MANAGUA (Reuters) - Nicaragua received "suitcases full of cash" from Venezuela that may have helped to sway tainted elections in 2008, according to U.S. diplomatic cables that throw light on Nicaragua's increasingly authoritarian leader Daniel Ortega.
An ally of Venezuela's socialist President Hugo Chavez, Ortega is accused by opposition lawmakers and rights groups of trying to turn Nicaragua into a Cuban-style dictatorship, which he denies.
"We have first-hand reports that (Nicaraguan) officials receive suitcases full of cash from Venezuelan officials during official trips to Caracas," the U.S. Embassy in Managua said in a 2008 cable made public by Wikileaks that appeared online in Spain's El Pais on Monday.
"Multiple contacts have told us that (Nicaraguan President) Daniel Ortega uses Venezuelan oil cash to fund the (ruling party) municipal election campaigns. Several unconfirmed reports indicate that Ortega will have as much as $500 million at his disposal over the course of 2008," it added.
The cables were written several months before the November 2008 municipal elections. Ortega, a former guerrilla leader whose Sandinista rebels fought U.S.-backed government forces in a 1980s civil war, faced widespread fraud allegations in those polls when the Sandinistas won big victories.
Neither the Nicaraguan nor the Venezuelan government were immediately available for comment.
Ortega, who took office in January 2007, is seeking to run for re-election in 2011 despite a ban on running again, which he appears to have been able to overturn in the Supreme Court as he consolidates power over Nicaraguan institutions.
Rights groups and independent political analysts worry the 2008 elections set an ugly precedent and that Ortega's efforts are a threat to democracy in Nicaragua, still emblematic internationally for its 1979 leftist revolution that overthrew a corrupt dictatorship.
Signs that Chavez is aiding Ortega in trying to suppress democracy in Nicaragua could also be damaging for the Venezuelan leader, who faces a rejuvenated opposition in 2012 elections.
Writing by Robin Emmott in Monterrey, editing by Philip Barbara