On April 21 Paraguay votes for a new president and, if opinion polls are to be believed, a man thought to be one of the country’s leading money launderers, as well as a DEA target, may get the top job.
Horacio Cartes’ political career to date has been short and his rise meteoric. But even before entering politics, Cartes was widely known throughout Paraguay as the head of a business conglomerate that includes one of of the country’s biggest banks and a principal cigarette manufacturer. He is also the president of a leading soccer team (although on sabbatical to run for the presidency).
However, beneath Cartes’ legitimate facade lies a web of murky connections, which have earned him a criminal reputation long on accusations although short on convictions.
Cartes’ first known brush with criminality came in the mid-1980s, when he was convicted for wire fraud. He served a brief prison sentence before going on the run for four years. His career as a fugitive ended in 1989, when a judge overturned his sentence. At the time, Cartes claimed he was no more than an ignorant employee and had gone on the lam in order to gather evidence for his defense.
Over the next ten years, Cartes’ criminal record continued to grow, although he was never again to return to prison. In 1996, the case against Cartes for falsification of public and private documents and financial crimes was dismissed. Four years later, the statute of limitation expired on murder charges against Cartes, and again in 2002, on charges involving the violation of correspondence.
Aside from Cartes’ dealings with the judicial system, over the years there have been a steady stream of reports, leaks, and rumors that have painted a picture of Cartes as one of the principal movers in Paraguay’s underworld.
The accusations range from gold smuggling — a newspaper article once named Cartes as the Paraguayan connection in a transnational gold smuggling operation — to contraband — a 2005 report claimed that 60 percent of falsely branded cigarettes in Argentina originate from his cigarette company. They also involve allegations of drug trafficking, including reports that in 2000, anti-narcotics police seized 343 kilos of cannabis and 20 kilos of cocaine from an airplane that had landed at a ranch owned by Cartes.
However, Cartes has been most frequently linked to money laundering. He is mentioned in a 2007 US diplomatic cable released by Wikileaks, which discussed the appointment of Angel Gabriel Gonzalez Caceres as the new director of Paraguay’s anti-money laundering unit. The cable, which refers to Cartes as a “so-called pillar of the community,” cites the concerns of the then-chief of Paraguay’s anti-narcotics squad, Hugo Ibarra, who believed Gonzalez may have been aiding Cartes in money laundering activities. According to Ibarra, 80 percent of money laundering in Paraguay at that time went through Cartes’ bank, Amambay.
Most damning against Cartes is a 2010 cable about a US anti-money laundering investigation named “Heart of Stone.” In the cable, Cartes is identified as the head of a transnational criminal organization and the main target of the operation, which brought together the Drug Enforcement Administration (DEA), the Immigration and Customs Enforcement agency (ICE), the Inland Revenue Service (IRS), and the Bureau of Alcohol Tobacco and Firearms (ATF).
According to the cable, US officials believed Cartes ran a major money laundering operation which handled profits from drug trafficking and other criminal activities. The operation had global connections, but was focused in the tri-border region where Paraguay meets Brazil and Argentina. The cable mentions that the DEA had already infiltrated Cartes’ operation and were planning to escalate their investigation.
In the run-up to the election, Cartes’ financial operations took a further hit to their reputation with the publication of an investigation by the International Consortium of Investigative Journalists (ICIJ). Based on leaked documents showing the workings of offshore banking organizations, the report showed how top officials from Amambay, including Cartes’ father, set up a secret financial operation in the Cook Islands, a renowned tax haven, in 1995. According to the ICIJ, the operation had a banking license, but no offices and no staff.
So far Cartes has brushed off all claims of illegal activity. In a political statement titled “The Reasons for my Coloradismo [Cartes is a member of the Colorado Party] Toward a Better Paraguay,” Cartes wrote: “If one percent of what they say about me were true, I would have stayed on the margins of politics. I have nothing to hide and I have hidden nothing.” He has also dismissed the Wikileaks cables as an “absurdity.”
InSight Crime Analysis
Although the case against Cartes has yet to yield incontrovertible evidence of his criminal connections, the overwhelming quantity of circumstantial evidence against him is worrying for Paraguay and the region.
Paraguay is South America’s largest producer of cannabis — which is mostly sold on the domestic markets in neighboring Brazil and Argentina. It is also a popular transit route for drug traffickers moving cocaine from Bolivia to Brazil and Argentina, where it is either sold or moved on to Europe.
If the allegations against Cartes are true, then the criminal groups behind this trade — which already take advantage of corruption in the security forces — may end up with an ally as head of state, which could facilitate the expansion of organized crime in the country.
It would also likely strain relations with Paraguay’s Southern Cone neighbors and with the US, marking a setback for international cooperation in tackling organized crime and for Paraguay’s attempts to regain political legitimacy in the region following last year’s impeachment of former President Fernando Lugo.