Peru's ex-spychief talks surrender terms from hiding

LIMA, Peru (Reuters) -- The fugitive ex-spy chief who sparked Peru's two-month-old political crisis is desperately trying to negotiate surrender on his terms, politicians said on Wednesday as new charges emerged of millionaire bank accounts.

Vladimiro Montesinos, who has been in hiding since defying President Alberto Fujimori and flying home two weeks ago from a failed asylum in Panama, is officially wanted on charges of corruption, money laundering and ordering murder, and some $48 million in Swiss bank accounts linked to him has been frozen.

"A senior military chief sent a trusted emissary ... to express Montesinos' concerns that his life might be at risk because of all the information he has," Luis Iberico of the Independent Moralizing Front (FIM) told Congress on Wednesday as the whereabouts of Peru's "Rasputin" gripped the nation.

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"He wants certain conditions, such as house arrest," Iberico told a debate. It was the FIM party which made public a video in September showing Montesinos apparently bribing an opposition lawmaker that prompted Fujimori to announce he would quit next July after elections in April, four years early.

Iberico's remarks were echoed by a senior political source, who told Reuters: "Montesinos is trapped, he's negotiating."

"They (Montesinos and Fujimori) are both terrified," the source said. "Fujimori thinks Montesinos is going to kill him. Montesinos thinks Fujimori is going to kill him ... I believe it might happen. It's like the mafia," the source said.

Fujimori has led a spectacular yet fruitless manhunt for Montesinos and admitted he feels frustrated. "He doesn't want to stay in office until July," the source said.

Politicians and analysts allege Montesinos silenced opponents, approved torture and murder and skimmed profits off the illicit drugs trade from the helm of the SIN intelligence agency which made him the power behind Fujimori's throne for 10 years.

His return sparked a bitter power struggle with Fujimori. Although the president has changed a military top brass seen as being at Montesinos' beck and call, and Montesinos cronies in the judiciary have been swept out, the ex-spy chief reportedly has heaps of incriminating evidence on top figures in Peru.

"He's still very powerful," the source said. "The police are the only ones whose structure has been purged."

Police seized some 40 crates of videos and documents from the home of Montesinos' estranged wife, Trinidad Becerra, as part of the official probe into Peru's new most wanted man sparked by news of the millionaire Swiss bank accounts.

Fujimori has said the cash they contain is illicit.

Jorge del Castillo, of the opposition APRA party, told Congress there were more. "At the moment I only have proof of one but there are at least 10," he told Congress, adding the account was in the Banco Wiese International (WIE.LM)(BWP.N) and contained some $3.7 million.

Peru's political crisis has sent an already troubled economy into a tailspin. International ratings agency Fitch warned it might cut Peru's debt ratings as uncertainty grew.

Protesters hurled hundreds of black garbage bags with mugshots of Fujimori and Montesinos over the gate of Economy Minister Carlos Bolona's house on Wednesday. Bolona, reportedly close to Montesinos, has denied being privy to a military plot to oust Fujimori and install him in his stead.

But in a positive step, the government restored Peruvian citizenship to Israeli-born media mogul Baruch Ivcher, who was stripped of it in 1997 amid wide criticism after his television reported murder, torture and phone taps by the SIN.

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