Institutions Complicit in Alleged Embezzlement by Fmr El Salvador President

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New details have emerged about the embezzlement and money laundering case against former El Salvador President Elías Antonio Saca, suggesting public and private institutional complicity in the pilfering of public funds.

Saca and several other members of his 2004 to 2009 administration were arrested at the end of October as part of an investigation of the alleged embezzlement of more than $240 million of public funds, according to Factum, which has seen a copy of the case documents against the former president and his associates.

Saca created a new law soon after entering the presidency in 2004 that allowed him and his associates to transfer public funds into private accounts without leaving much of a paper trail, writes Factum.

The new regulation was called “Internal Operational Regulation for the Management, Control and Inspection of Public Funds, Reserved and Secret Spending of the Presideny of the Republic, Destined for Intelligence, the Classification, Management and Proctection of Intelligence and the Duty to Keep Secret the Designated Collaborators for those that Manage Secret and Reserved Spending” (“Reglamento Interno de Funcionamiento para el Manejo, Control y Fiscalización de los Fondos Públicos, Gastos Reservados y Secretos de la Presidencia de la República Destinados a las Actividades de Inteligencia, Clasificación, Manejo y Protección de la Información y Deber de Guardar Secreto de los Colaboradores Designado Para el Manejo de los Gastos Reservados y Secretos”).

The rule “shows that from the start of the position [the presidency of Saca] they planned the way they were going to manage the embezzlement of state funds and how they were going to create impunity,” the Attorney General’s Office stated in documents seen by Factum.

Following the creation of the new regulation, Saca — with help from Élmer Roberto Charlaix, his private secretary at the time; Julio Humberto Rank, his then communications secretary; and César Daniel Funes, then president of the country’s National Aqueducts and Sewers Administration (Administración Nacional de Acueductos y Alcantarillados – ANDA) — allegedly proceeded to move millions of dollars of public money from the presidential accounts into their personal ones and those of other collaborators, as well as into the bank accounts of companies owned by Saca.

Some companies were apparently given money by the government even though no contracts existed between the two. Details of some of those accounts and the quantities of money that went into them are laid out in the graphic below, compiled by Factum.

Notably, private banks, state institutions tasked with detecting suspicious financial transactions, and government employees all appear to have remained silent about the suspicious financial activity alleged to have been taking taking place around that time.

One commercial bank went a step further and allegedly lied when it was asked to provide information on the deposits and withdrawals of a bank account connected to Francisco Rodríguez, an employee of the presidency. In a report to the Attorney General’s Office, the Banco Hipotecario assured that there had been no movement of funds in or out of the account since its creation, according to Factum. However, it later emerged that some $52 million dollars had been deposited in the account during the period of investigation.

The government’s Court of Accounts (Corte de Cuentas), in charge of tracking public spending by state institutions, also remained silent about the financial activities of Saca and his associates in what the magazine refers to as the “biggest embezzlement case in the country’s recent history.”

InSight Crime Analysis

The new revelations about the complicity of both public and private institutions in the pilfering of so much public money are deeply worrying. The allegations of institutional collusion — or at best blindness to wrongdoing — speak to a trend seen across the region in countries like Venezuela, Guatemala and Brazil: the development of mafia-like structures within governments that create mechanisms, networks and relationships to facilitate the theft of public money, and generate silence, corruption and impunity by spreading responsibility across more than a few individuals. The more people and institutions that are involved in embezzlement schemes such as the one alleged in El Salvador, the more interests it serves to remain silent.

SEE ALSO: Elites and Organized Crime

This trend also takes a heavy toll on governance, democracy and the ability to curb violence, with co-opted institutions failing in their responsibility to blow the whistle on corruption and wrongdoing, and abandoning their duty to bring abusers of public positions, trust and money to justice.

The striking new details of the alleged siphoning of public funds by Saca and his apparent cohorts, if true, also show a blatant disregard on the part of El Salvador’s political elites for the country’s development and future. El Salvador — one of the most violent countries in the world and deeply corrupt — is currently in the grip of a financial crisis and may have to default on its public debt.

That the alleged corruption has been uncovered and is being investigated is testament to a growing accountability in El Salvador, which is perhaps learning from the example set by its regional neighbors Guatemala and Brazil.

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