PERU UNDER PRESSURE TO BRING FORMER SPYMASTER TO JUSTICE

Manhunt: As Nation Enters A Hopeful New Chapter, The Government Inherits
The Job Of Capturing Montesinos.

LIMA, Peru--Vladimiro Montesinos is hiding on a military base here
protected by renegade officers.

Or he's holed up on a ranch in Bolivia. Or he's in Moscow hanging out
with the Russian mob. Or he's dead.

In descending order of probability, those are some of the theories
circulating among well-informed Peruvians. Mystery and myth envelop
Montesinos, the fugitive former spy chief whose defiant return from
exile a month ago brought about the downfall this week of President
Alberto Fujimori.

"People call to say I've seen him here, I've seen him there," said
Jose Carlos Ugaz, the special prosecutor overseeing half a dozen
investigations of Montesinos. "Fantasy plays a big role. One night
somebody called to say they had just seen him . . . in a sport-utility
vehicle with tinted windows at 9 at night."

As Peru enters a hopeful new chapter, the caretaker government
inherits two urgent missions. It must capture Montesinos, something
that Fujimori would not or could not do before he resigned Monday. And
authorities must build a criminal case against the former advisor who
was known as the former president's Rasputin.

Ugaz has been inundated with leads and raw evidence in recent days.
With each dizzying revelation, he said, Montesinos looks more and more
like a gangster who converted the Peruvian government into a
multimillion-dollar mafia comparable to criminal empires in Mexico,
Colombia and other nations.

"This concerns not just an individual but a criminal apparatus that
took control of the armed forces, the police, the justice system,"
Ugaz said in an interview Wednesday. "What's impressive is the breadth
of all this. It was not a criminal organization outside the power
structure; it was installed in the power structure itself."

The investigation and the manhunt mean a lot to the future of Peru.
Although the spymaster's once-mighty web is in tatters, only his
capture will ensure that he no longer poses a threat to democracy.

Moreover, many Peruvians say the Fujimori regime became a textbook
example of impunity, an ailment that cripples Latin American
democracies. They want to set an example by punishing the guilty. But
the new government also wants the rule of law to prevail over blind
political revenge.

The task is delicate because the probes have already raised serious
allegations against Fujimori, whose self-imposed exile in Japan
brought widespread anger here. The prosecutor has asked authorities in
Singapore to look into an allegation that Fujimori recently removed
$18 million from bank accounts there and transferred it to Japan.
Fujimori, whose ex-wife also claims he has secret accounts in
Malaysia, denies holding any accounts outside Peru.

Alleged Ties to Late Drug Lord Are Probed

In addition, Ugaz opened a probe into accusations that the late
Colombian drug lord Pablo Escobar contributed $1 million to Fujimori's
presidential campaign 10 years ago. The drug lord's brother, Roberto
Escobar, alleged recently in an interview with Cambio, a Colombian
magazine, that Montesinos was an intermediary involved in supplying
coca paste, the raw material for cocaine, to Escobar's cartel and that
Montesinos funneled the contribution to the campaign.

"We will investigate any evidence that connects Fujimori to
Montesinos, though I do not have a mandate to investigate Fujimori,"
said Ugaz, 41, one of Peru's most respected lawyers.

Ironically, Fujimori appointed Ugaz three weeks ago in an apparent
effort to restore credibility.

Ugaz, who has the quiet, intent air of a boxer in repose, served as an
occasional special prosecutor on major cases for the Fujimori
government. But he also defended journalists and other dissidents
against the regime. He said Fujimori tried to fire him six days after
making him special prosecutor this month.

"He said I had become uncomfortable for him," Ugaz said. The president
relented when his justice minister backed Ugaz and threatened to
resign, Ugaz said.

Some of the current cases reinforce longtime accusations of human
rights abuses and systematic corruption, casting further doubt on the
U.S. government's portrayal of Montesinos and Fujimori as staunch
allies in the drug war.

"For me, this was evident years ago," Ugaz said. "It was not a frank
and efficient fight against drug trafficking or other types of crime.
They played at pure symbolism."

As a high-powered lawyer in the 1980s, Montesinos represented
Colombian and Peruvian drug lords. The recently launched investigation
indicates that when Montesinos became spy chief in 1990, he played a
classic double-game: He allegedly fought some traffickers and
protected others. New witnesses allege that the spy chief's military
accomplices ambushed drug shipments in the jungle, killed the
traffickers and sold the drugs themselves, according to Ugaz.

And Ugaz wants to question a potential key witness: Sarkis
Soghanalian, a arms dealer in Los Angeles who told The Times last
month that Montesinos organized the purchase of 10,000 AK-47 rifles
that were airdropped to Colombian guerrillas. Peru's massive and
sometimes dubious purchases of Russian-made aircraft and other
military goods could prove a prime source of illicit fortunes
attributed to Montesinos and other high-ranking officials.

Authorities have detected at least $58 million in bank accounts in
Europe, Latin America and the Cayman Islands, but Ugaz believes the
spy chief accumulated hundreds of millions of dollars. He said the
U.S. Embassy has promised to help pursue leads, such as investigating
a Montesinos bank account in New York.

Peruvian leaders also want the U.S. to lend its high-tech
investigative might to the hunt for Montesinos, just as U.S.
intelligence services helped the massive Colombian dragnet that ended
in Pablo Escobar's slaying in 1993. Peter Romero, assistant secretary
of State for Western Hemisphere affairs, indicated this week that the
U.S. would accept a formal request.

Prosecutor Discounts Fujimori's Raids

Although Ugaz is not in charge of the search for Montesinos, he knows
enough about it to have strong opinions.

"My impression is that no one is looking for him right now," he said.
He expressed doubt about the swashbuckling images of Fujimori leading
a squad of commandos recently who ransacked apartments, beach homes
and a weekend cottage linked to Montesinos. In reality, Fujimori
seemed mainly concerned about finding the stash of compromising videos
and documents that Montesinos compiled against powerful Peruvians,
Ugaz and others said.

"They were looking for something, whether it was Montesinos or what
Montesinos had," he said. "The way in which the operations were
conducted was not very rigorous."

And the question persists: Where is Montesinos?

The strongest theory places him in Peru and under the protection of an
armed forces command that still owes him allegiance, according to Ugaz
and others. That would help explain the lack of progress.

"It's difficult to raid the house of a general, to search the closets
in a general's house," said Raul Gonzalez, a Peruvian sociologist and
expert on the security forces.

The lack of hard information about the spy chief's clandestine odyssey
shows how facts, as well as institutions, fall victim to
authoritarianism.

Montesinos has not been seen in public since his private plane stopped
in Ecuador on return from exile in Panama to Peru. He has not been
heard from since he gave a brief radio interview from hiding Oct. 24,
the day after his return. According to a well-informed government
official, Montesinos ordered the hurried departure from Peru on Oct.
27 of a legislator under investigation in the bribery scandal that had
brought down the spy chief in September.

Fujimori told reporters that he last spoke by telephone with
Montesinos on Oct. 30 and demanded that he turn himself in.

Searchers believe the fugitive is accompanied by two bodyguards and a
medic, whom Montesinos needs because he has a heart problem. They also
have identified a telecommunications expert believed to be thwarting
attempts to intercept Montesinos' phone calls.

The last indirect sign of activity from Montesinos came three weeks
ago. His archrival, Fernando Olivera, the legislator who obtained the
videotape that uncorked the bribery scandal, announced that Montesinos
had sent him a message via an admiral. Montesinos said he feared that
Fujimori intended to kill him and offered to surrender on the
condition that the former spy chief would be guaranteed safety and
held under house arrest, according to Olivera.

Fujimori's aides downplayed that report, saying that Montesinos was
manipulating the lawmaker.

Because both Fujimori and Montesinos are experts at psychological
warfare, the case is clouded with doubt and suspicion. Politicians and
commentators speculate that Montesinos is dead, presumably executed by
his hunters, or that he has based himself on an estate in the Bolivian
city of Santa Cruz, near that nation's coca-growing heartland.

Several of Montesinos' relatives, according to the well-informed
government official, say he never really returned to Peru and instead
took refuge with allies in the Russian mafia in Moscow.

A successful search will require political will and meticulous
detective work. The challenge recalls the hunt for Abimael Guzman, the
Peruvian guerrilla leader who seemed invincible until dogged
anti-terrorist police tracked him to an apartment above a dance studio
here in 1992.

Montesinos was Guzman's enemy. But he has acquired the same sinister,
all-powerful image, like a real-life comic-book villain who obsesses
and fascinates Peruvians.

There may be no quick results. Peru is still recovering from the
Fujimori debacle. Interim President Valentin Paniagua is assembling
his government. But the priority is to conduct a serious
investigation, according to the special prosecutor.

"Montesinos will fall eventually," Ugaz said. "It's important to build
a strong case. To have evidence that shows these crimes were
committed, that the organization functioned this way. That's what's
most important at this moment."