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Corruption Network in Guatemalan Health System Exposed

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Corruption network of 17 arrested in connection with Guatemalan health system scandal

Guatemalan authorities arrested 17 people, including the head of the Guatemalan Central bank, on Wednesday in an ongoing investigation into fraud at the Instituto Guatemalteco de Seguridad Social (IGSS—Guatemalan Institute of Social Security) that resulted in the deaths of at least five kidney failure patients.

In December 2014, IGSS changed its supplier of kidney dialysis treatment from Baxter to PISA, a Mexican firm, awarding it a 116 million quetzal contract ($15.67 million). This was to provide dialysis for 530 patients. However, CICIG wiretaps revealed that IGSS employees, businessmen and the head of the Bank of Guatemala stood to make 15-16 percent of the contract in kickbacks.

The Procuraduría de Derechos Humanos (PDH—Human Rights Ombudsman) received a number of complaints this year about the treatment, including a lack of personnel and poor facilities. Since December, a number of patients have died, while others have contracted peritonitis, an inflammation of the abdomen. On May 15, IGSS revoked the contract with PISA, citing "deficiencies in the educational plan" of patients and announced there would be a new tender for the service.

Ramiro Lorenzana, a doctor and spokesman for PISA, responded to complaints in an interview with Nomada.gt, saying, “Patients are already in a terminal phase of the disease. Anything that happens today is down to them experiencing a failure of their kidneys. I insist they will die sooner or later.”

The 17 suspects arrested in connection with the scandal have been charged with an array of offenses, including fraud, bribery, conspiracy, influence peddling, illegal collection of fees, illicit association, and insider trading. Depending on investigations to be carried out by the Ministerio Público (Public Ministry—MP), further charges of culpable homicide in the deaths of at least seven patients could be filed.

"We found documentary evidence that members of the board [...] were committing the crime of fraud, due to the board unanimously approving the bid, "said Iván Velásquez, head of the Comisión Internacional contra la Impunidad en Guatemala (CICIG—International Commission against Impunity in Guatemala).

Julio Roberto Suárez Guerra, the president of the Bank of Guatemala, is among those facing charges of fraud. Other notable captures include Otto Fernando Molina Stalling, son of Supreme Court Judge (CSJ) Blanca Stalling—whose sister-in-law, Marta Sierra Stalling, is currently being investigated for her role in a bribes-for-bail scandal. Max Schoeder, the private sector go-between with IGSS, was an Air Force reserve during Guatemala’s civil war and was linked to bombing raids on Indigenous civilians in the 1980s.

Another suspect, IGSS’ board chairman Juan de Dios Rodríguez, was captured in a private hospital in Zone 13 of Guatemala City. Dios Rodríguez is a lawyer and retired Colonel, who was appointed as private secretary to Guatemalan president Otto Pérez Molina when he assumed power in January 2012. A year later, he was made the chairman of IGSS.

Dios Rodríguez will stay in the hospital until he is examined by a team of independent medical personnel.  He was admitted to Hospital Maranatha on Tuesday evening, suffering from depression, anxiety, a peptic ulcer, gastric reflux, and diabetes. 

The case is expected to continue with the first hearings on Friday, chaired by Judge Silvia Violeta de León Santos of the Sixth Court of First Penal Instance. In a CICIG report from November 2012, the judge was one of 18 judges flagged for investigation for decisions that favored criminal networks, according to Francisco Dall'Anese, CICIG commissioner at the time. In 2013, CICIG asked for immunity against the judges to be revoked, but the CSJ denied every request.

Carmen Aida Ibarra of the civil society organization Movimiento Pro Justicia (Pro-Justice Movement) claimed that the defrauding of IGSS went further, with Dios Rodríguez using cash from the organization to influence election results. Nominating committees for the attorney general, comptroller and judicial appointments were allegedly compromised.

Guatemala City was the scene of yet more protests on Wednesday as President Otto Pérez Molina faced continued calls for his resignation. Thousands of farmers marched on the capital to protest poor public services, the appointment of a controversial new vice president, Alejandro Maldonado, and an appeal for compensation for those families affected by a confrontation with soldiers in Totonicapán in October 2012 which left seven dead.

At a news conference, Pérez Molina brushed calls for his resignation aside. "I put my trust in all of these people, but that does not mean that I become responsible for what they did (the charges the suspects face and patient deaths); they have defrauded the trust,” said Pérez Molina. “I am the first to regret this situation and if they are responsible they should be brought to justice and convicted."

However, following the Caso SAT customs fraud scandal and now IGSS, Pérez Molina is facing increasing pressure. How untenable a position must Pérez Molina occupy before it is too untenable? At the very least, the last seven months of his presidency should be spent cleaning up Guatemala’s public services and putting systems into place so that history will not repeat itself.

More protests are set for this weekend and the next, heaping further pressure on the president to resign. Many worry that civic action could either turn violent or be violently repressed. No matter which party wins the election this fall, Guatemalans have lost patience with corruption and the pillaging of public funds.

*Nic Wirtz is a freelance journalist who has lived in Guatemala for the last six years. His work has been featured on the Christian Science Monitor and GlobalPost, and he is editor for the website Vozz.

Any opinions expressed in this piece do not necessarily reflect those of Americas Quarterly or its publishers.
Tags: Guatemala, Comisión Internacional Contra la Impunidad en Guatemala

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