Bolivia's flag carrier Lloyd Aereo Boliviano (LAB) faces a financial crisis amid a scandal that could be a soap opera if it were not so serious.

When Wagner Canhedo, owner of Brazil's Vasp, sold his half interest in LAB to Bolivian businessman Ernesto Asbun in late 2001, it appeared that Asbun had a secret Bolivian partner financing part or all of the purchase.

That partner, Raúl Garafulic Gutiérrez, heads a local pension fund and now claims in a lawsuit that he personally owns the shares bought through his pension fund, that Asbun was simply a figurehead in the deal and should now step aside. Asbun responds that Garafulic broke the law by using pension funds for personal gain and should be prosecuted. The widely publicised scandal has prompted Bolivian lawmakers to launch their own inquiry into the events surrounding LAB's purchase.

Garafulic claims he has been compelled to go public because he alleges that Asbun is mismanaging LAB. According to unofficial sources, LAB's total $60 million debt soared by $40 million after Asbun took charge. Bolivia's government says it is prepared to cover amounts LAB owes local airport operators, but only in exchange for shares.

Source: Airline Business