Paraguay's Congress Interpellates ITAIPÚ's General Director Carlos Mateo Balmelli

photo of Mateo Balmelli (speaking) from Ultima Hora

Paraguay's House of Deputies interpellated Carlos Mateo Balmelli, the Paraguayan General Director of ITAIPÚ Binacional. Itaipú, the world's largest hydroelectric dam which is co-owned by Paraguay and Brazil (a public company), has been at the center of controversy since before its construction (see: my dissertation when I write it for more details). These days, the controversy centers on two issues: first, the relationship between Paraguay and Brazil, where Brazil sells Paraguay's excess energy for the market price, but only pays Paraguay a fraction of that price. Second, fiscal malfeasance and corruption within Itaipú Paraguay where hundreds of millions of dollars have been misdirected into private pockets, nonexistant shadow companies providing services that don't exist, the campaign costs of the Colorado party.

Following President Fernando Lugo's inauguration in August 2008, Itaipú has been at the top of his agenda in renegotiating the relationship with Brazil and "cleaning up" corruption in a state company whose valorization is four times the GDP of Paraguay. Part of this included appointing as General Director (the equivalent of CEO/COO) a non-Colorado for the first time in the history of the dam. Carlos Mateo Balmelli, a member of the Liberal party, has been at the helm since August 2008 and has attempted to address both issues (increasing Paraguay's control of its energy vis-à-vis Brazil, trying to eliminate nepotism and corruption within the Paraguayan half of the company).

Since I'm in the middle of my research on the various conflicts, controversies, and negotiations regarding Itaipú and since Itaipú is such a lively issue in Paraguay (everyone in this country has an opinion about the dam, about Paraguay's relationship with Brazil, and about the administration of the dam-- an analysis which falls along party lines) and since it actually is a highly sensitive subject on an international scale, I'm not sure how to voice my opinions about what's going on.

Yesterday's three hour interpellation (formal interrogation) of Mateo Balmelli was called for by members of the House mainly from two parties: Patria Querida and Tekojoja. After many hours of questioning about how money has been administered since August 2008 (something which never occurred during the administration of previous director Victor Bernal, whose corruption was so flagrant that the country punished his political party by voting it out of office for the first time in six decades), the early analysis fell according to political parties: PQ thought he evaded the questions. I think they're wrong and it seems, at best, incredibly partisan-motivated and, at worst, appears to punish the actions taken under an administration that is attempting to stop mafia-like corruption.

Let me give one example of the "bad administration" of which Mateo Balmelli is accused: the House asked why, instead of using the airplane owned by Itaipú as transportation from Asunción to the dam in bi-monthly meetings, Mateo Balmelli decided to rent a plane from a private firm. The accusation is basically, "why spend money outside when there's already a plane." Mateo Balmelli's reasoning was thus: no flight book was kept for the old plane and so it was an unsafe plane (had been in two accidents whose repairs were not noted) and had been judged "No Fly" by engineers; renting a plane would be the cheapest alternative to repairing a plane thirty years old whose use had been unregistered (this is against international flight rules and a plane in this situation wouldn't be allowed to fly in the United States, for example) and to buying a new plane. And then, the coup de grâce: under the previous directorship of Itaipú, the annual expenses for the "old" plane were $2 million; under Mateo Balmelli's directorship, annual expenses for the rented plane are $150 thousand. That is to say, the cost is less than 10 per cent of previous expenses.

The money that's been saved by this is now being used for agrarian relief and water relief in drought-ridden areas. It's unclear what those $2 million were doing in the past, where it went, if it was used actually for the plane, or if it went to private pockets that nowadays are railing against the loss of misdirected funds.

You can listen to the whole thing here. My personal opinion, as mentioned before, is that the new directorship of Itaipú Paraguay has gained ground in the negotiations with Brazil and seriously challenged the internal corruption and thus is receiving massive opposition.

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