Peru Judge Orders 23 GE Execs Arrested for Fraud

A Peruvian judge has ordered the arrest of 23 current and former General Electric Co. (GE) executives on fraud charges in a case brought by a former sales representative, a court spokesman and the defendant's lawyer said Friday.

El Comercio newspaper said former General Electric CEO Jack Welch (search) was among those named in the case.

The fraud charges stem from a suit brought by Guillermo Gonzales (search), a sales representative for the company from 1991 to 1998. Gonzales said he invested $10 million in a GE Peru headquarters and assembly plant after a verbal promise from the company to renew his contract. He said the contract was terminated despite the agreement.

No one was immediately available to comment at General Electric's Peru office and the Fairfield, Conn., headquarters of the industrial, financial and entertainment conglomerate declined immediate comment.

General Electric International Peru (search) took out an advertisement in newspapers Friday expressing outrage at the arrest order against the 23 managers, who it did not identify.

"GE expresses its indignation and most vigorous rejection of the opening of a case plus an international arrest order and embargo against the executives since this is a flagrant violation of their right to individual liberty," it said.

The advertisement said arrest orders were issued for 19 Americans, two Chileans and two Brazilians.

A Peruvian court spokesman confirmed Judge Cesar Herrera had ordered the arrests of the GE officials.

"There is a case open and the executives will have to come to testify ... the sentence for fraud can be up to six years in jail," Gonzales lawyer, Victor Cubas, said.

General Electric, the world's second-biggest company by market capitalization, has sued Gonzales in the United States "for nonpayment of a debt that he does not deny," Cubas told Reuters.

According to media reports, the debt was for just under $215,000. Cubas said his client countersued the 25 managers for fraud.