-Caveat Lector- http://my.cnn.com/jbcl/cnews/Go?template=nmDet&hd=0&sname=World&sbc_id=26&art_id =6031496&uid=969325436280 Peru Gripped by Reports of Arrest of Spy Chief LIMA (Reuters) - Peru was gripped Monday by conflicting reports about whether its shadowy spy chief and most-feared man had been detained amid a full-scale political crisis that has thrown the South American nation into turmoil. Ana Montesinos, a woman identified by some local media as the sister of intelligence chief Vladimiro Montesinos, filed court papers alleging that her brother was being held illegally at the headquarters of the National Intelligence Service (SIN), the agency he turned into Peru's most notorious institution. Local CPN radio said he had been detained by the military -- stunning if true because Montesinos was believed to have handpicked the top brass and rallied them behind President Alberto Fujimori in his role as the president's key adviser. A bribery scandal involving Montesinos prompted Fujimori, who was elected in a tainted ballot in May, to make the bombshell announcement Saturday that he was disbanding the SIN, calling new elections and would not run again. He gave no timetable for the elections. The government did not officially confirm or deny that the detention had taken place, and some congressmen accused the wily spy chief and the military of playing games to buy themselves time to find a way out of the political crisis. Meanwhile, U.S. officials expressed concern that the Peruvian military may try to disrupt moves toward new elections and opposition leader Alejandro Toledo refused to rule out the possibility of a military coup. Opposition leaders, who have demanded the arrest of Montesinos, called on Fujimori to resign and make good on his promise to hold new elections. For 10 years, Montesinos, a 56-year-old former army captain who only rarely has been seen in public, has been viewed as the power behind Fujimori. Critics alleged that he spied for the Central Intelligence Agency, authorized death squads and colluded with drug traffickers. His downfall was a videotape that showed Montesinos giving $15,000 to an opposition lawmaker in an apparent bribe. FINANCIAL REPERCUSSIONS Opponents were jubilant over Fujimori's announcement but Peru, which is struggling to attract foreign investment, felt the pain as fleeing investors Monday pushed stocks down 5.72 percent, the sol currency down 0.6 percent and Brady bonds down 4 percent. Cesar Carmen Ojeda, the lawyer representing Ana Montesinos, said the woman had requested the release of Vladimiro Montesinos as a preventive measure. But he said he had no confirmation of the arrest. "We continue in absolute mystery," he told cable television Canal N. Ana Montesinos said her brother's detention -- if he has been detained -- was illegitimate because there was no investigation open into allegations he had paid bribes. U.S. officials, who were highly critical of Fujimori's fraud-tarnished re-election, said they were worried that the military may try to disrupt the moves toward fresh elections. "We have every reason to believe that this can be done in a peaceful manner, but that certainly is not 100 percent guaranteed," one U.S. official said in Washington. Toledo, the opposition presidential candidate who boycotted the May runoff election against Fujimori alleging it was skewed against him, urged the president to create a transition government that could hold elections in six months. "The democratic bloc is trying to coordinate actions, but anything could happen, from taking Montesinos into prison, to a military coup, to a resolution that I hope will be peaceful and democratic," he told CNN. OPPOSITION FORCES RALLY Toledo's supporters massed in downtown Lima ahead of what he called a peaceful rally. The last time Toledo led a mass protest, at Fujimori's swearing-in ceremony in July, six people died and Lima's streets became a smoky battleground. Fujimori's allies tried to allay fears that the military would step into any political vacuum. "The president is still in command and leading the armed forces. There is reason to worry about an alternative situation (coup)," said ruling-party Peru 2000 lawmaker Martha Chavez, a Fujimori stalwart. Chavez said the unicameral legislature could pass a law that would allow the new elections to be held in May 2001. "By July 28 we could have a new president," she said. The opposition has said it will not return to Congress to vote to approve an election date until Montesinos is definitely jailed. "If the president has said that it's over, that he will deactivate the intelligence service, he also has to comply with the law and see that criminals are jailed," Lima Mayor Alberto Andrade, a former presidential candidate, told CPN radio. Prime Minister Federico Salas said Sunday night Montesinos was still in Lima and had not been detained. Confirmation of his arrest would be the strongest indication yet of a break between Montesinos and Fujimori, the two men whose strong-arm tactics have given the country one of the region's worst human rights records. Copyright 1999 Reuters.All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
