FBI Surveillance of Miami Bank Led to Arrest of Peru's Most Wanted

By Scott Wilson
Washington Post Foreign Service

LIMA, Peru, June 25 -- The beginning of the end for Vladimiro Montesinos was a telephone call two months ago from Saul Pena Farfan, a Peruvian anti-corruption
magistrate, to the FBI's Miami field office: Could the bureau monitor a $38 million account believed linked to Montesinos at a Miami branch of the Cayman
Islands-registered Pacific Industrial Bank?

A month later, a former Venezuelan intelligence agent, saying he represented the fugitive former Peruvian intelligence chief, contacted a bank officer and tried to
withdraw the money from an account that had been frozen and was not in his name, according to a U.S. Embassy official in Lima. The FBI, alerted by the bank officer,
began monitoring conversations between bank officials and the Venezuelan as he pressed them to release funds by threatening to make public what Montesinos said he
knew about the bank's money laundering practices.

On Thursday, FBI agents arrested the Venezuelan and two associates as they entered the bank. Under threat of prosecution for trying to extort the bank, the former
intelligence officer swiftly offered to arrange Montesinos's capture in an attempt to arrange a plea bargain. The deal, according to an account provided by the U.S.
diplomat on condition of anonymity, included naming a group of people protecting Montesinos in a series of Venezuelan hideouts.

That judicial transaction -- a banal sellout by someone trying to stay out of jail -- led to the arrest Saturday night of Peru's master of manipulation, the elusive intelligence
chief and political operative who had been Latin America's most hunted man since dropping out of sight in October.

Handcuffed but smiling for the cameras, Montesinos was returned from Venezuela to Peru this morning to stand trial on charges of illegal enrichment, drug trafficking
and organizing death squads during President Alberto Fujimori's 10-year presidency. Dressed in a khaki jacket and blue jeans, Montesinos stepped off a Peruvian national
police plane at Callao naval base beside the Lima airport, escorted by a dozen guards.

Montesinos, 56, was taken to a holding cell in the downtown Palace of Justice, where a crowd had gathered to get a glimpse of the balding former intelligence director.
Grayer than when he left, Montesinos had otherwise changed little in appearance. The plastic surgery he allegedly had in December turned out to be fiction.

Right up until Montesinos was arrested in one of the Caracas homes he was using, his capture was complicated by Venezuelan authorities, according to U.S. officials.

Peruvian authorities were to make the arrest, they said, but Montesinos's Venezuelan bodyguards turned him over at the last minute to Venezuelan intelligence agents,
who took him into custody before the Peruvians could act. With Montesinos in Venezuelan custody, a U.S. official said, Peruvian Interior Minister Antonio Ketin Vidal
flew to Caracas on Sunday to arrange the turnover. In the end, officials in Caracas fulfilled repeated promises from Venezuelan President Hugo Chavez that Montesinos
would be turned over immediately if he were caught in Venezuela.

In announcing the arrest at the close of a summit of leaders of Andean countries Sunday, Chavez suggested that Venezuelan intelligence agents had managed the
operation for days. But the account provided by U.S. officials, supported by Peruvian Defense Ministry documents, suggested Venezuela was a last-minute partner in the
operation and an obstacle throughout the eight-month search.

Information generated by U.S. investigators had to be handled with care, according to this account, because U.S. and Peruvian officials believed Chavez was not
committed to the search. In fact, Peruvian officials suspected members of the Chavez government of hiding Montesinos. The former spy chief, they recalled, had helped
arrange asylum in 1992 for 93 Venezuelan military officers involved in an attempted coup d'etat.

According to an internal report prepared for the Peruvian Defense Ministry and presented to Prime Minister Javier Perez de Cuellar and Defense Minister Walter
Ledesma on Feb. 22, the Peruvians had reason for their suspicions.

The report said a Peruvian named Emma Mejia Guzman visited Peru's embassy in Caracas on Dec. 15 seeking help returning home. She told officials that she had
entered the country illegally with Montesinos several weeks before. The Peruvian military attache in Caracas then sent details of Mejia's statement to Venezuelan
military intelligence. But then-Foreign Minister Jose Vicente Rangel, now defense minister, continued to deny knowledge of Montesinos's presence in the country.

The U.S. Embassy official here said the former Venezuelan intelligence officer taken into custody in Miami identified the Venezuelans who were shuttling Montesinos
from safe house to safe house. No arrests have been made, but Rangel reaffirmed today that an investigation to determine who had helped Montesinos is underway.

Peruvian officials said that Montesinos, who faces a life sentence if convicted, will be held at the Palace of Justice until they decide where to put him pending his trial.
One option is the prison he helped design on the Callao base that holds the Shining Path guerrilla leader, Abimael Guzman, who was captured in 1992 in an operation led
by Vidal, the interior minister. Vidal also headed the team that hunted down Montesinos, his former military academy classmate.

"More than anything I think he must be horrified that he will be imprisoned in Callao, a prison he built for Peru's worst criminals," said Benedicto Jimenez, a police colonel
who participated in the capture of Guzman.

Peruvian television stations trumpeted Montesinos's return as "the capture of the 21st century." But his pending trial is likely to overshadow the arrest, given the secrets
he collected during his decade running Fujimori's domestic intelligence network. Already 61 people -- including military officers -- have been arrested in an investigation
said to have linked 150 people to criminal enterprises connected to Montesinos ranging from drug smuggling to skimming.

Peruvian authorities have seized about 2,400 videotapes made by Montesinos, which he used to manipulate political opponents, military officers and journalists whom he
caught on film. One tape that ended up in the hands of a political opponent, showing Montesinos bribing an opposition congressman to switch parties, prompted Fujimori
to abandon the presidency in November and seek exile in Japan.

What Montesinos may reveal in the coming months, just as Alejandro Toledo takes office as president, has the potential to be deeply embarrassing or politically lethal for
those associated with Montesinos.

Toledo himself may be vulnerable. During the presidential election that he won June 3, Toledo defended himself against charges that he had used cocaine and consorted
with prostitutes by saying Montesinos's agents had drugged him. Whether a videotape exists of the episode, as has been rumored for months, may be revealed before or
after his July 28 inauguration.

But Peruvian officials suggested that the person who may have the most to fear is Fujimori, whom Toledo has pledged to bring back to Peru for trial. Justice Minister
Diego Garcia Sayan said Montesinos has "information that is absolutely critical" to making a case on corruption and murder charges against the former president.

The emerging details of the U.S. role in his capture silenced months of complaints from Peruvian officials, who had suggested that Montesinos's long ties to the CIA
were protecting him. But the FBI has been working for months to help Peruvian authorities track Montesinos's bank accounts, allegedly holding $264 million that he stole
or collected through illegal arms and drug trafficking.

Last year, U.S. authorities arrested Victor Alberto Venero, believed to be a leading business associate of Montesinos in Miami, and sent him to Peru where he has been
cooperating with investigators. The FBI also arrested Manuel Aivar Marca, a former high-ranking member of the Federal Police state security unit, and Liliana Pizarro
de la Cruz, accused of helping Montesinos escape in November. Both are fighting extradition to Peru in Florida courts and helping U.S. investigators with the case.

"The lesson we can learn is that when there is a political decision to defend the truth we ensure that impunity does not triumph," said President Valentin Paniagua, who
vowed not to plea bargain with Montesinos.

Staff writer Karen DeYoung in New York contributed to this report.

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