Roxana Baldetti and President Otto Perez Molina

Guatemala President Otto Perez Molina and Vice President Roxana Baldetti have come under intense scrutiny for their potential links to one of the country's biggest corruption scandals in recent years.

On April 16, authorities announced the arrests of the head of Guatemala's Superintendency of Tax Administration (SAT), Alvaro Omar Franco Chacon, and his predecessor, Carlos Enrique Muñoz Roldan, for their alleged participation in a customs fraud network.

Dubbed "La Linea," or "The Line" by investigators, the network reportedly charged importers just 40 percent of standard import taxes, and received kickbacks of 30 percent. The importers kept the remaining 30 percent, meaning the government was receiving less than half of the tax revenue on imports that it would earn under normal circumstances. In addition to Franco and Muñoz, more than a dozen other individuals implicated in the corruption network were arrested in the sting.

However, Guatemala's Attorney General's Office and the United Nation's International Commission against Impunity in Guatemala (Comision Internacional contra la Impunidad en Guatemala - CICIG), which conducted the joint investigation, consider Baldetti's then-private secretary, Juan Carlos Monzon, to be La Linea's top boss. So far, Monzon has managed to avoid arrest.

Measuring Degrees of Separation from La Linea to the Presidency

On April 13, just days before the arrests, Monzon accompanied Baldetti on a trip to South Korea, where she received an honorary degree. During a press conference on April 19, Baldetti admitted that this was the first time Monzon had traveled with her outside the country. The Vice President said she knew Monzon was under investigation, but was not aware of the specific details, even though she is the president of the National Commission Against Contraband (CONACON).

According to Baldetti, Monzon left her to attend to "personal things" just hours before she found out about the arrests. The Vice President said she called Monzon as soon as news reached her of the scandal and fired him, demanding that he return to face justice in Guatemala. Nevertheless, Baldetti stated that she does not know where Monzon currently resides. 

 

The Vice President said she knew Monzon was under investigation, but was not aware of the specific details. Baldetti is the president of the National Commission Against Contraband.  

There are a few more degrees of separation between President Perez Molina and the customs scandal. However, as Manfredo Marroquin, head of the Guatemalan civil society group Accion Ciudadana, told InSight Crime: "All of the pieces provoke suspicion of the president as well."

La Linea's alleged second-in-command, Salvador Estuardo Gonzalez Alvarez, is the president of a news corporation that owns Guatemalan newspapers Siglo 21 and Al Dia. According to elPeriodico, Gonzalez Alvarez -- who was among those captured during the raid -- is the son of former Guatemalan Defense Minister Marco Antonio Gonzalez Taracena. 

SEE ALSO: Guatemala News and Profiles

ElPeriodico states that Gonzalez Taracena was Perez Molina's boss when the president served in the now-dissolved Estado Mayor Presidencial (EMP), the intelligence wing of the presidency, similar to the United States Government's National Security Agency. Gonzalez Taracena also reportedly assisted Perez Molina in designing his national security plan when he became president.

Shortly after Gonzalez Alvarez took over as president of the news corporation in July 2013, he pressured Siglo 21 editors to publish articles that portrayed Perez Molina and Baldetti in a favorable light, according to a former Siglo 21 journalist interviewed by elPeriodico. What's more, an alleged member of La Linea, Giovani Marroquin Navas, recently declared in court that last year Perez Molina attended a meeting organized by Gonzalez Alvarez to discuss a plan designed to improve Guatemala's tax collection services.

Click through the presentation below to view the links between alleged La Linea members and the President's Office

The Customs Fraud Network That 'Never Disappeared'

Perez Molina's possible ties to customs fraud networks could go back much further than just La Linea.

From the 1970s until the mid-1990s, a powerful contraband ring made up of corrupt military, police, and other government officials known as the Moreno network collected large sums of money by confiscating contraband shipments and forcing their owners to pay bribes in order to recover the goods, according to a 2003 Washington Office on Latin America (WOLA) report (pdf) on illegal armed groups in Guatemala.

In the same report, WOLA listed Perez Molina as one of the leaders of a clandestine group within the military known as "El Sindicato." El Sindicato was one of Guatemala's "hidden powers," or CIACS as they are known by their Spanish acronym, shadowy groups made up mainly of former military and intelligence officials that have their origins in the country's civil conflict. Another prominent member of El Sindicato, according to WOLA, was General Roberto Letona Hora, who was also allegedly part of the Moreno network. WOLA noted the unusually high level of cohesion and fraternity among members of El Sindicato.

SEE ALSO: Coverage of CIACS

Perez Molina may also have connections to the link between La Linea and the Moreno network. A suspect arrested as part of the La Linea investigation, Francisco Javier Ortiz Arriaga, had previously served as the top deputy for the Moreno network's leader, Alfredo Moreno Molina, reported Prensa Libre. According to elPeriodico, Ortiz Arriaga helped arrange the 2014 meeting both Perez Molina and Gonzalez Alvarez attended.


Perez Molina's possible ties to customs fraud networks could go back much further than just La Linea.


Ortiz Arriaga's involvement in both La Linea and the Moreno network indicates that the criminal structure that largely controlled Guatemala's customs system for decades was never fully dismantled. "The customs fraud structures that were dismantled yesterday have operated since the Moreno network in 1995, and never disappeared," CICIG Commissioner Ivan Velasquez stated at a press conference.

Perez Molina is also facing scrutiny for his decision to select first Muñoz in 2013 and then Franco in January 2015 to head the SAT. During a press conference on April 17, Perez said he did not know Franco was part of La Linea, and that there were no outside influences affecting his decision-making process. Muñoz was reportedly dismissed as head of the SAT for failing to collect sufficient tax revenue two years in a row.

None of this evidence would be enough to convict Baldetti or Perez of wrongdoing in a criminal court, even if it has provoked Guatemalan citizens to hold massive protests calling for their resignation. But that doesn't mean more incriminating evidence won't come to light in the coming weeks and months.

"The investigation [into La Linea] has not concluded... the [Attorney General's Office] and the CICIG made it very clear in saying this investigation has just begun," Marroquin told InSight Crime. "A second stage of the investigation could directly involve the vice president," he added.

And perhaps Baldetti's boss as well. 

Investigations

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
Prev Next

Guatemala's Mafia State and the Case of Mauricio López Bonilla

Guatemala's Mafia State and the Case of Mauricio López Bonilla

Former Guatemalan Interior Minister Mauricio López Bonilla -- a decorated war hero and a longtime US ally -- finds himself treading water amidst a flurry of accusations about corruption and his connections to drug traffickers. López Bonilla is not the most well-known suspect in the cases against...

The Prison Dilemma: Latin America’s Incubators of Organized Crime

The Prison Dilemma: Latin America’s Incubators of Organized Crime

The prison system in Latin America and the Caribbean has become a prime incubator for organized crime. This overview -- the first of six reports on prison systems that we produced after a year-long investigation -- traces the origins and maps the consequences of the problem, including...

'MS13 Members Imprisoned in El Salvador Can Direct the Gang in the US'

'MS13 Members Imprisoned in El Salvador Can Direct the Gang in the US'

Special Agent David LeValley headed the criminal division of the Federal Bureau of Investigation's (FBI) Washington office until last November 8. While in office, he witnessed the rise of the MS13, the Barrio 18 (18th Street) and other smaller gangs in the District of Columbia as well...

Where Chaos Reigns: Inside the San Pedro Sula Prison

Where Chaos Reigns: Inside the San Pedro Sula Prison

In San Pedro Sula's jailhouse, chaos reigns. The inmates, trapped in their collective misery, battle for control over every inch of their tight quarters. Farm animals and guard dogs roam free and feed off scraps, which can include a human heart. Every day is visitors' day, and...

El Salvador Prisons and the Battle for the MS13’s Soul

El Salvador Prisons and the Battle for the MS13’s Soul

El Salvador's prison system is the headquarters of the country's largest gangs. It is also where one of these gangs, the MS13, is fighting amongst itself for control of the organization.

How the MS13 Got Its Foothold in Transnational Drug Trafficking

How the MS13 Got Its Foothold in Transnational Drug Trafficking

Throughout the continent, the debate on whether or not the Mara Salvatrucha (MS13) gang is working with or for drug traffickers continues. In this investigation, journalist Carlos García tells the story of how a member of the MS13 entered the methamphetamine distribution business under the powerful auspices...

Reign of the Kaibil: Guatemala’s Prisons Under Byron Lima

Reign of the Kaibil: Guatemala’s Prisons Under Byron Lima

Following Guatemala's long and brutal civil war, members of the military were charged, faced trial and sentenced to jail time. Even some members of a powerful elite unit known as the Kaibil were put behind bars. Among these prisoners, none were more emblematic than Captain Byron Lima...

Colombia's Mirror: War and Drug Trafficking in the Prison System

Colombia's Mirror: War and Drug Trafficking in the Prison System

Colombia's prisons are a reflection of the multiple conflicts that have plagued the country for the last half-century. Paramilitaries, guerrillas and drug trafficking groups have vied for control of the jails where they can continue to manage their operations on the outside. Instead of corralling these forces...

How the MS13 Tried (and Failed) to Create a Single Gang in the US

How the MS13 Tried (and Failed) to Create a Single Gang in the US

In July 2011, members of the Mara Salvatrucha (MS13) attended a meeting organized in California by a criminal known as "Bad Boy." Among the invitees was José Juan Rodríguez Juárez, known as "Dreamer," who had gone to the meeting hoping to better understand what was beginning to...

The Lucky ‘Kingpin’: How ‘Chepe Diablo’ Has (So Far) Ridiculed Justice

The Lucky ‘Kingpin’: How ‘Chepe Diablo’ Has (So Far) Ridiculed Justice

José Adán Salazar Umaña is the only Salvadoran citizen currently on the US government's Kingpin List. But in his defense, Salazar Umaña claims is he is an honorable businessman who started his career by exchanging money along the borders between Guatemala, El Salvador and Honduras. He does...