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

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