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The gangs’ bloody business of extorting transport in Guatemala has provided a pernicious environment and the perfect cover for some economic and political elites to embezzle millions of dollars from state coffers.

It started with just a few quetzales gang members demanded from bus drivers. By the mid-2000s, the extortion of buses had become systematic, and more of the drivers were being killed. By 2009, the homicide rate for bus drivers in Guatemala stood at a staggering 135 per 100,000, more than 200 percent higher than the national average, according to official data. Around 3,100 were murdered between 2001 and 2018, claims the Association of Widows of Bus Drivers (Asociación de Viudas de Piloto – AVP).

This brutality was fueled by the scale of extortion proceeds. By 2017, some estimated that extortion of Guatemala’s buses generated as much as $70 million a year for gangs.

*This article is part of an investigation on various types of extortion in Central America and was carried out by InSight Crime as a joint project with the Global Initiative. See the rest of the series here.

But street gangs were not the only ones filling their pockets with millions of dollars.

As insecurity on buses grew, the government increasingly subsidized the sector, pouring state funds into the shady hands of the Association of Urban Transport Companies (Asociación de Empresas de Autobuses Urbanos – AEAU) that brings together the sector’s most powerful private actors.

Spent without transparency, large swathes of these funds have vanished into corruption schemes involving transport businessmen and political elites. And the AEAU now finds itself at the heart of the “Transurbano” case, the investigation into the country’s most lucrative embezzlement scheme ever uncovered that has brought down an ex-president along with a spate of former ministers.

The Transport System: Vulnerable and Infiltrated

The structure and nature of Guatemala’s public transportation system make it particularly vulnerable to gang extortion. The system is largely a cash business, privatized and fragmented. Municipalities sell the right to run bus routes to private actors — route owners then rent the route licenses, and often buses as well, to drivers.

“The problem of extortion and the killings of bus drivers isn’t about criminality – it’s about a business model based around the way transport operates,” noted Carmen Rosa de Leon, the director of the Guatemala think tank Institute for Education for Sustainable Development (Instituto de Enseñanza para el Desarrollo Sostenible — IEAPADES).

Several sources relayed their suspicions that gang members have posed as “brochas,” individuals who work on the buses collecting fees from passengers. Beyond the arrests of colluding brochas, these suspicions were strengthened by the nature and accuracy of the information that gangs possessed on the routes, the numbers of passengers, and bus drivers’ habits. Many suspect that even bus drivers have colluded with gang members.

Extortion and the accompanying violence provided unscrupulous transport actors with an opportunity to advance their personal interests. The threat of extortion was allegedly used by some route owners to force rivals out and take over their routes, while some added to the perception of insecurity in transport to pressure the government into increasing subsidies for the sector.

“A bus driver once told me that the owner asked him to shoot the bus to make it look like it had been attacked, but to be careful not to damage the engine,” Lilian Pérez, the head of AVP, told InSight Crime.

The extortion market “created a dark incentive for bus owners or bus drivers to become part of that business,” concurred analyst Quique Godoy, former deputy mayor of Guatemala City.

“And it created an even darker incentive for politicians to use for their benefits,” Godoy noted.

A Subsidy and a State Contract

As the killings of bus drivers increased and bus shootings spread, the decision was made to increase a decade-old annual subsidy for the transport sector, whose original purpose was unrelated to security. From 54 million quetzales (around $7.3 million at current rate) in 2004, the subsidy grew to spike at 340 million quetzales ($46.3) in 2008. By 2018, the national government had funneled to the transport sector more than three billion quetzales (more than $400 million) that were spent with a complete lack of transparency.

The International Commission against Impunity in Guatemala (Comisión Internacional contra la Impunidad en Guatemala – CICIG) has launched an investigation into the disappearance of $35 million of these funds dedicated to a public-private partnership, launched by former President Álvaro Colom in 2009 and dubbed the “Transurbano” project.

The partnership, trumpeted as part of the fight against extortion, was meant to reform Guatemala City’s public transport and implement a pre-paid system via magnetic card validators. The idea for the Transurbano was simple: the government would finance the setting up of the pre-paid system on private buses to remove cash transactions from transport, thereby undercutting extortion and insecurity.

But CIGIC’s investigation has revealed that the proper process for awarding the state contract was never followed. Several of the companies participating in the bid turned out to be front companies and the remaining ones could all be traced back to the same owners — all prominent AEAU members. And while the partnership established that the private party would acquire 3,150 new buses in exchange for receiving state funds for the pre-paid system, only 450 buses were ever bought.

In addition to never being fulfilled, the contract was grossly overpriced.

“We knew the cost of the pre-paid system for the 3,150 buses was between $4 and $5 million dollars …Instead of getting $5 million to implement the system, they gave them $35,” said Godoy, who as Guatemala City vice mayor participated in the implementation of a pre-paid system on a municipal bus route that inspired the Transurbano project.

“Exaggerate it up to $6 million for whatever [reason], that left them with $29 million to give away to government officials, politicians, other business owners … to oil the machinery.”

CICIG prosecutors seem to concur, as Colom and ten of his former ministers await trial on fraud and embezzlement charges following their February 2018 arrest as part of the Transurbano case.

‘Dark Incentives’ Behind Extortion

Godoy went further in decrying the dark connections between extortion-related violence and political corruption.

“There were two businesses: the political electoral business, and the cash business linked to the pre-paid system. The killings of drivers actually started in 2007,” explained the former vice mayor who at the time had mapped the locations of killings during the presidential election year.

“There was a circular nature to it. On the outskirts of Guatemala City, you would find that every week or two, some driver was killed at the entrance to the city. We tried to prove it was strategically done,” he said. “The Patriotic Party (Partido Patriota) wanted to show that ‘mano dura’ was needed. Then when Colom came into power, he promised to do away with all this through a new system.

That system, justified by the killings and extortion of public transport, was the Transurbano project.

Godoy is not alone in suggesting that violence surrounding extortion may at times have been used to serve the nefarious purposes of certain elites.

Juan Alberto Sánchez, the current chief of security for the Villa Nueva municipality bordering Guatemala City, remembered an extortion investigation in his previous post around 2009 that had unearthed the direct participation of various actors within the transport system.

“There were approximately 100 buses operating on a daily basis, each being extorted nine times a week. When the investigation started up, the first to quit were the route inspectors (tasked with noting down buses’ transit time) … But bus assistants and drivers, inspectors and even [bus owners] were directly involved,” Sánchez said.

“They had connections with the gangs … in some instances, [bus owners] hired the gangs to carry out acts of terror against their own transport system.”

These links have never been formally established, although Guatemala’s anti-extortion prosecutor Emma Flores admitted to InSight Crime that “there have been several people implicated but there is no legal process underway.”

*This article is part of an investigation on various types of extortion in Central America and was carried out by InSight Crime as a joint project with the Global Initiative. See the rest of the series here.

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