BANK SCANDAL EMBROILS ARGENTINA

BUENOS AIRES, Feb. 13 -- The Argentine government struggled today to
contain a money-laundering scandal involving allegations that Central Bank
President Pedro Pou covered up evidence of illicit cash being moved through
local and foreign banks here.

The administration of President Fernando de la Rua announced creation of a
new government body to stamp out such practices, a move that came one day
after the government promised an investigation of the banking system. That
was prompted by the assertions of two influential legislators that Central
Bank documents show Pou tried to hide from Congress information on illegal
transactions.

But the announcement failed to quell a growing clamor among leading members
of Congress and other politicians for Pou's immediate ouster and for a
broader government investigation into allegations that money laundering was
carried out on a massive scale here during the 1990s.

Pou was traveling today and could not be reached for comment. In statements
to authorities on Monday, however, he issued a challenge to the government
to "investigate my conduct and determine whether I am guilty of the crime
of not complying with the duties of a public official."

The scandal erupted last week after a minority report by a U.S. Senate
subcommittee on money-laundering traced a trail of drug money through U.S.
banking giant Citibank back to Mercado Abierto Bank, an Argentine
institution. It also said that Citibank did not rigorously monitor its
relationship with a second Argentine bank, Banco Republica, which collapsed
in 1999. Banco Republica was headed by a close associate of former
president Carlos Menem, who appointed Pou to head the Central Bank in 1996.

"This is a national disgrace and something that our government must move
quickly to alter," Carrio said in an interview today. She and other
legislators are calling for creation of a special congressional commission
to investigate Pou and allegations that as much as $10 billion was
laundered through Buenos Aires when banking laws were relaxed during
Menem's free-market reform drive of the 1990s.

The Senate subcommittee report and ensuing allegations involving Pou have
escalated into a major political crisis here -- and a test for de la Rua's
13-month-old administration. Although the government has said it would move
for Pou's dismissal if an investigation proved he had prior knowledge of
money laundering, government spokesmen have also cautioned against a rush
to judgment.

Analysts say the measured response from the de la Rua administration --
which has tried to portray itself as tough on corruption -- stems from
fears that Pou's removal could further weaken investor confidence in the
Argentine economy, which is struggling to emerge from a two-year recession.

"This is tough for the government. There is enough information out there to
warrant strong doubts about Pou, but [the government] wants to avoid the
risk of provoking another financial crisis by removing the Central Bank
president at a difficult time for the economy," said Horacio Verbitsky, a
Buenos Aires-based political analyst.

Indeed, while Justice Minister Jorge de la Rua, the president's brother,
began organizing a team of banking and law enforcement officials to root
out money laundering, he also tried to play down claims that Argentina is a
hub for dirty cash. "The nation has not become a haven" for drug money, he
said.