Vesco in Costa Rica

In the two years since Robert Lee Vesco took control of Investors Overseas Services, the Geneva-based mutual fund empire created by Bernard Cornfeld, he has gone from virtual anonymity to worldwide notoriety. Last week he was indicted in the U.S. for conspiracy and obstruction of justice in connection with an unreported $200,000 donation he made to President Nixon's re-election campaign. Vesco, 37, is also the chief target of one of the largest security-fraud suits ever brought by the U.S. Securities and Exchange Commission. Investigations of his activities have forced him to move his operations outside the regulatory reach of one country after another, from Switzerland, through France to the Bahamas. Now Vesco is trying to gain a beachhead for his operations in tiny Costa Rica and, as usual, his efforts are making waves.

Vesco's biggest problem is his increasingly tarnished reputation. Though he denies any wrongdoing, the SEC charges that he and his associates looted $224 million from four I.O.S.-managed funds, selling off gilt-edged stocks and stashing the money in various banks and dummy firms controlled by him or his associates. The commission's case to halt further alleged plundering of the funds is now before the courts.

Costa Rica has the potential of becoming a kind of financial Shangri-La for Vesco, and he has taken pains to win over some of the country's most powerful politicians. According to the SEC, one of the I.O.S. funds, IIT, has made an unsecured loan of $2,150,000 to Sociedad Agricola y Industrial San Cristobal, a firm founded and still partly owned by Costa Rican President Jose ("Don Pepe") Figueres. Says Figueres: "Vesco's investments here are very secure and creative. I can't understand the fuss." I.O.S.'s Fund of Funds allegedly plowed about $60 million into Interamerican Capital, a Costa Rican investment firm that could well serve as a vehicle in securing for Vesco a firm financial foothold in the country. For a time, Alberto Inocente Alvarez, a Figueres confidant, headed the company.

Local businessmen view Vesco's bulging money bags with a nervous ambivalence--as both a promise of much-needed investments and a threat to their control of local enterprises. Lately, Vesco's name has been linked with almost every sizable business deal in the country. Despite Vesco's denials, rumors persist that through various fronts he has bought a gas station network from Gulf Oil Corp., a big piece of San Jose's Royal Dutch Hotel, the El Molina coffee plantation, and a share of the anti-Figueres newspaper, La Nacion. There even are wild rumors that he has linked up with the ultimate business recluse, Howard Hughes. Until the Costa Rican Congress turned thumbs down, Vesco's attempt to set up an international free zone in the country drew an angry public outcry. The plan called for a financial district that would enact its own laws and regulate all banks and trusts in its area. Critics charged that the zone would become a pirates' sanctuary and attract shady operators from all over the world. Figueres' congressional opponents have been loudly castigating him for his close ties to Vesco, hoping to make the American financier's scandal-smirched background a political issue in the presidential election next February.

Meanwhile, Vesco goes on establishing himself in Costa Rica. Crateloads of furniture have arrived in San Jose from I.O.S. offices in France. Vesco has been granted a provisional Costa Rican passport and, according to Figueres, he intends to renounce U.S. citizenship. He has rented a chalet in a wooded area on the outskirts of San Jose and parks his private plane --a Boeing 707--at the San Jose airport. Yet for Vesco, the relentlessly ambitious son of a Detroit auto worker, San Jose, with no stock market and less than a dozen banks, is a pale substitute for Wall Street and other centers of financial power. As Vesco's problems pile up in the U.S., even this haven is none too snug. The opposition National Unification Party has already pledged that if it wins in February, Vesco's ouster from the country will be its first order of business.

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