PERUVIAN PANEL FINDS WEB OF CORRUPTION

Ex-Spy Chief Ran A `Narco State,' It Says

LIMA, Peru -- Fugitive former spy chief Vladimiro Montesinos and more
than 200 of his cronies turned Peru into a ``sort of narco state,'' a
congressional commission has concluded.

In its final report, excerpts of which were released late Friday, the
panel said ``networks of support for this illicit activity were set
up, using the concentration of information that Montesinos had'' about
local and international drug figures.

The report accused 222 people -- including military chiefs, business
leaders and politicians -- with being implicated in Montesinos'
network. The panel said Montesinos, who for more than a decade was the
right-hand man of disgraced former President Alberto Fujimori, should
face charges of treason.

The state attorney investigating Montesinos' alleged web of corruption
said Friday that more than $200 million had now been frozen in bank
accounts linked to Montesinos.

The commission also accused the current head of the armed forces, Gen.
Miguel Medina, of falsifying information relating to a purchase of
Russian MiG jets. Medina has denied wrongdoing.

Completing seven months of work, the commission members said they
still had more leads to chase but their work officially ended with the
close of the legislature Friday. The head of the panel, David Waisman,
said he wanted to continue in the new Congress set to be sworn in July
27.

``We have lived in a mafia-like system,'' one of the commission
members, Anel Townsend, told RPP radio Saturday.

La Republica newspaper reported last week that the commission's report
said Montesinos had run his own cocaine laboratory, but there appeared
to be no mention of that in the report summary handed to the media.

Waisman said some of the panel's findings were top secret and could
not be released ``for national security reasons.''

Official figures show a significant drop in drug production since Peru
handed the mantle of world cocaine capital to neighboring Colombia in
1998.

In March, in its annual report on global narcotics production and
trafficking, the United States said eradication efforts had led to a
dramatic reduction of drugs in Peru.

Peru, Colombia and Mexico are among the countries that have met the
criteria to be ``certified'' as helping Washington stem the flow of
illegal drugs.

Montesinos, last heard of in Venezuela -- where he is believed to have
changed his appearance with plastic surgery -- is on the run from
charges ranging from stealing state funds to taking kickbacks from
illegal drugs and arms deals to running death squads and ordering the
torture of opponents.

Fujimori fell from power in November amid a government corruption
scandal sparked by a video showing Montesinos apparently bribing a
congressman. The spy chief was later also revealed to have manipulated
Peru's courts, media and military. Fujimori is in self-exile in Japan.