmert and his supporters praised the sentence, which fell short of prosecutors’ call for six months of community service. The lighter sentence clears the way for Olmert to return to politics if he wishes, though he is still fighting an indictment in a separate bribery case involving a real estate deal during his tenure as Jerusalem mayor.

Some of the former Kadima Party chairman’s backers are urging Olmert to run again for a seat in the Knesset, Israel's parliament, and challenge Israeli Prime Minister Benjamin Netanyahu.

Another mass prison break in Mexico sees 132 inmates escape

MEXICO CITY -- Complicity by guards or other officials is suspected in the escape of 132 inmates from a prison in the northern border state of Coahuila, authorities said Tuesday.

The inmates apparently fled through a 21-foot tunnel carved underneath a carpentry workshop in the prison at Piedras Negras, across the border from Eagle Pass, Texas. They were noticed missing sometime Monday afternoon.

Authorities on Tuesday said they had recaptured three female inmates. Four men also thought to be escapees were killed in a shootout with troops scouring the region in search of the fugitives, they said.

It was the second-largest prison break in the six-year administration of President Felipe Calderon. Mexican prisons, heavily overcrowded in part because of drug-war arrests, are notoriously porous and saddled with corrupt management.

Calderon said Tuesday via Twitter that more than 1,000 inmates had escaped from state prisons in the last six years.

Victim in Mexican kidnapping speaks

 

MEXICO CITY -- As questions persist surrounding the shooting by Mexican federal police of a diplomatic vehicle, and the wounding of two U.S. government employees inside, a new explanation is gaining traction.

Interior Minister Alejandro Poire, confirming a version floated by the police command, said this week  the shooting came as the officers were investigating a kidnapping, and that they had mistook the vehicle occupants for suspects.

And now, the purported victim of that kidnapping has spoken out in defense of the police officers, who U.S. officials accused of "ambushing" their men, thought to be CIA operatives.

The police "risked their necks for me," the victim, Salvador Vidal Flores Perez, told Milenio TV in an interview program Wednesday night (link in Spanish). Flores was identified as the head of protocol and public relations for the National Institute of Anthropology and History, an agency that oversees museums and archaeological projects.

Flores said the police assisted him after the kidnappers released him in the wooded, hilly region south of Mexico City near where he lives and where the shooting of the Americans took place a day later.

"In those police, I found a friendly hand, professional and capable personnel, and they helped me out," he said. "That is why it is unfair, it is an outrage, it's incredible to me that they're going around saying those police are criminals."

Flores said he was kidnapped Thursday, Aug. 23, and driven around for hours while his captors attempted to demand ransom from his family. They released him after taking his credit cards, and he reported the crime to the police stationed in the area. Those same police, he said, mounted a number of operations to find the culprits.

The next day, Friday morning, police intercepted and opened fire on the diplomatic SUV, chasing it as it attempted to flee and pumping it full of more than 30 bullets. The two U.S. officials, who have not been formally identified, were wounded and quickly removed from the country. A Mexican marine captain accompanying them was not injured.

U.S. and Mexican officials said the men were traveling to a military base in the area for training exercises. Speculation immediately centered on two theories: either the cops made a mistake and thought they were firing on criminals, or they were corrupt officers working at the behest of organized criminal gangs who were attempting to steal the car and kidnap or kill its occupants.

U.S. officials, after first labeling the shooting an ambush, later said they do not believe the gunmen, whatever their motives, targeted the men because they were Americans.

Twelve police officers involved in the incident have been arrested and are undergoing interrogation.

The incident was especially troubling because cleaning up Mexico's notoriously police agencies is a pillar in the security strategy of President Felipe Calderon, and Washington is spending millions of dollars to help with the effort.

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Photo: Investigators inspect a U.S. diplomatic vehicle attacked by Mexican federal police south of Mexico City on Aug. 24, 2012. Credit: AFP/Getty Images

 

 

Quebec separatist party riding wave of voter dissatisfaction

This post has been updated. See note below.

When the separatist Parti Quebecois burst on the political scene 40 years ago, financial institutions and global corporate headquarters fled Montreal for neighboring Ontario in fear of the economic disaster predicted if Quebec were to secede from the Canadian federation.

In 1995, when the party again gained control of the provincial government, voters defeated a referendum on separation by such a small margin -- the difference was 1 percentage point -- the province again suffered a loss of business investments that killed jobs, dropped property values and depressed the Canadian dollar for much of that decade.

So why, in an age of relative prosperity that is the envy of the recession-racked world, are Quebec voters again surging to the side of Parti Quebecois and its nationalist platform for more sovereignty and French language dominance? As the Ottawa Citizen warned in an editorial Tuesday, a victory for Parti Quebecois leader Pauline Marois in Tuesday's legislative elections would give her "a chance to turn her province into the Greece of North America and slow Canadian progress for many years."

Votes were still too close to call in some hotly contested districts, or "ridings" as they are known in the province, but Canadian Broadcasting Co. declared Parti Quebecois the winner and Marois poised to become Quebec's first female premier. Incumbent Jean Charest and his Liberal Party colleagues lagged by at least 10 seats in the winner-takes-all district contests. Parti Quebecois could end up heading a minority government, though, as a relatively strong third-place finisher, the Coalition Avenir Quebec, appeared to deprive the separatists from getting at least 63 seats for an outright majority.

[Updated 9:30 a.m. Sept. 4: In a possible sign of the tensions that can flare on the separation issue, shots were fired during Marois's victory speech shortly after midnight, prompting security officers to whisk the party leader off the stage. Police said they were questioning a man detained at the scene who was wearing ski mask and blue bathrobe. Marois was unhurt, but a 48-year-old man was killed and another man wounded, Quebec police reported.]

Support for separation has fallen dramatically since two previous referendums found insufficient voter interest in going it alone. A 1980 ballot measure failed with only 40% in favor, and the vote 15 years later narrowly missed with 49.5% backing. Today, only about 28% of the electorate wants to separate from Canada, according to a recent poll published by La Presse of Montreal.

What has brought voters back to the Parti Quebecois fold, says McGill University law and politics professor Daniel Weinstock, is Canada's long tradition of "democratic alternance in power," a cyclical sweeping out of the governing echelons.

"After three or four terms in power, a party gets complacent. Corruption sets in and it gets too cozy with people it shouldn’t be getting cozy with. About a quarter of Parti Quebecois voters say they just want change," said Weinstock, alluding to a scandal involving the building trades and organized crime that eroded support for Charest and the Liberal Party.

Quebec has also been roiled this year by massive student unrest in protest of tuition increases, which flared into ugly confrontation between police and demonstrators. Thousands were arrested this spring, and new restrictions imposed on public demonstrations have angered free-speech advocates across Canada.

More than an opportunity to raise the separatist cause again, Marois has appealed to voters with populist pledges to boost taxes on wealthy individuals and charge higher mining royalties on multinational extractors to raise revenue for public projects. She has also called for making it more difficult for foreign companies to buy out Canadian competitors, like the $1.8-billion offer from home improvement giant Lowe's of North Carolina for Quebec-based chain Rona Inc. that could imperil thousands of Canadian jobs, mostly in the Francophone province.

Under pressure from party hardliners, Marois has demanded provincial autonomy in foreign affairs and immigration policy and called for making French the exclusive language of education at the community college level. French already has that status in primary and secondary school teaching.

Marois made clear on the campaign trail that getting Quebec's finances in order would be the first priority if her party regains power. But she also reiterated Parti Quebecois' separatist aim in vowing to hold a referendum "tomorrow morning" if polls show majority support.

Finn Poschmann, vice president of research at the C.D. Howe Institute, an economic and social policy think tank in Toronto, says separation makes no sense economically for Quebec and Marois has said she would push for a third vote on it only when the measure is assured of passage.

Still, the notion of independence has an emotional appeal for many in Quebec, Poschmann said.

"It's the sovereigntist ideal, that if only the province could have more control over its destiny that everything will get better," he said. "There are going to be significant groups of people, particularly in rural areas and among youth, who are true believers in the separation program. But that is not the dominant force in Quebec politics."

Canadian markets and currency have weathered the latest Parti Quebecois rise without the nerves and panic of previous political shifts in Quebec, probably because analysts see little imminent threat of another secession vote, said Poschmann.

But he points out that the campaign promises made by Marois -- higher income taxes for  big earners and $1 billion in new public spending -- would be enough to damp investors' enthusiasm for Quebec and Canada as a whole even if the separation issue has been relegated to the back burner.

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Photo: Parti Quebecois Leader Pauline Marois is whisked off stage as she delivered her victory speech in Quebec on Tuesday. Police were not immediately able to provide details but party organizers informed the crowd that there had been an explosive noise and they needed to clear the auditorium. Credit: Paul Chiasson/Associated Press