BY GLENN GARVIN

 MANAGUA -- If it didn't make him so mad, Octavio Argüello says, he could savor
 the irony: The police who come by his massage parlor several times a week to
 hassle his female workers and male customers have to drive by a hundred or so
 prostitutes to get there.

 "But they never do anything about the prostitutes in the street,'' Argüello fumes.
 "What's more important, my four girls who might be doing something behind
 closed doors, or a hundred girls on a highway right in middle of town, grabbing
 men out of cars on the street?"

 MASSAGE PARLORS

 Managua police are cracking down on a few massage parlors while ignoring a
 flourishing trade in prostitution in the city's upscale nightlife district.

 ``It's pretty weird, and I can't say I understand it at all,'' says Danilo Medrano, who
 heads an outreach program for prostitutes. ``Any way you look it at it, the
 problem is much worse out there on the highway.''

 The police won't talk about it. "Prostitution is not a problem that has anything to
 do with the police,'' said spokesman Justo Zamora. ``We don't know anything
 about that.''

 THE HOOKERS

 If that's so, the police are about the only people in Managua who aren't aware of
 the hookers who nightly line the Masaya Highway on Managua's south side.

 The prostitutes along the highway confirm that police never bother them. ``They'll
 come if someone gets robbed or hurt in an encounter with one of the girls, but
 never just because we're there,'' says Jenny, 26, a former legal secretary who has
 been working the highway for two years.

 Instead, since July, the police have been conducting regular raids against 20 or
 so massage parlors. They have made no arrests, but demand to see business
 licenses and check ID cards of the women working there. The constant presence
 of the cops -- sometimes accompanied by newspaper photographers -- has driven
 away most of the parlors' clients.

 "Nobody's going to come here if he's going to have to talk to the police and his
 picture's going to be taken,'' says Argüello, 42, the owner of Oriental Massage.
 "I'm lucky if I get three or four clients a day now.''

 Argüello does not deny that some commercial sex might take place in his parlor,
 but says he is not running a bordello: Customers pay 150 cordobas (about $12)
 for the right to disappear into a closed room with a masseuse, and once inside,
 whatever extra services the two negotiate between themselves is their own
 business, he says.

 "SO WHAT"

 But even if some of his employees have engaged in prostitution, Argüello says, so
 what? "Over there on the highway, those girls are doing it in cars parked in front
 of TGI Friday's and no one cares,'' he says. "They should arrest all those women
 before they start with me.''

 Argüello and other parlor owners say their problems with the cops began in July
 after the Managua dailies Nuevo Diario and La Prensa each ran a two-page
 spread on massage parlors. Some of the owners suspect a conspiracy between
 the newspapers and some unnamed power to put them out of business -- a
 suspicion shared by some social workers.
 

 "Some of the authorities are involved in prostitution here, there's no doubt about
 that,'' says Zelmira García, director of Casa Alianza, which tries to help underage
 prostitutes. ``You go to nightclubs or bars where prostitutes hang out and you'll
 find government officials sitting right there drinking at the table with the owner.''

 But the executive editors at Nuevo Diario and La Prensa say the stories on
 massage parlors were their own ideas, not suggested by anybody else.

 La Prensa's David Hume said the paper began looking into the parlors after
 receiving a number of explicit classified ads seeking female employees. ``We'd
 been working on it for several weeks, and I think somebody in the police tipped off
 Nuevo Diario just as we were getting ready to go,'' he says. Nuevo Diario's
 Francisco Chamorro denies swiping the idea from La Prensa.