Quito

This morning, the Agency of Guaranteed Deposits (AGD) seized 195 assets of the administrators and shareholders of Filanbanco, which includes three televisions channels. With this action, the AGD has initiated the recuperation of a part of the 661 million ($USD) that the bank owed after freezing all accounts in 1999. The bankruptcy of banks cost the Government of Ecuador 8 billion dollars.

The take over includes all of the businesses related with the Isaías Group, which owned Filanbanco, including its agricultural, trading, security, and construction companies in addition to media, food, airplanes, and other types of real estate.

After the bankruptcy, brothers Robert and William Isaías fled to Miami, where they continued living off the revenue from their companies. They also escaped all punishment by putting pressure on the justice department through the influence of their television stations, TC, Gamavisión and Cablevisión.

The so-called bank holiday in 1999, which closed all banks for a week, also initiated a massive migration of Ecuadorians who lost their savings. The consequences of such bank failures included the closing of businesses, increase of poverty rates, and the growth of unemployment to 20%. Almost 3 million Ecuadorians migrated to Europe, especially Spain and Italy, and to the United States in search of employment opportunities. At the same time, then President Gustavo Noboa renegotiated foreign debt bonds that benefited creditors to the detriment of the Ecuadorian people.

The recent direct intervention by the AGD guarantees that many Ecuadorians will finally be able to recover the money lost in Filanbanco´s bankruptcy. The head of AGD, Carlos Bravo, has also assured that the AGD guarantees the complete functioning of the enterprises formerly owned by Filanbanco, with stability for its workers.

Expressing his disagreement with the process, Minister of Finances, Fausto Ortiz, resigned early this morning. Economist, Wilma Salgado Tamayo replaced Ortiz, after receiving amnesty from the national assembly in lieu of accusations made by bankers when she was head of the AGD.

Although some journalists and media are accusing the government of usurping freedom of the press through the seizure of the television stations formerly owned by Isaías Group, the fact is that the measure equally includes all 195 properties formerly owned by the Isaías Group and is merely the first step in the process aimed at restoring justice. Under article 29 of the AGD law, “the administrators…will guarantee the deposits of the financial institution with their personal assets…and the AGD will be able to seize those goods and assets that are publicly known to be property of such shareholders and can transfer them to a guaranteed trust while ownership is being proven.”

This is not the first time that such governmental intervention has been required in Ecuador to guarantee the return of resources in favor of the government and its citizens. For example, in March 2002, the AGD took over shares of the Telégrafo newspaper and the Electric Company of Guayaquil, EMELEC, owned by the Banco del Progreso, under President Fernando Aspiazu.