BY LUCIEN O. CHAUVIN
  Special to The Herald

  LIMA - Switzerland on Tuesday returned to the Peruvian government $77.5 million linked to Peru's discredited former spy chief, Vladimiro Montesinos,
  concluding that the money ``originated from corruption-related crimes.''

  The money had been squirreled away in secret bank accounts during the past decade by Montesinos and other officials in former President Alberto
  Fujimori's government.

  The bulk of the money, $49.5 million, was in accounts belonging to the jailed Montesinos. Another $21 million was in an account held by retired Gen.
  Nicolás de Bari Hermoza Ríos, who headed the Joint Chiefs of Staff throughout most of the 1990s.

  The remaining funds were deposited in Switzerland by an unidentified arms dealer.

  The Peruvian government expressed satisfaction Tuesday with the decision of the Swiss Federal Office of Justice.

  ''This is great news. We are not only recovering money that belongs to all Peruvians, but the decision of Swiss authorities will also help us work with
  other countries to repatriate more funds,'' said Rep. Anel Townsend Diez Canseco, a member of congress and close ally of President Alejandro Toledo.

  The returned funds were transferred to an account belonging to the Peruvian National Bank at Citibank in New York.

  The repatriated funds represent a staggering amount of money for a relatively poor country like Peru, which is fighting to overcome an economic crisis.

  Earlier this year, the Swiss government agreed to return to Nigeria some $535 million held in blocked accounts in Swiss banks by the late Nigerian
  dictator Sani Abacha. In terms of money returned to a Latin American government, however, the Peruvian figure is believed to be one of the highest.

  MORE SOUGHT

  In addition, the Peruvian government is working with the Swiss Federal Office of Justice to repatriate another $33 million held by Montesinos in accounts
  that have been blocked in that country.

  Montesinos was sentenced to nine years in prison in early July for illegally acting as head of Peru's National Intelligence Service. Fujimori never formally
  appointed him to head the intelligence service, which he ran for 10 years. He faces nearly 60 other charges, many involving arms smuggling, and has
  been held at a special prison on a navy base in Callao, near Lima, for more than a year.

  Hermoza Ríos, arrested in April 2001, also faces a long list of charges. He admitted to siphoning resources from the military budget and agreed to return
  the money. He has not been sentenced.

  ARMS DEALS

  Swiss authorities said Montesinos' accounts were from commissions made on at least 32 arms purchases in the 1990s. Montesinos took an 18 percent
  cut on transactions. Hermoza Ríos' $21 million was embezzled from the military budget during nearly seven years as head of the Peruvian army.

  The two are also accused of making a fortune from drug trafficking when they formed part of a three-man team that ran Peru with Fujimori from the early
  1990s. Several jailed drug traffickers testifying before a congressional commission said they paid off both men. Montesinos and Hermoza Ríos deny the
  accusations, which would mean life sentences if shown to be true.

  Montesinos' accounts were first detected by Swiss authorities in November 2000, leading to the creation of a Special Prosecutor's Office and a dozen
  congressional commissions in Peru.

  Switzerland has also blocked accounts belonging to other former political brokers, including Victor Joy Way, a former congressional speaker and finance
  minister. Joy Way is in prison awaiting trial.

  The money being repatriated represents a small fraction of the total identified by the main commission investigating corruption in the Fujimori
  administration (1990-2000). When it finished its second report months ago, the commission had tracked $782 million belonging to more than 200 people.

  Townsend said she hopes the Swiss decision and tougher banking laws enacted in that country will encourage other nations to cooperate more fully with
  Peru. Switzerland, long considered a paradise of banking secrecy, passed stricter laws in 1998 requiring banks to report deposits suspected of coming
  from illicit sources.

  The Swiss decision comes at a key moment for the cash-strapped Peruvian government. President Toledo has set up a special fund to administer money
  embezzled during the Fujimori years.

  The fund has already received $38 million from bank accounts held by two other jailed Montesinos associates, Alberto Venero Garrido and Juan Valencia
  Rosas, at the Cayman Island-based Pacific Industrial Bank.