Uruguay minister quits in Pluna scandal

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Uruguay's economy minister Fernando Lorenzo has resigned ahead of his court appearance in the trial over the bankruptcy of Montevideo-based airline Pluna.

The trial at the Montevideo Court for Organised Crime, which has has seen in recent days crucial advances with the public prosecutor asking to imprison the former chief executive and chief financial officer of the carrier under the accusation of massive fraud, is investigating to what extent the support of the Uruguayan state may have been illegal and instrumental to the illicit enrichment of the private owners.

One of the principal accusations against Lorenzo was his direct intervention to deliberately appoint pro-Pluna members to the Uruguayan Pro-Competition Comission (CPDC) to resolve an accusation of predatory pricing filed in 2010 by Pluna against its local competitor BQB Lineas Aereas,which was a small startup carrier at that time.

According to the accusation, Lorenzo appointed the commission for this case personally, although the law states that the CPDC can only by composed by members with a parliamentary mandate. One of the decisive members of the commission happened to be Javier Gomensoro, a Pluna board director who represented the state shareholding in the airline.

While Lorenzo admitted "errors", he rejected accusations of favouring Pluna over its competitors. "However, I will assume the political consequences of what happened," he said during the announcement of his resignation.

Pluna entered bankruptcy in June 2012. The Uruguayan state maintained a minority stake in the airline sold to Leadgate in 2007 and guaranteed financially the acquisition of seven Bombardier CRJ900 jets. The state was forced to take full ownership of the aircraft after Pluna's grounding, producing a significant loss for the public coffers as the government has failed to sell the aircraft in several tenders held in 2012.