As repression in Nicaragua deepened, one bank kept the money flowing

The bank’s lending to Nicaragua rose from $365 million in 2018 — the year the killings and mass arrests began — to a peak of $805 million in 2021, when President Daniel Ortega detained dozens of political dissidents and aspiring presidential candidates, expelling many of them from the country and seizing their property.

One of those candidates, Juan Sebastián Chamorro, Nicaragua’s former deputy minister of finance and public credit, said the CABEI loans after 2018 were essential to the Nicaraguan economy, because other international development banks had largely pulled back or routed their funds directly to nongovernment organizations. In 2019, the government’s budget was $3.5 billion, according to an estimate in the CIA’s World Factbook.

CABEI “became the main source of funding for public works,” said Chamorro, an Ortega opponent who is a visiting fellow at the University of Notre Dame. He noted that the CABEI loans represented a sizable portion of the gross domestic product of Nicaragua, the second-poorest country in the Western Hemisphere after Haiti.

Chamorro, along with five other presidential aspirants, was arrested ahead of the 2021 election. He was imprisoned for 20 months before the Nicaraguan government agreed to put him on a plane to Washington, along with 221 other dissidents.

The Post also found that between 2018 and 2020, Nicaragua’s national police — the main instrument of government violence — used CABEI funds to build or renovate at least 19 police precincts across the country, purchase radio and communication systems, and help build a data center at police headquarters, according to documents posted by the government. One document shows that at the height of the crackdown in 2018, when scores of protesters were being shot dead or arrested, CABEI and the police put out a tender to purchase buses and boats to “guarantee the mobilization of police forces and to strengthen the operational capabilities of the National Police.” Ultimately, the police were unable to find sellers to fulfill the order, according to CABEI officials.

Faced with demonstrations over cuts in social spending in the spring of 2018, the Nicaraguan government unleashed police and paramilitary forces on protesters, according to U.N. investigators, the State Department, the Organization of American States and human rights groups. They found that snipers shot unarmed civilians and arrested doctors who treated them. Nicaraguans detained by masked officers disappeared without warrants or trials, only to be found dead later. Police carried out torture in prisons, raping and killing hundreds of government opponents and bystanders and even some of their own officers who refused orders to shoot unarmed protesters.

Dante Mossi, CABEI’s president from 2018 to 2023, defended the bank’s funding of the Nicaraguan government.

“It is not up to the president of the bank to pass judgment on whether a country is democratic enough or not to receive loans from CABEI,” Mossi said in an interview from Honduras in March. “That’s not my mandate,” he added.

But CABEI’s new president does not share that view.

In an interview with The Post, Gisela Sánchez Maroto said the bank is reviewing all loans approved over the past 10 years, and implementing new anti-corruption and human rights policies.

Asked about the loans to the police after widely documented rights abuses, killings and torture, Sánchez Maroto expressed regret.

“I want to make sure that something like that, that happened, will never happen again,” she said.

Mossi said he recently sued the bank for more than $2.4 million due to lost wages from reputational harm.

The Nicaraguan government did not respond to requests for comment emailed to officials in Managua, the capital. Ortega has repeatedly downplayed the police violence and called the 2018 crackdown a response to a U.S.-sponsored coup attempt.

CABEI’s multiyear lifeline to the Nicaraguan economy came as a group of human rights experts commissioned by the United Nations concluded that the government, led by Ortega, his wife and other high-level government officials, had turned Nicaragua into a police state. Once a celebrated communist revolutionary, Ortega has gone through several political metamorphoses. He ceded power peacefully after a 1990 electoral defeat, then swept back to victory in 2006 after downplaying his leftist roots and promising to attract foreign investment. Since then, he has broken with former revolutionary and socialist allies and even imprisoned several, while steadily consolidating authoritarian power.

“These violations and abuses are being perpetrated in a widespread and systematic manner for political reasons, constituting the crimes against humanity of murder, imprisonment, torture, including sexual violence, deportation, and politically motivated persecution,” the U.N. group’s chair, Jan Simon, said in a statement when the report was released last year. “The Nicaraguan population lives in fear of the actions that the Government itself may take against them.”

The U.N. group updated its findings in February and said that human rights violations of that level are ongoing. “Nicaragua is caught in a spiral of violence marked by the persecution of all forms of political opposition, whether real or perceived, both domestically and abroad,” Simon noted.

Financing the police

The Post interviewed dozens of victims of the 2018 repression who are living in exile. One was a police special forces officer, now in Costa Rica, who saw the rising power of his former institution and suffered its wrath when he fled rather than follow what he said were orders to shoot protesters. He asked that he be identified by only his first name, Edwin, because even outside the country, he fears retribution from his government.

“I didn’t go into the police to kill people,” he said.

After he was captured while trying to flee the country, Edwin said he was taken to El Chipote prison — an infamous institution where Ortega, when he was a young revolutionary, said he was tortured. By 2018, human rights groups said, Ortega’s government was employing the same brutality he had once fought against as a Marxist guerrilla.

At El Chipote, Edwin said his interrogators raped him with a rubber baton, pulled out four of his teeth and removed four toenails on his left foot with pliers. They burned his testicles with candles, he said, broke his wrist and dislocated his shoulder. They sliced a line across his chest that left a scar that he showed to Post reporters.

His account of torture is consistent with a Post review of detailed testimony he gave to Costa Rica’s immigration authorities in his successful claim for asylum, as well as to two international humanitarian aid organizations — Doctors Without Borders and HIAS (formerly the Hebrew Immigrant Aid Society) — that offered him medical and legal assistance. The Post also examined medical records that detail the continuing effects of injuries Edwin suffered as a result of torture. The methods of torture and rape that he says he suffered are also consistent with the descriptions in the U.N. report published after his testimony to Costa Rican authorities.

In 2005, the year before Edwin graduated from the police academy, CABEI sent its first police loan to Nicaragua with the aim of improving public security. It was a period of optimism in the country. Ortega, president for a time in the 1980s, had swept back to power on the promise of economic reform and greater democracy in a landslide election victory in 2006.

By the time CABEI issued a second loan to the police of $16 million in 2014, that was a harder proposition because Ortega was already coming under international criticism for packing the judiciary and pushing through a constitutional change removing presidential term limits.

Edwin said the expansion of police financing and capabilities was noticeable. In the years leading up to 2018, he recalled getting newer, better uniforms as well as more-sophisticated weapons. Police headquarters and precincts were being built or renovated across the country.

Captivated by Ortega

When he was selected to lead CABEI in October 2018, Dante Mossi had come from relative obscurity after a decade and a half in mid-level positions at the World Bank. A Honduran economist with a doctorate from Vanderbilt University, he joined the World Bank’s office in his native country after serving 10 years in government. Mossi later worked in Ghana and Paraguay before leading the World Bank’s global energy practice in Africa.

After Mossi took up his position with CABEI in December 2018, he began visiting governments in Central America. In April 2019, Mossi flew into Managua’s Augusto C. Sandino airport, named after the assassinated revolutionary who inspired the movement that first propelled Ortega to power.

It had been a year since the beginning of a bloody crackdown. But Nicaragua’s first couple threw a reception for Mossi that left him feeling “like a rock star,” he said in an interview with The Post.

Mossi said that growing up in Honduras, he was captivated by Ortega’s crusade against the Somoza dictatorship. He thought of his bank’s client as “this revolutionary guy” and “this legend,” Mossi said.

Ortega’s support was important for Mossi. CABEI, founded in 1960 by Nicaragua and four other Central American countries, is unlike other development banks that operate in the region in that its primary shareholders are also its primary loan recipients. And Mossi needed to cultivate the leaders of those countries, like constituents, if he wanted to be reappointed, according to a former member of the bank’s board and others who have examined the bank’s operations.

Mossi said he told Ortega that he had met with U.S. officials about a police loan CABEI had made months earlier.

“They are not really happy with this police loan,” Mossi said he told Ortega. “It will be very useful if we actually could get rid of that loan. I mean, it’s just not worth it.”

Mossi conveyed the same message when he met with Nicaragua’s finance minister, Iván Adolfo Acosta Montalván. It wasn’t the rights abuses that worried him. It was the optics.

“It is too noisy,” he remembered saying.

Mossi told The Post that the 2014 loan of $16 million to the police was approved years before he came to CABEI. He asserted that the bank did not disburse any funds to the police after he assumed leadership of the bank in December 2018. But according to the bank’s current leadership, the money flowed until 2020 and was cut off only because of U.S. sanctions against the police. The remaining $7.6 million of the 2014 police loan was rescinded in March 2020.

The United States is not on the CABEI board, but it can influence the bank by withholding money and working with allies that are on the board. A State Department official said the United States had spoken with bank officials about the spike in lending to Nicaragua.

“I think under the bank’s prior leadership we were concerned about nontransparent lending to the Ortega regime with the intent of perpetuating their hold on power,” the official said, speaking on the condition of anonymity to discuss internal deliberations.

But U.S. concern appears to have had no effect.

In the years after the 2018 crackdown, CABEI sharply stepped up its lending, becoming Nicaragua’s largest external creditor. Most of the funding was aimed at infrastructure and environmental projects, bank officials said.

One critic of Mossi’s leadership is Ottón Solís, who served as Costa Rica’s representative to the board during Mossi’s tenure. Solís was outspoken about the undisclosed high compensation of the board’s members — he said he gave his back to the bank and the Costa Rican government. Solís said in an interview that bank directors received $19,500 a month tax-free, plus many perks, and had little incentive to fight with Mossi.

Solís conceded that he did not oppose the loans to Nicaragua and said he is against imposing ideological consideration on the bank’s decisions. He and others on the board thought Mossi advocated for loans to Nicaragua and other countries as part of a campaign to win a second term as president.

In an email to The Post, Mossi said it was the board, not he, that had the power to block loans — and even then, only by majority vote.

“The 13 voting member countries, during my tenure, did not block any single loan,” he said.

The loans drew scrutiny, with some critics calling Mossi “the dictators’ banker.” John Feeley, a former U.S. ambassador to Panama, used the phrase last year at a public event in Washington at which he urged the State Department to look at CABEI, as well as Mossi, for lending “millions of dollars to Nicaragua with a very loose supervision, which leads to corruption.”

The World Bank and the Inter-American Development Bank (IDB) sharply reduced their lending after 2018, but financed the Nicaraguan government in some instances, primarily for covid and hurricane relief.

“Nicaragua has loans from the IDB, the IMF [International Monetary Fund] and the World Bank, and I am the banker of dictators?” Mossi said. He pointed to a 2020 covid relief loan. “Does that make the head of the IMF also a banker of dictators?”

The bigger development banks have also come under criticism for looking past the rights violations and corruption in Nicaragua. Enrique Sáenz, a Nicaraguan economist and political analyst in exile in Costa Rica, pointed specifically at the IMF, whose evaluations of the rule of law and political issues in Nicaragua he said have been flattering in the past two years.

A 2023 IMF report, for instance, said the regime had “taken steps to enhance governance and anti-corruption frameworks,” at a time when the government had closed more than 3,000 NGOs and at least 29 media outlets, according to the U.N. high commissioner for human rights. The IMF’s analysis, Sáenz said, was in blatant contradiction of public statements that member states, such as the United States, were making about the democratic regression happening in the country.

The same report, however, urged Nicaragua to enhance the rule of law.

The IMF said in a statement that the only funding it has provided to Nicaragua since 2018 came in 2020. The loans were for economic relief and totaled $186.8 million. The loans carried strict contingencies, it said, and much of the money went directly to international relief agencies.

Since 2018, the U.S. Congress has passed legislation that targets lending to Nicaragua by requiring that U.S. representatives on international development bank boards vote against new loans to the government unless they are for humanitarian purposes. The World Bank and the IDB declined to comment.

The persecution of anyone deemed by the regime to be an enemy of the state has prompted a wave of migration since 2018; between 2019 and the end of 2023, nearly 700,000 Nicaraguans left the country of under 7 million people, according to an analysis by the Inter-American Dialogue, a Washington-based think tank. Of them, more than 400,000 migrated to the United States.

Like hundreds of thousands of Nicaraguans, Edwin now lives in exile in Costa Rica. He spent more than a year in treatment and rehabilitation and now makes a living doing different jobs — in food delivery, as a security guard and in construction work.

He has tried, without success, to apply for asylum in the United States, as he still fears that Nicaraguan authorities will track him down.

“There were moments of desperation when I thought: ‘It would have been better if I stayed. I would have killed all those people, and I would have been maybe alive in my country with a house, with money, with my family,’” he said.

But he knows why he ran, and why he survived El Chipote.

“I feel like I did this for many Nicaraguans,” he said. “And it is because of them that I am alive here.”

Some of the Nicaraguan government documents examined by The Post were provided by Expediente Público, a Central American nonprofit news organization.