Major Odebrecht Corruption Cases and Investigations in 2019

Since beginning in Brazil with the “Operation Car Wash” (“Operação Lava Jato”) investigation in 2014, the Odebrecht corruption scandal has been headline news across Latin America. Presidents, lawmakers, and business tycoons alike have been charged and jailed across the region. Here, InSight Crime presents a round-up of investigations or trials against prominent figures in Latin America and the Caribbean. Mexico: Mexico has shown a lethargic approach to the Odebrecht scandal. The only high-profile name being investigated for the largest corruption scandal to rock Latin America is Emilio Lozoya Austin. The former president of the state-owned oil company Petróleos Mexicanos (Pemex), who served under former President Enrique Peña Nieto, is accused of conducting a corruption scheme that involved ghost companies between 2012 and 2016. In addition, Mexican prosecutors believe that Austin used the hefty bribes received from Odebrecht to fund the electoral campaigns of the Institutional Revolutionary Party (Partido Revolucionario Institucional – PRI), including that of Peña Nieto. Many in Mexico believe that the lack of accountability and prosecution by the federal government was a way for the former and current administration to protect those who were involved with Odebrecht.  In a country known for its high levels of impunity, it remains to be seen if this case will eventually lead to more far-reaching investigations. In February, President Andrés Manuel López Obrador vowed that the investigation into Odebrecht would continue, which may see more inquiries begin soon. Dominican Republic: Preliminary Odebrecht hearings have dominated news headlines in the Dominican Republic in recent weeks. Known for its entrenched corruption, the Caribbean nation is currently investigating seven people that reportedly received more than $92 million in bribes from the Brazilian construction giant. Two names that stand out from the investigation are current Senator Tommy Galán and former Public Works Minister Víctor Díaz Rúa. Both men are members of the Dominican Liberation Party (Partido de la Liberación Dominicana – PLD), which is gearing up for the 2020 presidential election.  A guilty conviction could potentially tarnish the image of the party and hamper its chances at retaining power as the current president, Danilo Medina, is also a member of the PLD. El Salvador: Former president Mauricio Funes is being investigated for allegedly embezzling $351 million. Odebrecht is suspected of paying out between $1-3 million to Funes during 2009 presidential campaign. Funes, who was president from 2009 to 2014, is also under judicial investigation for reportedly paying off deputies in order to obtain favorable votes in the Legislative Assembly during his presidency. The ex-president has four arrest warrants out against him for corruption cases. He is now residing in Nicaragua protected by political asylum granted by President Daniel Ortega. However, the spokesperson of newly-elected president Nayib Bukele announced that the government will begin talks with Nicaragua to demand Funes’ deportation. Guatemala: Guatemala’s current investigation into Odebrecht is centered on the former minister of infrastructure, and current fugitive, Alejandro Sinibaldi. The Attorney General’s Office and the International Commission Against Impunity in Guatemala (Comisión Internacional Contra la Impunidad en Guatemala – CICIG) claim that Sinibaldi led a criminal structure within the Communications Ministry. Sinibaldi is currently under an Interpol search warrant and an additional eight people with close ties to him are being sought by authorities, including his brothers, Alvaro and Luis Rodrigo Sinibaldi. Another key figure being investigated in Guatemala is former presidential candidate Manuel Baldizón, who was arrested in the United States in January 2018. Baldizón is accused of allegedly receiving bribes from Odebrecht officials to help them with public works contracts in the Central American nation. After a failed attempt to seek asylum in the United States, Baldizón decided to withdraw his request and is now pending extradition to Guatemala. A constitutional crisis has unfolded in Guatemala after President Jimmy Morales decided to ban the CICIG from the country, a move that has been met with public and international backlash. As a result of the absence of the CICIG, the latest hearing against Sinibaldi and Baldizón was suspended and rescheduled for February 27, 2019. It remains to be seen what impact the ongoing crisis with the CICIG will have on the future of the case.

SEE ALSO: Coverage of Money Laundering

Panama: Former President Ricardo Martinelli, who is under arrest, and other people with close ties to his presidency are currently under investigation for allegedly receiving bribes from Odebrecht. Panamanian prosecutors indicate that from 2009 to 2014, the duration of Martinelli’s presidency, payments surpassing $96 million were awarded for infrastructure projects such as road improvement in Chanis, the Tocumen Airport expansion, the urban renewal of Curundú, improvements to Line 1 of the Metro, and many others. As a result, the Special Anti-Corruption Prosecutor’s Office in Panama launched an investigation against the former economy minister Frank de Lima, who is accused of receiving at least $7 million in improper payments. Another high-level name that is currently under investigation is the former minister of public works, Jaime Ford. Ford is linked to accepting illegal bribes from the Brazilian company, as well as being accused of overpricing the Arraijan-La Chorrera Highway project for illicit purposes. Colombia: In Colombia, Odebrecht paid at least $32.5 million in bribes to ensure contracts for the building of the Ruta del Sol highway and other infrastructure projects. Colombia’s Attorney General Néstor Humberto Martínez has found himself in the spotlight  after Jorge Enrique Pizano, an auditor, revealed secret recordings in which he talked about contract irregularities with Martínez, who was at that time an attorney for Corficolombiana, a minor partner of Odebrecht. Pizano’s tapes with Martinez came to light in a television interview. Pizano, who was suffering from cancer and ultimately died of a heart attack, provided the interview on the condition that they only broadcast it in the event of his death. Congress has opened an investigation into Martinez’s statements about the Obredecht scandal, and he is under pressure to resign. Martinez’s conflict of interest doesn’t stop with Corficolombiana. He was also legal advisor to Luis Carlos Sarmiento, Colombia’s richest man and founder of the conglomerate Grupo Aval. Grupo Aval is a part owner of Corficolombiana and is currently cooperating in a US Justice Department investigation, according to Reuters. Former Senator Otto Nicolás Bula Bula, who was sentenced to two years in jail for bribery, has been the government’s key witness in unraveling the graft scheme. The investigation has ensnared a number of government officials during the administrations of both former presidents Alvaro Uribe and Juan Manuel Santos, including former senator Bernardo Miguel Elías. Ecuador: Ecuador’s Odebrecht case illustrates a close-knit corruption structure that took place under the presidency of Rafael Correa. His childhood friend and ex-vice president, Jorge Glas, who is already serving a jail term for the corruption scandal, has been accused by Luis Mameri, Odebrecht’s vice president in Latin America, of accepting further bribes than initially known through a company named Glory International. In September 2018, the Ecuador’s Attorney General’s Office opened a preliminary investigation against eight people for allegedly indulging in organized crime within Odebrecht’s corruption scheme. Among those investigated is former President Rafael Correa, who is currently residing and seeking asylum in Belgium. In addition, former legal secretary of the presidency Alexis Mera, former Interior Minister José Serrano, and former Attorney General Diego García are also being investigated for their role in the Hydroelectric San Francisco Project. Ecuador’s Attorney General’s Office recently announced that an additional 11 preliminary investigations were going to be targeting Rafael Correa, Alexis Mera, and Jorge Glas. The latest announcement solidifies Ecuador’s efforts to punish those involved in this corruption scandal.

SEE ALSO: Coverage of Elites and Organized Crime

Peru: To say that the Odebrecht scandal has rocked the political class in Peru would be an understatement. Maria Sokolich, Peru’s new attorney general following the controversial resignation of Pedro Chávarry, is currently overseeing the investigation into some of the country’s top politicians, which are holding or have held the highest office in this country. Current president Martín Vizcarra is being investigated for an alleged link between his company and Odebrecht between 2006 and 2008. His predecessor, Pedro Pablo Kuczynski, has an ongoing investigation against him — which forced his resignation in March 2018 — for alleged consultancies that his company, Westfield Capital, made to Odebrecht between November 2004 and December 2007. Former president Alan García, who was denied an asylum request in Uruguay after the allegations came to light, is accused of taking bribes during the construction of the Lima Metro. The two other former presidents being investigated for allegedly taking bribes are Alejandro Toledo and Ollanta Humala. In March, Odebrecht’s former executive in Peru, Jorge Barata, is expected to declare this in Brazil. Barata’s testimony could potentially create new shockwaves in the Andean nation. Recently, Odebrecht has announced it will cooperate with the Peruvian government. Its former executives in the country are set to be interviewed, which may yet lead to further revelations. Argentina: The Odebrecht investigation in Argentina threatens dozens of former high-level officials linked to public works projects during the presidencies of Néstor Carlos Kirchner (2003-2007) and Cristina Fernández de Kirchner (2007-2015). Most notably are the investigations into Julio de Vido and Daniel Cameron. Julio de Vido, a former minister of federal planning under Fernández, turned himself into authorities in October 2018. De Vido is accused of being part of the “Road Works” scandal, which involves the alleged embezzlement of public funds through tender processes for road works in the former president’s home province of Santa Cruz, as well as other infrastructure projects under his supervision. Meanwhile, former Energy Minister Daniel Cameron is being investigated as part of a case known as “Skanska II,” where irregularities in the expansion of gas pipelines in the country are being linked to a corruption scheme with the collaboration of Odebrecht. However, the level of corruption into the Kirchners’ is more profound. Reports suggest that an additional 14 businessmen and five former employees are also being investigated for many illicit activities in cooperation with the Brazilian construction giant. Bolivia: Bolivia’s has a history of favorable dealings with Brazilian companies that dates back to 1987. In that year, then-Energy Minister Carlos Morales Landívar was accused of using his political influence to favor the Brazilian company, Andrade Gutierrez. Now, Landívar is being accused of being involved in 2003 with Camargo Correa — among the 13 major companies in Brazil under investigation in the Lava Jato case — when he was minister of services and public works. However, the names directly linked to the Odebrecht case are the former president and current 2019 presidential hopeful Carlos Mesa and his successor, Supreme Court Justice and former president Eduardo Rodríguez Veltzé. Both are being investigated for allegedly receiving bribes from Odebrecht during their presidencies, which spanned between 2003 and 2006. Mesa’s investigation could play a pivotal role in the presidential elections that are to be held in October. A conviction in Mesa’s case could leave the door wide open for Evo Morales to be reelected. Brazil: Over the past five years in Brazil, more than 77 company executives have agreed to plea bargains, one president was impeached, another former president is currently in jail, and his successor is now also being investigated as a result of the Odebrecht scandal. That’s just a slight glimpse of the far-reaching impact that the Lava Jato case has had on South America’s largest nation. On February 6, currently jailed former President Luiz Inácio Lula da Silva, was indicted for additional charges that would add 13 extra years to his current sentence. Lula is accused of receiving illicit benefits during his mandate from 2003 to 2010. In addition to Lula, other people close to his inner circle have been accused and arrested for corruption. One of those people, former Chamber of Deputies President Eduardo Cunha, has been in prison since 2016. Cunha is accused of receiving a $5 million bribe. However, despite his current arrest, Brazilian prosecutors have requested further charges against him. Meanwhile, Aécio Neves, a former governor and 2014 presidential candidate, is accused of receiving bribes in exchange for support for legislation mainly regarding works that were of interest to Odebrecht when he was governor of Minas Gerais state. Neves’ investigation is ongoing while he maintains a seat as a senator for Minas Gerais. Lastly, former President Michel Temer (2016-2018) has made headlines as Brazil’s federal police have asked for him to be charged with bribery and money laundering. According to officials, while vice-president in 2014, Temer and his Brazilian Democratic Movement Party (Partido do Movimento Democrático Brasileiro – PMDB) received more than $2 million from Odebrecht. Now that Sérgio Moro, who was once leading the Lava Jato corruption probe, is the new justice minister under President Jair Bolsonaro, close attention will be focused on sweeping new legislation that he has proposed to combat corruption.  

Panama Security Officials Implicated in International Arms Trafficking Network

Authorities in Panama are asking the United States for assistance in investigating an international arms trafficking network that may have included the participation of former security officials, raising questions about the country’s role in the regional arms trafficking trade. Prosecutors in Panama have asked for two US judicial assistants to participate in an international arms trafficking investigation that implicates several former officials from the Central American nation’s Public Security Directorate (Dirección Institucional de Asuntos de Seguridad Pública – DIASP), La Prensa reported October 12. Authorities are investigating nine individuals, eight of whom are former DIASP officials, for their alleged role in importing 100 weapons into Panama after they were purchased in the United States, according to a number of press releases from the Attorney General’s Office. The investigation was recently extended six months to “analyze” whether or not the head of the DIASP, Ovidio Fuentes, was also involved in the network, La Prensa reported. Fuentes has been temporarily suspended from the DIASP while the investigation continues.

SEE ALSO: Panama News and Profiles

So far, prosecutors have been able to recover at least 40 of the weapons imported into Panama from the United States, including an AR-15 assault rifle and various grenades, according to La Prensa. The network reportedly purchased the weapons for between $149 and $540 each in the United States before they were sold to unidentified local merchants in Panama at a marked up value between $5,500 and $7,500. Prosecutors allege the weapons were purchased between 2016 and 2017. However, the weapons reportedly had permits listed for 2012, suggesting that this information was altered by DIASP officials, who are responsible for providing the proper permits and certifications for imported firearms, according to a 2012 firearms law. The 2012 law also says that only authorized security personnel can import firearms into Panama.

InSight Crime Analysis

The recent arms trafficking investigation in Panama raises more questions than answers. The country has long been known as a money laundering haven that criminal groups throughout the region, including Colombia’s notorious Medellín Cartel, have used to wash billions in criminal proceeds, rather than a final destination for illegally trafficked firearms.

SEE ALSO: Coverage of Arms Trafficking

Guns, especially from the United States, remain a driving force behind violence in Latin America. But Panama consistently has one of the region’s lowest homicide rates, suggesting that the firearms imported into the country may have been moving on to another country. Indeed, Central America has long been a key source and transit region for illegal firearms moving to countries in South America, such as Colombia, according to a 2006 report from the United Nations Office on Drugs and Crime (UNODC) on arms trafficking in Colombia. In particular, the UNODC found that Panama acts as the “principal port of entry” for illicit firearms from the United States and Central America that are traveling into the Andean nation due to its free port status and geographically strategic location bordering Colombia.

New Panama Law Small Stride Towards Shrugging Dirty Money Stigma

Panama is seeking to clean up its image as a financial crimes haven by passing new regulations but the process has been tarnished by its failure to address certain policy holes and criminal proceedings against a former president. On June 11, Panama passed Executive Decree 122, which requires the country to automatically share tax-related financial information with 33, primarily European, nations. The measure follows international reporting standards laid out by the Organization for Economic Co-operation and Development (OECD)’s Common Reporting Standards (CRS) and approved in Panama in 2016. According to La Estrella de Panamá, the measure covers certain private and public sources, and financial institutions.

InSight Crime Analysis

Panama has long been used for tax evasion and money laundering purposes by elites from around the world, as was revealed in the explosive 2016 Panama Papers scandal. While Panama has made strides in recent years to reverse this stigma with new transparency laws, it continues to avoid some of the core issues behind financial crimes. The positive measures taken by Panama have largely been in response to international pressure by entities such as the OECD and the Financial Action Task Force (FATF), which placed the country on its international money laundering watch list between 2014 and 2016. Despite such initiatives, Panama is still failing to address some of the most important policy holes exploited by criminals. Its regulation of anonymous companies, a boon for money launderers and tax evaders as they allow people to set up secret shell companies without revealing their identity, remains limited. Furthermore, lax laws regarding the registration of ships under the Panamanian flag has long facilitated tax and other crimes. Also casting a shadow over Panama’s attempts to improve its image is the ongoing espionage case against former President Ricardo Martinelli. Sources claim that current President Juan Carlos Varela — former vice president to Martinelli — was in on the scheme. The case serves as a reminder of the high-reaching corruption that continues to undermine the rule of law in Panama, and by consequence attempts at serious policy reform.

Task Force Points Out Gaps in Panama Money Laundering Laws

A new report demonstrates that although Panamanian authorities have made progress in combating money laundering, the country’s laws continue to make it an attractive destination to conceal revenue from illegal activities. The report is based on the results of an investigation conducted by the Latin America Financial Action Task Force (Grupo de Acción Financiera de Latinoamérica – GAFILAT) after a visit to Panama in May 2017, during which investigators evaluated the current status of money laundering and terrorist financing in the country. The GAFILAT concluded that Panama is more vulnerable to foreign illicit revenue streams than domestic ones. The group also found that drug trafficking, contraband and other illicit activities related to organized crime provide key sources of illicit revenue entering the country’s financial system. In general, the report characterized Panamanian authorities anti-money laundering efforts as good. But the task force also highlighted that various deficiencies remain, including in preventing and investigating money laundering, as well as financial intelligence gathering. With regards to prevention and investigation, the biggest challenge that authorities face is that tax crimes are not classified as predicate offenses for money laundering. In other words, the influx of large sums of money related to tax evasion is not taken into account during money laundering risk evaluations. This, in turn, affects the prevention and investigation of the crime because it inhibits the authorities’ ability to track and seize illicit revenue. The GAFILAT stressed that the most vulnerable sectors to money laundering are free trade zones, real estate and banking and corporate services. Although Panama has taken steps to create transparency laws, evidence of their effectiveness remains scarce. During its research, the task force identified nearly 730,000 Panamanian businesses considered to be at “high risk” of participating in money laundering. The group found that  supervision of these entities is low, and that most of them are still active. In terms of financial intelligence, Panama’s Financial Analysis Unit (Unidad de Análisis Financiero de Panamá – UAF) is responsible for reporting suspicious activity to the Attorney General’s office (Ministerio Público – MP) and other relevant authorities. However, although the UAF has access to a wide range of information, the task force found the unit had issued few reports, and it was unclear if any had supported offical action.

InSight Crime Analysis

Panama has long served as a hub for money laundering in Latin America, serving criminal groups who inject dirty money into legitimate institutions as well as corrupt elites attempting to hide their wealth. In 2014, Panama was added to the GAFILAT “gray list,” which includes countries whose efforts to combat money laundering are falling short. In 2015, the Panamanian government committed to taking steps to remove itself from the list and improve its reputation as a hotspot for dirty money. To achieve this, laws were created to supervise and control banking and to better report suspicious monetary activity. The government also incorporated various recommendations proposed by the GAFILAT at the time. In 2016, Panama was taken off the list, but scandals like the “Panama Papers” revealed that the country still had a long way to go in combating money laundering. Last year, the GAFILAT threatened to add Panama back to the list if it did not fulfill certain requirements, such as the classification of tax evasion as a crime.

SEE ALSO: Coverage of Money Laundering

In spite of significant progress made by authorities in recent years, combating money laundering continues to be a difficult task for Panama. As InSight Crime has reported in previous years, this has to do, in part, with Panama’s economic model. The same factors that have contributed to economic growth — like loose financial regulations that allow for high levels of investment — also allow criminal groups to easily conceal the source of their illegal revenue. As Orlando Pérez from the University of Millersville told InSight Crime in 2015, “Money laundering follows countries with fairly liberal or open banking systems. And Panama’s economic model is dependent on an open economy … and the ability of investors to bring their money in without a significant amount of regulations and barriers.” 

European Cocaine Seizures Hint at New Possibilities for Colombia Traffickers

Major cocaine seizures in Spain, Portugal and Ecuador illustrate the European cocaine pipeline that has become a central part of the operations of Colombian drug traffickers, and could represent lucrative new opportunities for them to occupy new roles the drug supply chain. On January 17, Spanish and Portuguese police announced the seizure 745 kilograms of cocaine during the course of an operation against an international drug trafficking ring operating in both countries. Press reports indicated the network was led by Colombian nationals. The group allegedly imported Colombian cocaine in shipping containers traveling from Panama to Portugal, and were in the process of trying to import 355 kilograms of cocaine stashed in hollowed-out pineapples. According to police, the network transported the drugs to a stash house in Barcelona, and then on to several properties in Madrid, which were used as “laboratories,” presumably to cut the cocaine, and distribution points for sales within the city. Police arrested nine people, among them at least three Colombians and a Venezuelan, with two Colombian brothers named as the alleged ringleaders. They also seized 400,000 euros ($490,000), two hydraulic presses, precision scales, three packaging machines and documentation related to fruit import companies, reported Catalonian newspaper La Vanguardia.

SEE ALSO: Coverage of European Organized Crime

In Ecuador, meanwhile, the Interior Ministry announced the seizure of 1.45 metric tons of cocaine hidden in a shipping container of frozen fish that was set to sail from the port of Guayaquil to Belgium. According to the police, the drugs came from Colombia and comprised shipments from three different trafficking networks, with the packages marked with different images — some of Russian President Vladimir Putin, others of a chainsaw, and others of a bull. Ecuadorean news outlet El Telégrafo reported that police have so far arrested just one person in connection with the seizure: the customs agent who completed the shipment’s paperwork.

InSight Crime Analysis

When it comes to the world’s largest cocaine market, today’s Colombian drug trafficking networks have been reduced to the role of wholesalers to Mexican cartels, who claim the biggest profits by controlling the movement of drugs into the United States, as well as wholesale distribution there. However, in recent years, Colombian networks have been gradually making up for this shortfall in high-end drug trade profits by seeking out other markets — Europe in particular. Although more distant from drug production centers, Europe offers major advantages compared to the United States: there is less risk of interdiction, there is little interest in extraditing Colombian traffickers, and the price per kilogram is substantially higher. The seizures highlight two important routes Colombian cocaine takes to Europe. Cocaine produced in southern departments of Colombia such as Putumayo, Nariño and Caquetá frequently crosses the border into Ecuador, where it is dispatched from ports, above all Guayaquil, where anti-narcotics police seized 13.5 tons of cocaine last year, according to Ecuador’s El Diario. Cocaine produced in the north or on the Pacific coast, meanwhile, is often first trafficked by land or sea into Panama, and then onto Europe in shipping containers.

SEE ALSO: Colombia News and Profiles

The seizures also fit a pattern of a substantial increase in the size of shipments reaching Europe that coincides with the dramatic increase in cocaine production in Colombia. As InSight Crime reported last year, officials across the continent registered a sudden leap in the average seizure size beginning in mid-2016, with officials in Belgium, for example, noting an increase from an average of around 100 kilograms to up to 600. However, the most notable aspect of the recent seizures was the Colombian-led network’s operations in Spain, which involved not only importing cocaine into Europe, but also breaking down shipments and distributing it within major cities, in this case Madrid. This contrasts with the more common pattern of Colombian traffickers importing cocaine and then handing it over to European organized crime networks, in particular the Italian mafia network the ‘Ndrangheta, for distribution. Although the network appears to have been limited to distribution in Spain, it poses an important question regarding Colombian operations in Europe: How many links in the chain will the Colombians seek to occupy? While the safest and easiest option is to hand over to European networks at the continental entry points, huge profits can be made by breaking down loads and distributing them into different countries. Within Europe, price differentials can be massive. For example, the short hop from the Netherlands to the United Kingdom can increase profits by over 60 percent per kilogram. Even within the European Union’s Schengen zone, which can be crossed without having to move through any manned borders, prices can increase by around 40 percent. Several factors could facilitate attempts by Colombian groups to move into intra-continental distribution. Firstly, Colombians groups such as the Rastrojos and later the Urabeños have a level of armed presence in Europe, maintaining “oficinas de cobro,” or debt collection offices, in Spain, which have been linked to kidnappings and murders. Secondly, the abolition of visa requirements for Colombians to enter the Schengen zone, makes entering and operating in Europe substantially easier. For sure, there are limits to any expansions the Colombians might undertake as they would be unlikely to move into territory where distribution networks are run by established and powerful organized crime structures as such the Italian and Russian mafias. Nevertheless, this still leaves an array of potentially lucrative territories that would take their already high European profits to new heights.

GameChangers 2017: Anti-Corruption Successes Fuel Elite Backlash


Corruption scandals have continued to break at dizzying pace across Latin America throughout 2017, spanning politics, business, the security forces, the judiciary and even sports teams. But while the revelations have been exposing the rotten core of Latin America’s ruling class, entrenched elites are now fighting back in what could prove a pivotal battle for the future of the region.

There was barely a corner of Latin American life that was not touched by corruption scandals in 2017.

The richest source of revelations of just how far reaching and systematic corruption is in the region was the investigation into Brazilian construction firm Odebrecht and its business model of using mass bribery to secure lucrative contracts.

Over the course of the year, InSight Crime reported how this investigation has now implicated Mexican President Enrique Peña Nieto, Ecuadorean Vice President Jorge Glas, Peruvian presidential candidate Keiko Fujimori, former Peruvian President Alejandro Toledo, Venezuelan political leader Diosdado Caballo, a string of officials in the Dominican Republic, and even the now former guerrillas of the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia – FARC). And investigators have promised that more is to come.

The year also saw the continuation of a trend of corruption investigations reaching ever higher up the political power chain. El Salvador’s former President Mauricio Funes and Brazilian ex-President Luiz Inácio “Lula” da Silva were both convicted on corruption charges. Lula’s deposed successor Dilma Rousseff was indicted for corruption and money laundering, current Brazilian President Michel Temer was charged with obstruction of justice and racketeering, Panama’s former President Ricardo Martinelli was arrested on espionage charges in the United States, and Argentina’s last leader Cristina Fernández de Kirchner was indicted for money laundering.

SEE ALSO: InDepth Coverage of Elites and Organized Crime

Revelations detailing how corruption networks interact with organized crime to facilitate drug trafficking and money laundering have also emerged at a frantic pace. This has especially been the case in the Northern Triangle, where testifying drug lords and US investigators — along with InSight Crime’s extensive special investigations — have uncovered collusion that stretches from the municipal mayors to the upper echelons of political and economic power.

In Colombia, meanwhile, investigators have begun to expose another key sector for corruption in the region: justice systems. An investigation that began with the arrest of the country’s former anti-corruption chief continues to unravel at a breakneck pace, and has already exposed how the country’s Supreme Court was itself allegedly a key node in corruption networks that sabotaged the prosecutions of underworld chiefs.

Not even the sacred Latin American field of sport has emerged unscathed from 2017’s anti-corruption campaigns. In November, InSight Crime reported on the start of the corruption trials of regional soccer officials as well as a string of new indictments and allegations over the role of media companies. The following month, the head of Brazil’s Olympic committee was detained on bribery charges.

Investigations and prosecutions only tell half the story of corruption in 2017. This was also a year when corrupt elites began to fight back.

This trend has been evident in everything from threats and intimidation of Panamanian prosecutors working on corruption cases to Paraguayan politicians attempting to hollow out laws targeting criminal money corrupting campaign financing. However, the most evident pushback has come in the two countries where anti-corruption investigations have made significant headway: Guatemala and Brazil.

In Guatemala, evidence continued to emerge of the rampant corruption and criminal ties of the previous administration of President Otto Pérez Molina, who was removed from office and imprisoned in 2016 along with his Vice President Roxana Baldetti and several other key political allies. However, the anti-graft campaign did not stop there, as the international body behind the investigation, the International Commission against Impunity in Guatemala (Comisión Internacional contra la Impunidad en Guatemala – CICIG) turned its sights not only on Pérez Molina’s successor Jimmy Morales, but also the country’s two main opposition parties.

First to fight back was President Morales, who has faced mounting accusations of corrupt campaign financing and ties to drug traffickers since winning the presidency on an anti-corruption platform. In August, Morales declared the Colombian head of the CICIG, Ivan Velázquez, persona non grata. Although his efforts to remove Velásquez from the country were frustrated by the courts, Morales was able to secure immunity from prosecution in a congressional vote.

SEE ALSO: Guatemala Elites and Organized Crime

When the CICIG then turned its sights on other politicians, it managed to mobilize the country’s entire political elite against them. This culminated in a vote to reform a law in order to protect politicians and their party functionaries from prosecution and penalties in cases of illicit financing of political campaigns.

As we pointed out at the time, the CICIG had “effectively cemented a political alliance among these former foes, incentivizing them to create blanket protections for the rest of the parties and their corrupt operatives and leaders.” With the new law, we added, “congress and the president have institutionalized corruption in the political process.”

As in Guatemala, Brazil’s far-reaching corruption investigations exposed the breath taking scale of graft in the country. But these efforts have similarly run into fierce opposition.

The Brazilian congress — many of whose members have been accused of corruption — voted twice to spare Temer from standing trial on the criminal charges against him. The votes, however, seemed to be part of a broader strategy to undermine anti-graft initiatives. Earlier in the year, the government took a far more insidious route, by slashing funding and staffing for Operation Car Wash.

The moves seemed to confirm our expectation from earlier in the year that “the significant expansion of the corruption probe could unite Brazil’s typically fractious political landscape around the goal of derailing the investigations.”

Anti-corruption efforts retain significant popular support in the region, but the elite backlash has cast doubt on whether they can be sustained. The conflict between these two powerful forces could be decisive for whether Latin America can finally address chronic issues of poverty, inequality and rampant organized crime.

The truth of the region’s systemic corruption has been forced out into the open. What remains to be seen is what can be done about it.

Top photo by Associated Press/Leo Correa

Tell-All Interview Exposes Details of Colombia’s Cocaine Trade


A Colombian drug trafficker offered juicy details on his work during a remarkable interview that provides a panoramic view of Colombia’s drug trade.

A captured drug trafficker known by the alias “Camilo,” who spent nearly a decade coordinating cocaine shipments for some of Colombia’s most powerful drug trafficking groups, recounted from personal experience the inner workings of the cocaine trade in an interview with El Tiempo published on November 2. Camilo spoke to the news outlet in Bogotá, where he is cooperating with Colombian authorities as part of a plea deal.

The former shipment coordinator said that the first step in the trafficking process consisted of being contacted by a client, usually an intermediary working for a large drug trafficking organization such as the Urabeños, who typically would solicit his help sending drugs to the United States or Europe.

Then, Camilo said, he would reach out to corrupt government contacts.

“I work with logistical operators from customs who tell me which containers will be available for a certain destination, at a certain date, with a certain route and with a specific vessel,” he explained.

Camilo said he would then turn to his contacts within the anti-narcotic police to check whether the officers on duty that day could be bribed. He would also obtain confirmation that the company in whose containers the drugs were to be placed did not raise any flags that could warrant an unexpected security check. If so, the plan was redrawn.

If all went well, Camilo said, he would receive payment for his services via a money laundering scheme that operated through a chain of supermarkets. The store would receive payment for the drugs in euros or dollars, depending on where the shipment landed, and would subsequently pay Camilo in Colombian pesos.

SEE ALSO: Coverage of Money Laundering

But all didn’t always go well.

“The most I had to pay once was 3.5 billion pesos [around $1.1 million] for 820 kilograms of cocaine that anti-narcotic police seized in the port of Cartagena,” Camilo said, adding that he was held responsible if something went wrong. “I had to pay back everything, and they gave me fifteen days. It was pay up or die.”

At times, the drugs had to be stored for a while before being shipped. Following a multi-ton seizure in Panama, a client had asked Camilo to stall the shipment, because the price of the drug had dropped.

“In Panama a kilogram of cocaine costs $4,500, but since authorities are so corrupt, when they seize a go-fast boat with a metric ton, they sell the drugs themselves and that brings the price down.”

On average, Camilo said that he typically earned monthly profits of between 600 and 700 million pesos ($200,000 to $230,000).

“I’m against sending large quantities, I prefer shipments of half a ton,” he said. “To launch that quantity from the port can cost around 2.2 billion pesos [around $720,000]. I’m left with around 500 million [roughly $165,000], after deducting the costs.”

When asked whether the drug trade might one day end, Camilo answered that this would be “impossible.”

“An anti-narcotic officer who earns [a monthly salary of] 1.4 million pesos [$460], or an operator in charge of supervising the cargo, you tell him: ‘Look, here are 10 million pesos [$3,300] so that you don’t check a container. And if it launches, more will come,'” Camilo explained, referring to the almost irresistable financial incentives traffickers can offer to authorities.

He also said that anyone who refuses to go along gets “adjusted” by the criminal groups.

InSight Crime Analysis

In addition to insightful anecdotes and details about the financial aspects of his former occupation, the interview with Camilo paints a broader picture of Colombia’s cocaine trade. Nearly all the major components of the business are mentioned: the production of coca crops, the raw material for cocaine; shipping methods and routes that often pass through Central America; and the money laundering methods used to conceal related financial transactions.

SEE ALSO: Colombia News and Profiles

However, a particular element of the trade stands out in the discussion; namely, corruption. In addition to illustrating the magnitude of this problem, which stretches across borders, the interview with Camilo serves as a reminder that no large-scale drug smuggling operation can be carried out without the help of colluding officials.

US Secures Confession in Panama Waked Money Laundering Case


The Waked money laundering investigation that has rocked the Panamanian establishment has recorded its first successful prosecution, but US authorities remain some way from proving their most serious allegations against one of Panama’s wealthiest and most powerful families.

On October 19, Nidal Waked Hatum, the man labeled by the Drug Enforcement Administration (DEA) as “one of the world’s most significant drug money launderers and criminal facilitators,” pleaded guilty to one count of money laundering conspiracy.

Waked admitted that he had fraudulently secured bank credit for one of his companies for the purchase of non-existent electronic appliances from two more of his companies. These fake transactions, which were supported by falsified invoices, were used to move funds between a bank in Panama and a bank in Miami.

In exchange for his confession, prosecutors agreed to dismiss two further charges and drop the cases against his companies Star Textile Manufacturing, and Vida Panama.

The dropped charges related to defrauding a bank to secure favorable interest rates and an alleged trade based money laundering scheme in which drug money was imported into Panama and used to purchase goods from Waked’s company in the Colon Free Trade zone, which were then shipped to retailers in Colombia, who transferred the profits to traffickers.

SEE ALSO: Coverage of Panama

Although the plea agreement does not mention the predicate crime, in previous hearings prosecutors described how they had witnesses prepared to testify that these transactions were used to move cash for various drug traffickers in Panama, Colombia and Mexico and shadowy contacts in Venezuela.

Among the evidence they were preparing to present were informants claiming to have knowledge of Waked’s ties to traffickers and wiretap intercepts in which he allegedly discussed money laundering options for clients in Venezuela.

Waked had previously denied all charges and stated his intention to clear his name, even securing character references from some of the most prominent people in Panama, among them members of the national legislature, the current mayor of Panama, and members of clergy, to help his case.

In prior hearings. his lawyer argued that as the suspect loans had all been paid back it was unclear whether any crime had taken place, and that if the alleged trade based money laundering took place, then Waked was merely an unwitting participant in the scheme.

Following his judicial U-turn Waked is now facing a maximum sentence of 10 years in prison.

InSight Crime Analysis

The confession of Nidal Waked marks a crucial first success in one of the most wide ranging and controversial money laundering investigations the United States has ever launched.

The US publically revealed its investigations into the Waked money laundering network in 2016, when the Treasury Department added Nidal Waked, his father Abdul, six associates and 68 companies to the “Kingpin List” of “Specially Designated Narcotics Traffickers.”

The US Office of Foreign Assets Control’s (OFAC) summary of the case alleges that Abdul Waked began laundering money for Colombia’s Medellín Cartel in the 1980s, and went on to work with numerous trafficking organizations including Mexico’s Sinaloa Cartel.

According to the accusations, the network used a bewildering array of techniques to launder money including real estate investments, financial vehicles, shell companies and property holdings. However, the most popular method allegedly involved bulk cash smuggling into Panama aboard commercial airlines, which was laundered through Waked’s duty free and free trade zone stores.

SEE ALSO: Coverage of Money Laundering

The decision to sanction the Waked business empire sent shockwaves through Panama, where members of the Waked family are among the most powerful people in the country. They own a business empire that extends throughout sectors such as import/export, real estate, construction, retail, hospitality, banking, pharmaceuticals, casinos and the media. Abdul Waked is also among the founders of the Colon Free Trade Zone — the second largest such zone in the world, and a long time money laundering hub.

The resulting sanctions against the Waked businesses had an immediate and devastating economic impact, with over 5,000 people losing their jobs from one of the targeted Waked businesses alone, according to Panamanian media. The move by the US also saw Abdul Waked retaliate with a legal suit claiming $165 million in damages from the Panamanian state for freezing his assets.

Faced with such consequences, as well as ongoing support from Panamanian elites, pressure was mounting on the United States to show results and prove it could back up its allegations with enough evidence to prosecute rather than just publically accuse.

The confession of Nidal will go some way to easing that pressure. However, given the scale of the accusations, a relatively light sentence on one count for one person means the US authorities still have a long way to go before they can prove their belief that the Waked business empire is also one of the world’s leading money laundering networks, and justify the real life consequences their accusations have caused.

How Fear of Crime in Central America Impacts Daily Life, Contributes to Migration

A new report shows the extent to which insecurity negatively affects the daily lives of Central American citizens, and provides further evidence that crime and corruption are important factors driving emigration from the region. The findings suggest current policies aimed at addressing these issues may lack an adequate emphasis on preventive, rather than reactive measures for deterring crime and migration. Vanderbilt University’s Latin American Public Opinion Project (LAPOP) and the Inter-American Dialogue presented a report titled “Beneath the Violence” at an October 3 event in Washington, DC. Based on surveys carried out in Central America, the authors created a “crime avoidance behavior index” that ranked countries according to the degree to which respondents said fears of crime had affected their daily lives. The index showed that citizens in Honduras felt most impacted by insecurity throughout the region, followed by closely Guatemala and El Salvador, the other two countries that make up Central America’s “Northern Triangle.” Notably, a majority of those surveyed in the Northern Triangle subregion admitted to having “some or a lot of fear of being murdered.” 17-10-04-CentAm-Crime

(Graphic courtesy of LAPOP and the Inter-American Dialogue)

Somewhat unsurprisingly, the study found that at the individual level, “crime avoidance is higher among those who are genuinely at risk for crime.” People who had already been victims of a crime were much more likely to report fearing another such incident. Other factors, such as the presence of gangs in one’s neighborhood and first-hand experiences with police corruption or incompetence, were also associated with greater crime avoidance behavior. Although there were surprisingly small variations in the average responses across different socioeconomic classes, the report notes that lower-income individuals carry a higher burden when it comes to insecurity. For example, nearly half of the poorest respondents surveyed said they avoid taking public transportation for fear of becoming the victim of a crime, potentially impacting their ability to seek out educational or work opportunities.

SEE ALSO: InDepth Coverage of Homicides

In addition, the study found a strong correlation between greater crime avoidance and increased emigration. Roughly one-third of adults in the Northern Triangle had considered leaving their country due to insecurity during the year prior to the survey. The only factors found to have a greater impact on the decision to emigrate were unemployment and having relatives abroad. As InSight Crime previously pointed out, it is common that a number of these so-called “push” factors will combine to spur a person’s decision to migrate. Echoing what several experts told InSight Crime, the LAPOP and Inter-American Dialogue report argues that “this suggests that US immigration control efforts that focus exclusively on domestic policies and border security are unlikely to be successful in deterring immigration in the long run.”

InSight Crime Analysis

The new report provides valuable information about how insecurity is perceived by citizens in Central America, as well as how it impacts various aspects of their lives. For instance, one of the report’s authors, Michael Camilleri, pointed out during the presentation of the study that Honduras and Uruguay have roughly the same percentage of population saying that insecurity is their country’s main issue. However, as InSight Crime previously reported, other studies have shown that Honduras experiences far greater economic impacts from crime than Uruguay does. The economic impacts of crime are important to take into account because, as mentioned above, crime victimization and lack of economic opportunity often combine to drive emigration from Central America. And the LAPOP and Inter-American Dialogue authors say their findings contain important lessons for policymakers seeking to tackle insecurity and migration in the region.

SEE ALSO: Are US Anti-Crime Programs in Central America Working?

Report author Carole Wilson stated that “insecurity motivates migration,” suggesting US efforts to increase border security and crack down on undocumented migrants will only have a limited effect. Undocumented immigration to the United States has appeared to decline in response to intensified enforcement operations under the administration of President Donald Trump. But Camilleri argued that “any drop that we’re seeing … in migration is likely to be temporary. The underlying push factors are ultimately what will matter to long-term migration trends.” This assessment was echoed by former US Deputy Assistant Secretary of State for Central America and the Caribbean Juan Gonzalez. “On the long term, it’s not going to work, because people that are fleeing violence and that are looking for opportunities are either going to go to Mexico, which is something that we’ve been seeing, or they’re going to make the journey to the United States,” he said. According to Gonzalez, investing in socioeconomic development in particularly crime-prone regions like the Northern Triangle countries would be a more efficient allocation of resources than increasing spending on US domestic security measures. Improving law enforcement and judicial institutions could also help curb crime and corruption, thus reducing the incentive for citizens to migrate, the authors said.