Peru judge orders GE's Immelt, Jack Welch arrest

LIMA, Peru: General Electric Co.'s chief executive officer, Jeff Immelt, and his

predecessor, Jack Welch, have been ordered by a Peruvian judge to be arrested on fraud charges brought by a former distributor, according to court papers released on Tuesday by their accuser.

Guillermo Gonzales, who distributed GE goods between 1992 and 1998, told a news conference that he brought the suit against 26 serving and past GE executives over investments he said he was induced to make despite what he said was a secret plan to drive out local distributors.

"They said they were going to renew (my contract); they asked me to buy (a building) ... they were tricking me," Gonzales said.

The court confirmed last Friday that it had ordered the arrests of GE executives, but it did not name them. The United States has an extradition treaty with Peru, but GE has said it would strenuously defend itself and Immelt, Welch and the other executives are under no immediate threat of arrest pending appeals of the arrest order. GE's lawyer in Peru could not immediately be reached for comment.

Gonzales' case against some of the most powerful names in corporate America hinges on his claim that he invested more than $10 million in Peru under rolling two-year contracts while GE was all the while planning to cut him out in favor of extending its alliance with Mexico's Controladora MABE.

The fraud charges carry a maximum six year sentence.

A GE spokeswoman for Latin America, who is based in Mexico, had no immediate comment on Gonzales' allegations.

The company said last week, when the court order against unnamed GE executives came to light, that Gonzales had lost "multiple cases in the United States and Peru and all his claims have been found to be baseless. This matter has already been decided in our favor three times."

Gonzales said GE had won a case in 2002 in Kentucky upholding its right to terminate his contract. It was unclear why the case had been brought in that state of Kentucky.

But he said documents that surfaced during that trial showed the company had been working on plans to end deals with independent distributors in the region. The company denied any such plans at the Kentucky trial.

Among documents released by Gonzales at Tuesday's news conference was a May 1998 letter referring to plans in South America to "extend the MABE joint venture beyond Mexico." Gonzales' contract was terminated in October that year.

A MABE document from 1994 highlighted plans to "develop a plan to enter Peru and Bolivia" and a GE document from the same year cited a goal of "setting up a manufacturing and distribution joint venture with MABE" in South America.

Gonzales also provided a letter from GE supporting his application for a bank loan to buy the headquarters building, and a June 1998 letter saying his firm was Peru's only authorized GE Appliances distributor. He said the headquarters was inaugurated in September 1997.

He said GE had also asked him to set up an assembly plant, for which he rented a building in November 1997.