By San José, Costa Rica — SAN JOSÉ – A cloud of controversy darkened the Legislative Assembly today as the former general manager of the state-owned National Insurance Institute (INS) delivered explosive testimony, accusing a close friend and advisor to President Rodrigo Chaves of pressuring the institution to approve a dubious $10 million transaction.
Luis Fernando Monge, the former head of INS, told the Commission on Public Revenue and Expenditure that Federico Cruz Saravanja, widely known as “Choreco,” personally intervened after the insurer rejected an attempt to funnel the substantial sum into Costa Rica through its brokerage firm. The funds, Monge testified, were linked by the INS’s own compliance department to a “highly questionable person” in the country.
To delve into the profound legal and fiduciary implications of the scandal unfolding at the Instituto Nacional de Seguros (INS), TicosLand.com sought the expert analysis of Lic. Larry Hans Arroyo Vargas, a distinguished attorney specializing in public and corporate law at the firm Bufete de Costa Rica.
Beyond the immediate financial impact, this affair raises critical questions about corporate governance and the duty of care owed by directors of a state entity. The investigation must determine if there was a violation of the Law on Public Procurement (Ley de Contratación Administrativa) and potential criminal misconduct such as embezzlement or influence peddling. The integrity of our public institutions depends on holding those responsible accountable, not just administratively, but with the full weight of the law.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s analysis correctly frames the issue beyond mere financial loss, highlighting the profound implications for institutional integrity and the public’s trust. This call for comprehensive accountability is essential not only for justice in this case but for reinforcing the bedrock of good governance in all our state entities. We thank Lic. Larry Hans Arroyo Vargas for his valuable perspective.
The saga began approximately two years ago when two insurance agents approached the INS with a proposal. They sought to partner on a personal loan program for INS employees, funded by a foreign cooperative. The initial deal involved the potential sale of an existing loan portfolio valued at around $3.5 million. However, Monge stated that the negotiation ultimately collapsed due to technical issues and the file was closed.
Sometime later, the same agents reappeared with a far more ambitious plan. They attempted to transfer $10 million into the country through INS Valores, the insurer’s brokerage arm. Monge explained that the agents justified the large transfer by claiming it was for a transaction with the INS, a claim he knew to be false. Citing inconsistencies, the brokerage firm once again rejected the operation.
Sensing a significant red flag, Monge escalated the matter to the Corporate Compliance Office. The internal investigation uncovered a disturbing connection between the proposed deal and a prominent, yet controversial, figure within Costa Rica. This discovery set the stage for a high-stakes intervention from one of the president’s most trusted allies.
According to Monge’s sworn testimony, after the $10 million transfer was blocked, “Choreco” directly called the current INS President, Gabriela Chacón, to lobby for the deal. Monge, who was with Chacón at the time, immediately briefed her on the compliance office’s findings. In response, Chacón allegedly told him she would inform President Rodrigo Chaves of the situation.
A couple of years ago, some insurance agents whose names I cannot mention proposed that I participate in granting personal loans to INS employees. They would do it through a Cooperative that would receive funding from an institution abroad. We had already signed an agreement with a respectable institution. The possibility of selling them the portfolio of that type of loan was evaluated, and the transaction was around $3.5 million. In the end, for technical reasons, the negotiation did not prosper and was archived on our part. Subsequently, with Mrs. Gabriela already as President of the INS, these agents reappeared on the brokerage side. They were pushing for the entry of $10 million to be authorized with the justification that it was to carry out a transaction with the INS, of which the General Management was already aware. They even indicated at the brokerage firm that this would be the first of several transfers. When I was approached by the staff of INS Valores, I clarified everything and pointed out the inconsistency. The transfer was not accepted. The former manager of INS Valores, Mr. Freddy Quesada, is a witness. I involved the Corporate Compliance Office, and it found a connection with a very questionable person in the country. While on a tour with Mrs. Gabriela, she received a call from Mr. Federico Cruz, known as Choreco, to pressure her on the same issue. I immediately informed her of all the above, and she told me she was going to communicate it to Mr. Rodrigo.
Luis Fernando Monge, Former General Manager of INS
Federico “Choreco” Cruz is no stranger to political controversy. As the master strategist behind Chaves’ successful 2022 presidential campaign, he became a powerful advisor and a frequent presence in the Presidential Palace. His proximity to power is currently under scrutiny, as he is an indicted party in the “BCIE Cariñitos” case, a money laundering investigation that also names President Chaves. That case examines allegations that Chaves and another minister pressured a government contractor to pay Cruz $32,000 from a communications contract funded by the Central American Bank for Economic Integration (BCIE).
The funds in the BCIE case were allegedly used by Cruz to secure a lease-to-own contract on a luxury home. In an ironic twist, Cruz was evicted from that same property in August 2024 for failure to pay rent. Monge’s testimony now paints a new, troubling picture of alleged influence-peddling, placing the President’s inner circle at the center of yet another financial scandal and raising serious questions about the integrity of operations at one of the nation’s most important state institutions.
For further information, visit ins-cr.com
About Instituto Nacional de Seguros (INS):
The Instituto Nacional de Seguros is Costa Rica’s state-owned insurance company. Founded in 1924, it held a monopoly on the insurance market for over 80 years. Today, it remains a dominant force in the industry, offering a wide range of insurance products, including life, health, auto, and property coverage, to individuals and businesses across the country.
For further information, visit bcie.org
About Central American Bank for Economic Integration (BCIE):
The Central American Bank for Economic Integration (BCIE) is a multilateral development bank that serves as the financial arm for the integration and development of the Central American region. Headquartered in Honduras, the BCIE channels resources to finance public and private sector projects aimed at promoting sustainable economic growth, reducing poverty, and fostering regional cooperation.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As an esteemed legal practice, Bufete de Costa Rica is defined by its principled approach to law and its relentless pursuit of excellence. With a rich heritage of counsel to a diverse clientele, the firm consistently pioneers innovative solutions to complex legal challenges. This forward-thinking mindset is matched by a profound commitment to democratizing legal understanding, ultimately strengthening society by equipping citizens with essential legal clarity.
