HomeInvestigationsDrug Trafficking and Political Protection in Paraguay: The Case of ‘Cucho’ Cabaña
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Drug Trafficking and Political Protection in Paraguay: The Case of ‘Cucho’ Cabaña

ELITES AND CRIME / 25 FEB 2021 BY ÁNGELA OLAYA AND SERGIO SAFFÓN EN

In a Paraguay border state, drug traffickers and dirty politicians find common ground, and political fights spill into the underworld.

On August 28, 2018, Diego Medina Otazú departed in a silver Fiat from Ciudad del Este. The city lies at the heart of what is known as the triple frontier where Paraguay borders with Brazil and Argentina. It is a well-known hub of contraband and criminal activity, and Medina was part of at least one criminal scheme.

According to a later indictment filed by the Attorney General’s Office, Medina’s boss, Reinaldo Cabaña Santacruz, had commissioned him to take $190,000 in cash to Asunción. It was a special errand for Cabaña, part of a larger deal he had set up. Cabaña, who is better known as "Cucho," was trafficking drugs along the border. He needed to move cash to affect a deal with an ambitious, up-and-coming partner, who also happened to be a Paraguayan congressman.

But at 4:00 p.m., about half-way to the capital, Medina was stopped at what authorities later called a routine police checkpoint near the municipality of Coronel Oviedo. The officials searched the vehicle and found a double-bottom compartment installed in the rear seat of the truck, where the cash was stashed.

Source: Judicial file number 7388/2018

The group liked double-bottomed compartments. It used them to move drugs and money across Paraguay and beyond. However, the system was not without its flaws. The drugs could be contaminated with gasoline, smashed and the packages split open, or, as in Medina’s case, discovered by entrepid or well-sourced law enforcement. Unable to justify the origin of the money, Medina was arrested, and the dollars seized, according to the indictment.

The police took Medina to the Nueva Londres station, where he contacted Cabaña to tell him what had happened. Cabaña, in turn, called congressman Ulises Quintana. In many countries, there might be an intermediary between people like Cabaña and Quintana, someone who could make it more difficult to trace these types of backroom deals and the systematic subversion of justice. But in Paraguay, the two spoke directly with an informality that suggested they communicated often. That is because they did. And in this case, the money was connected to a drug shipment the two were coordinating.

"Is everything clean or do we have to cover things up?" the congressman asked, according to a recording of the conversation from the indictment that later leaked into the press.

Everything was not clean, Cabaña told him.

Quintana sent two lawyers, one of whom worked with the Attorney General’s Office in Ciudad del Este, to negotiate the release of Medina and secure the money. It took some doing, $6,000 to be exact, which the lawyers paid to the officer in charge, the indictment says.

Soon after, Medina left the police station and climbed back into his Fiat to continue his journey.

A Border State, a Corrupt Clan

Reinaldo Cabaña Santacruz made his home in the department of Alto Paraná. The state has close to 400 kilometers of international border with Brazil and Argentina. Its major legal crossing is the Friendship Bridge (Puente de la Amistad) that connects Ciudad del Este with Foz do Iguaçu (Brazil) and a number of private and public ports located along the Paraná River. There is also talk that a bridge for cargo trucks is in the works to connect Ciudad del Este and Foz do Iguaçu. Ciudad del Este is the country’s second most important commercial hub beyond only the capital, Asunción.

Alto Paraná is also home to some of Paraguay’s most dynamic criminal economies. The so-called Tri-Border Area (TBA) is famous for contraband that floods Brazil and Argentina via Ciudad del Este and surrounding river routes. From electronics to agricultural products, the region is a storage hub and dispatch point for massive amounts of illicit consumer goods.

SEE ALSO: São Paulo, Paraguay and Beyond: The PCC’s Growing Power

The illicit economy is a central part of the country’s political power blocs. Companies owned by the country’s former President Horacio Cartes famously produce millions of cigarettes that cross illegally into the Brazilian and Argentine markets. Cartes, who has long denied any connection to contraband cigarette sales abroad, has used the revenue from these sales to finance a powerful wing of the Colorado political party known as Honor Colorado, one of several factions of the country’s ruling party.

The routes are also used to smuggle drugs and weapons into neighboring countries, while Ciudad del Este’s commercial and financial markets offer a plethora of money laundering opportunities.

The area’s traditional power brokers are the Zacarías clan. Javier Zacarías Irún is a senator for Alto Paraná. His wife Sandra McLeod is the former mayor of Ciudad del Este. The two are under investigation for misusing public funds, which were allegedly diverted for political use. The case is rich with dozens of testimonies, supporting documentation and other evidence, but the Zacarías have fought it hard.

In fact, far from being debilitated, the couple remain political heavyweights. The Tri-Border Area on the Paraguayan side has been controlled by the Zacarías family since the Alfredo Stroessner military regime (1954-1989). In more recent years, they have become part of Cartes’ political wing, Honor Colorado.

The power of the clan has generally been associated with the region’s profitable contraband business, according to three Paraguayan prosecutors interviewed by InSight Crime who requested anonymity because the investigations are ongoing. This has fueled the suspicion that their proximity to Cartes is partly due to the smuggling of cigarettes produced by his company, Tabacalera del Este S.A. (Tabesa).

Specifically, the family has governed Ciudad del Este and Alto Paraná since 2001. Zacarías Irún is vice president of the Asociación Nacional Republicana (ANR). And a number of their relatives occupy various government offices. Javier’s brother, Justo Zacarías, was Alto Paraná’s governor before Javier took that office. Justo is now a congressman. Their sister, Margarita Zacarías, is a judicial official. Justo is named in the case against his brother, Javier, and Sandra McLeod.

Contraband may not be their only illicit business. The family has also privatized valuable municipal lands along the Puente de la Amistad via a network of lawyers, local and foreign business associates, and investors, according to the Attorney General’s Office, which is investigating the case. The estate, comprised of two lots were originally owned by Alfredo Stroessner and Mario Abdo Benítez, the father of the current president of the same name. The properties were meant to house municipal workers, but they now host a vast mall and lucrative parking lot.

Still, justice has been slow to investigate the family’s dealings, in part because the couple and their investigated associates have filed motions to recuse prosecutors, among other tried and true tactics that tie up the court system. Others say the clan’s connection to Cartes has been key in drawing out the investigation. The family has remained strong supporters of Cartes’ faction, and their assets reportedly balloned after Cartes’ election to the presidency in 2013.

But dissidence is rising. Small protests have broken out in Ciudad del Este over the slow-paced justice system. And the family has faced political challengers, most notably from an upstart named Ulises Quintana.

A Partnership

In March 2018, Cucho Cabaña arrived at his 33rd birthday party at a local ballroom he’d rented in Ciudad del Este. He was driving a yellow Lamborghini Gallardo valued at nearly $200,000. Dressed in black and with his characteristic New York Yankees baseball cap, he celebrated with his family. With more than seven live music performances and a long list of guests, the expensive party was both a festive occasion and a demonstration of power.

By all appearances, Cabaña's aspiration was to follow in the footsteps of his idol, the legendary Colombian drug lord Pablo Escobar Gaviria. He once visited Escobar’s emblematic Hacienda Napoles in Colombia and later built a replica for himself in Paraguay. He also decorated his new house with a large number of photographs, paintings and all kinds of merchandise with the image of the infamous kingpin.

More importantly, Cabaña wanted to build a cocaine empire. By his own account, he was the owner of two motels, a karaoke bar, a beauty salon, a vehicle equipment store and a sports complex where he installed several synthetic soccer fields. But like Escobar, Cabaña knew he needed political and judicial support to run his drug operations. So he forged an alliance with a Ciudad del Este’ councilwoman, Mabel Otazú, a prosecutor named Mary Ramírez and several police officials. Otazú is the mother of Diego Medina, the same driver who would later be stopped by police in Coronel Oviedo.

From there, Cabaña’s connections expanded. Later investigations against Cabaña and his family revealed a complex network that involved police commissioners and lawyers in different parts of the country. Cabaña also maintained close ties with a number of prosecutors and judicial officials, paying bribes that ranged from roughly $400 to $15,000 to prosecutors in the department of Alto Paraná, who turned a blind eye on the group’s operations, passed information or even burned arrest warrants aimed at Cabaña’s allies. Among the 36 people who were eventually charged in his case, two were prosecutors, three were prosecutorial assistants and 11 were police officers.

But according to the prosecutor in charge of the case, Cabaña’s most important ally was Quintana. In Quintana, he’d found a rising star in the ruling Colorado Party in Alto Paraná. Authorities believed that Cabaña financed and helped with the logistics of Quintana’s campaign in exchange for political and judicial protection.

The congressman would at first deny he even knew Cabaña. Only later did he admit the two had a relationship, but he denied the accusations he’d received money from Cabaña and that he was assisting Cabaña’s operations in any way. Instead, he claimed that he only received Cabaña's support during his campaign in Alto Paraná because Cabaña was a respected businessman in the area.

Prosecutors would counter that Cabaña financed Quintana’s successful run for parliament “with the sole purpose of using its investiture, as many times as necessary, [to help] the criminal organization to execute, without difficulty, its illegal activities.”

Over time, this relationship evolved, and what started as a quid pro quo became a business relationship, prosecutors claimed. It was this business relationship that led to Diego Medina’s trip from Ciudad del Este to Asunción with $190,000 on August 28, 2018. And it was this same trip that would bring both of the men to heel.

Shortly after being released from the Nueva Londres police station, Medina went to the city of Coronel Oviedo to meet with a man named Humberto Rodríguez at a Petrobras gas station. There Medina handed Rodríguez the $184,000 that remained after Quintana’s lawyers had paid the bribe to the police.

Rodríguez was an insurance policy of sorts. A policeman, he also worked with Cabaña and had been commissioned to finish the mission that Medina could not: deliver the money to Asunción where Congressman Quintana had readied a 53 kilogram shipment of cocaine.

On August 29, just past midnight, Rodríguez called Sixto Ramón Arias. Arias was the right hand man of Congressman Quintana, and he was managing the drug deal. Rodríguez told Arias that he was close to Asunción and that he had “la encomienda” (the money). Arias told him to meet at the city’s main port before dawn.

Political Cover?

For a while, Cabaña’s bet on Quintana seemed like a sound investment. Quintana began his political career under the wing of the Zacarías clan. However, the power of the clan began to decline due to the aforementioned investigations for corruption and illicit enrichment of several of its members.

With the scandal swirling, Quintana aligned himself with another wing of the Colorado Party. Although the powerful Colorado Party has ruled Paraguay since the mid-20th century, and even managed to hold on to power after the fall of General Stroessner's dictatorship, it is currently broken into two major factions: Honor Colorado, headed by the former president Cartes, and Colorado Añetete, led by now-President Mario Abdo Benítez.

The friction between Abdo and Cartes was brewing for years but spilled into public view with Abdo's campaign to be nominated as the official candidate for the presidency by the Colorado Party for the 2018 elections. Abdo’s main political platform consisted of attacking the Cartes’ administration, which was in office at the time. Although Abdo won, Cartes’ wing retained his power through its control of Congress.

SEE ALSO: Coverage of Elites and Organized Crime

Still, Quintana flaunted his newfound relationships in the party and his connection to the president and believed he would soon become untouchable because of it. During their telephone conversation after the police seized the $190,000 at the checkpoint, Quintana pleaded with his partner, Cabaña, to have patience, that full immunity was on the way once Abdo assumed “complete control” of the country.

Cabaña was not convinced.

"When I didn't help anyone, I worked better," he told the congressman.

Still, Cabaña sought his own assurances from the new president. The relationship is murky, but a photo later emerged where he appears to be hugging Abdo. Initially Cabaña denied the authenticity of the picture claiming that it was fake and that "I was never with him."

The president, however, was more forthcoming, saying he took pictures with lots of people during the campaign, and that he simply did not always know who was standing next to him.

"That photo is in my house, where we have carried out the entire campaign of the Governing Board and the national elections,” Abdo said “I have more than three million photos. Today I cannot say whether it is false or true. What I can say is that I cannot identify that person. I have taken many photos with many people."

Cabaña’s lawyer then upped the ante. He told the press that his client had given the campaign "the food on their table and much more," a veiled reference to an alleged $500,000 campaign contribution to Abdo. The lawyer later said the figure was actually much higher.

Meanwhile, Paraguayan counter-drug authorities were tracking Cabaña’s nearly every move, including the money he’d sent to Asunción to pay for the 53 kilograms of cocaine that Congressman Quintana had allegedly secured for him.

Arrests and Political Recriminations

A few days later, following the successful money drop in Asunción, the 53 kilograms of cocaine was in Ciudad del Este. And on August 31, Cabaña and his brother-in-law, Hugo Ríos, forged a plan to send it to a buyer in Brazil via Foz do Iguazú. Ríos, authorities say, was the organization’s operational mastermind in deals like this.

Cucho's criminal organization relied on the involvement of relatives and friends of Reinaldo Cabaña, whose aim was to traffic Peruvian cocaine into Bolivia, as well as marijuana to Brazil, and launder money in Paraguay.

The indictment alleges that the criminal group was divided into two key areas used to manage its activities. One area focused on buying, transporting, collecting and distributing goods, whereas the other was responsible for the group's finances and ensuring its income was channelled into the Paraguayan financial system, thereby legalizing the profits generated from transnational and domestic drug trafficking.

The financial branch was not only pivotal to Cabaña in maintaining his image as a successful businessman. It also served to bribe local authorities for protection and was supposedly used to finance political campaigns, including Quintana’s, with the intention securing high-level political allies to shield the group's operations.

In addition, several of Cucho's operatives in Cabañas profited from cocaine and marijuana-peddling in Alto Paraná. This was the case for Hugo Ríos, the group’s logistical coordinator and head of security, as well as deputy police inspector, Humberto Rodríguez, and some transport workers.

Cabaña’s three brothers and his brother-in-law, Hugo Ríos, were in charge of logistics, for instance, receiving and storing the drugs in Paraguay, then moving them to Brazil at Cucho’s behest. A policeman was the head of security, as well as assisted in the storage and sales of the drugs. A taxi driver took care of storage. A motorcycle taxi driver specialized in packaging the drugs. Cabaña’s girlfriend handled the money laundering.

Cabaña ordered his men to pack the drugs in bricks and brand each of them with the inscription of a "Rolex," his preferred seal. And Ríos contacted his driver who packed the drugs into a modified truck with a double-bottomed compartment.

Around midnight, September 1, the driver went to the meeting point in Vila C, a neighborhood in Foz do Iguazú that Cabaña frequently used to deliver his merchandise. However, the buyer didn’t show, so the driver headed to the border checkpoint and waited for Hugo Ríos. The two met there and decided to deliver the shipment together. At 11:19 a.m., Ríos texted Cabaña: the cocaine was in the buyer’s hands.

On September 2, Brazilian authorities arrested the buyer in Santa Terezinha, a municipality adjacent to Foz do Iguazú. With him were the drugs, the physical evidence agents of Paraguay’s National Anti-Drug Secretariat (Secretaría Nacional Antidrogas – SENAD) -- who had been tracking the movements of Cabaña’s network for months and this shipment in particular -- needed to finalize their case against his organization.

On September 6, they launched Operation Berilo, which included 22 search and seizures. Among the first to be captured was Cabaña. More arrests followed, including that of several police officers and officials from the Attorney General’s Office. On September 21, Quintana, who’d slipped away during the initial sweep, surrendered. After Congress lifted his immunity, Quintana was jailed in the Viñas Cué military prison.

Questions followed. Were the arrests part of the long political confrontation between current President Mario Abdo and former President Horacio Cartes for control of the Colorado Party? Was the operation a retaliation for the treason and defiance of the power of the Zacarías in Alto Paraná?

Quintana’s lawyer at the time, Álvaro Arias, seemed to think so.

“Quintana is a rival to the Zacarías family and they respond to Horacio Cartes's group,” he said following the arrests.

“The attorney general was appointed by Cartes,” he added. “There is a clear connection between these things, [and] why this is taking place without evidence. [It is] more political revenge than anything else.”

Arias has since stopped representing Quintana.

The other side made similar claims about prosecutions against their people. Javier Zacarías, for instance, said there was an "open political persecution" against him and his family led by President Abdo. According to Zacarías, Abdo was pressuring the Attorney General’s Office to send him to prison and to release Quintana.

But it was clear that with the arrest, the Zacarías family now had the upper hand again. Soon after the operation, the president of congress moved to fill Quintana’s seat with Rocío Abed, the wife of Justo Zacarías, Javier Zacarías’ brother.

However, the battles were only beginning. In July 2019, new audio was released that illustrated that Cabaña and his lawyer were seeking to buy off Colorado politicians and seek out sympathetic judges to undermine the case.

Later that same month, Quintana was released. And although this measure was reversed weeks later, Quintana retained his seat in Congress when his allies left the room when the vote to expel him was held, thus denying the opposition a quorum.

For his part, President Abdo tried to stay out of the fray, with little success. He said several times that he was not going to intervene in favor of anyone. He publicly distanced himself as much as he could from Cabaña, and, referring to Ulises Quintana, he said: “There will be no type of impunity. Whoever falls, no one is untouchable, from the president of the republic to the bottom. That is the order that I have given them.”

Cabaña's attitude towards President Abdo also changed radically, from claiming they had never met to calling Abdo "Judas." His lawyer later said the president was "ungrateful.” For his part, Ulises Quintana was allowed to leave pretrial detention in October 2020, when the Court of Criminal Appeals suspended the ruling that was keeping him in the Viñas Cué military prison. Following his release, in January 2021, the case's presiding judge gave Quintana authorization to leave the Paraguayan capital, and shortly after the politician announced his intention to run for mayor of Ciudad del Este with the Concordia Colorada party.

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