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Customs Fraud Sparks Guatemalan Protests

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Guatemala’s corruption investigation threatens Partido Patriota’s election chances.
Political corruption in Guatemala is at a crossroads.

Tens of thousands of Guatemalans protested last Saturday, calling for the resignation of Vice President Roxana Baldetti for her alleged role in Caso SAT, a scandal involving the defrauding of hundreds of millions of quetzales from the Guatemalan government.

On April 16, Guatemalan authorities arrested 22 people in the culmination of an eight month investigation by the Fiscalía Especial contra la Impunidad (Special Anti-Impunity Prosecutor’s Bureau—FECI)—part of the Comisión Internacional contra la Impunidad en Guatemala (International Commission against Impunity in Guatemala—CICIG) and the Ministerio Publico (Public Ministry—MP).  A number of officials from the Superintendencia de Administración Tributaria (SAT), Guatemala’s tax collection agency, were detained, including the head of SAT, Omar Franco, his predecessor, Carlos Muñoz, and the private secretary of Baldetti, Juan Carlos Monzón. 

CICIG was investigating an alleged corruption network called “La Linea” (The Line) that targeted Guatemala’s customs system. Businesses that had their goods in two ports, Puerto Quetzal or Puerto Santo Tomás, would call a certain cellphone number to negotiate the rate to have their property released after passing through Customs.  A review of 500 containers revealed that 40 percent of customs taxes would be paid to the state, 30 percent to the fraudsters and the remaining 30 percent was a discount to the company.

CICIG Commissioner Ivan Velásquez explained that telephone interceptions of lower-ranking members within SAT opened the case to further scrutiny.  Those investigations revealed a middle management group of employees that were charged with ensuring that the payment and processes appeared legal.  At the top of the structure were two bodies, external to SAT.  One was responsible for identifying employees that could be integrated into the network.  The other was charged with ensuring that Franco was named the next SAT superintendent after Muñoz was relieved of duty for failing to hit collection targets.

Officials have estimated that Guatemala lost between 800 and 900 million quetzales ($103 to $116 million) due to La Linea, and now face the tough task of restoring faith in the tax collection system.  Those at the top of La Linea’s chain reportedly received 40 million quetzales ($5.16 million) a year, those in the middle tier received 15 to 20 million quetzales ($1.93 to $2.58 million), and at the bottom, “no less than 330,000 quetzales” ($42,500), according to court statements.

Nonetheless, Eighth Court judge Marta Sierra de Stalling released two of the main defendants, Salvador Eduardo González—president of Siglo XXI, a Guatemalan national newspaper—and Francisco Javier Ortíz Arriaga, who was caught up in a similar case in the 1990s and bragged of his 18 years of smuggling experience in wiretaps.  González, along with Monzón, were allegedly the leaders of the network, responsible for ensuring that the payments looked legitimate.  Ortíz was allegedly the liaison between the leaders and the rest of the network, charged with ensuring that employees loyal to them were placed in important positions in SAT.

The judge claimed the State did not provide enough proof that González nor Ortíz, who were not SAT employees, were part of network.  Stalling placed González and Ortíz under house arrest instead—meaning that they are unable to communicate with other defendants, but still have ample opportunity to destroy incriminating evidence. Giving bail to Ortíz is particularly surprising, given his links to previous corruption networks.

“For me, this process is not for an ordinary court,” said Stalling, who declared the case outside her jurisdiction.  “A case of this magnitude should be transferred to the Alto Riesgo (High Impact) court.”  This has not yet happened, however.

Meanwhile, Interpol is searching for Baldetti’s secretary, Monzón, who is rumored to have escaped abroad—although his lawyer suggests he could be in Guatemala. A former soldier who was discharged from the army after being repeatedly sanctioned for disobedience, misconduct, and other offenses, Monzón was also connected to a ring of car thieves, earning him the nickname “Robacarros” (Car-Robber) Monzón. Ana Lucía Alejos Botrán, a lawyer acting on behalf of Monzón, presented cause to have farms owned by Baldetti searched.

Given the high-profile suspects involved, Guatemalan protesters haven’t held back in decrying the scandal, staging demonstrations in Guatemala City’s Plaza Central in front of the Presidential Palace, as well as in Huehuetenango, San Marcos, Alta Verapaz, Quetzaltenango, and abroad.  On Saturday in Guatemala City, protesters expressed a common sentiment: “nos robaron tanto que nos robaron el miedo”—“they’ve robbed so much that they’ve robbed our fear.”  The protest was organized on social media by a group of eight friends who wish to remain anonymous, but it quickly drew broad support from Guatemalans who wanted to show their support of an anti-corruption message

In a statement, the organizers explained, “there are no political or ideological affiliations, no speeches or performances.  Only Guatemalans who are tired of unscrupulous politicians who govern us.  We are a group of friends who decided [...] to show our disgust and invited our friends to join.  Show your disagreement and that we’re not asleep!

Although over 35,000 people confirmed their attendance prior to Saturday’s protest, estimates of actual turnout range from 8,000 to 30,000 people, with 15,000 being the officially accepted figure for the demonstration in Guatemala City.

Caso SAT has brought to light immense political and structural problems in Guatemala and has undermined the credibility of an already struggling government.  President Otto Pérez Molina and Vice President Baldetti  now face intensified scrutiny, whether they were aware of the misdeeds allegedly carried out by people they had appointed to high-level positions or not.  Independent journalists in Guatemala have even attempted to link Pérez Molina’s military intelligence background with the SAT fraud.

The ripple effects of this investigation cannot be overstated.  Along with the 2014 investigation into Byron Lima and the criminal network in Guatemala’s jails, this is exactly the type of case CICIG was brought into the country to assist Guatemala’s judiciary with: hidden structures that have stolen billions of dollars from the country for decades.  Pérez Molina has earned praise for asking for a two-year extension of CICIG’s mandate in Guatemala, but once he and Baldetti lose immunity in January 2016, they may find themselves under investigation.

Undoubtedly, the Partido Patriota (Patriotic Party—PP), which was founded by Pérez Molina, goes into September’s election as the poisoned chalice of Guatemalan politics.  Alejandro Sinibaldi, the party’s former presidential candidate, chose to leave the party on April 19, and was followed by an exodus of mayoral hopefuls and congressmen.  Sinibaldi cited CasoSAT and his deteriorating relationship with Baldetti as reasons for his departure.  It’s highly likely that others will follow Sinibaldi, leaving PP on the verge of imploding.  It could become the first political party in Guatemalan history to win one election but not contest the next.

With more protests planned for May 16, a contrite president admitting that the public’s voice had been heard and changes will be made, and Baldetti facing five impeachment attempts and avoiding public appearances, there is a measure of hope in Guatemalan politics.  A system that has, for decades, served to illegally enrich corrupt officials now stands at a crossroads, with the opportunity for legitimate change reinforced by an election in four months.

*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, CasoSAT, corruption, Roxana Baldetti

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