Details Emerge on ‘Dinero K’ Corruption Scheme in Argentina

SHARETweet about this on TwitterShare on FacebookShare on LinkedInShare on Google+

As a major scandal involving the diversion of millions of dollars from public works contracts rocks Argentina, a new report written by the judge presiding over the investigation provides details about the extent of the corruption.

Federal Judge Sebastián Casanello released a 122-page report on April 18 shedding new light on the corruption scandal, dubbed “La Ruta del Dinero K,” in which contractor and businessman Lázaro Báez stands accused of diverting millions of dollars from state public works contracts. The report suggests an “international criminal structure” of shell companies was used to launder diverted funds allegedly connected to more than $650 million of state contracts awarded to Báez and his firm between 2003 and 2015, reported Clarín

Allegations against Báez first surfaced in 2013. Since then, the investigation has broadened to include business partners, financiers, and public officials that appear to be connected to Baez. The investigation is also casting shadows on former President Néstor Kirchner and his wife, and successor to the presidency, Cristina Fernández de Kirchner, both of whose administration’s awarded government contracts to Báez.

According to details released in Casanello’s report, more than 11% of the total national publics work budget was directed to the state of Santa Cruz where Báez’s firms were based, second only to the capital province of Buenos Aires which received 14%. Santa Cruz has a population of just 300,000 while Buenos Aires has a population of more than 15 million.

The report noted there was a concentration of contracts awarded to firms linked to Báez, despite irregularities in fulfilling those contracts. It also noted there was an unequal delay period between when contracts were awarded and when funds were disbursed that heavily favored Báez, with firms linked to Báez waiting an average of 34 days compared to the overall average waiting period of 231 days. 

Casanello processed preventative detention orders for Báez and his accountant, Daniel Pérez Gadín, on April 18, declaring them flight risks. Báez’s attorney, Jorge Chueco, went missing on April 11, and was detained by authorities in neighboring Paraguay on April 19. He has since been turned over to Argentine authorities. 

InSight Crime

As new information emerges, the full range of actors implicated in the scandal is likely to grow. Casanello’s report noted that at least two public officials had traveled on Báez’s private jet, including the former head of the Tax Directorate of the Federal Public Revenue Administration, Ángel Rubén Toninelli, and Chief Engineer for the Provincial Roads Department for Santa Cruz, Jorge López Geraldi. Casanello has also called for questioning the former director of the Federal Public Revenue Administration, Ricardo Echegaray. 

Leonardo Fariña, an associate of Baez’s imprisoned on separate charges of tax evasion, has provided extensive testimony to investigators suggesting that complicity in the Dinero K scheme ranges from private firms, to public institutions, all the way to the legislature. He spoke of a “systematic plan with the goal of emptying state funds through public works projects.”

The saga in Argentina adds to the list of high-level corruption scandals that have unfolded elsewhere in Latin America over the last year. Guatemala saw a customs fraud ring bring down its president, Honduras is in the midst of an active investigation into a social security corruption ring, and Brazil is embroiled in a corruption scandal connected to dealings with its state owned oil company. 

SHARETweet about this on TwitterShare on FacebookShare on LinkedInShare on Google+