In 2015 and 2016, anti-corruption efforts in Guatemala saw a ray of hope, as criminal investigations led to the resignation and incarceration of former president Otto Pérez Molina on corruption charges, and angry citizens took to the streets around the country.
For Juan Francisco Sandoval, head of the anti-impunity unit (Fiscalía Especializada Contra la Impunidad – FECI) within Guatemala’s Attorney General’s Office, that all now feels very far away
FECI is one of the few institutions left in the country to be continuing the mission of the now-defunct International Commission against Impunity in Guatemala (Comisión Internacional contra la Impunidad en Guatemala — CICIG), a United Nations-backed body that investigated corruption.
In two separate interviews with InSight Crime, Sandoval addressed several key topics. Firstly, the Guatemalan political apparatus has tried its hardest to dismantle anti-corruption efforts, including attacking CICIG and FECI investigators. Secondly, while former president Jimmy Morales deployed significant resources to curbing these efforts, drug trafficking grew significantly in the country.
InSight Crime: CICIG is gone, and FECI has been left weakened. Guatemala’s system of impunity continues to work. Have the country’s anti-corruption efforts ultimately been in vain?
Juan Francisco Sandoval: They showed the phenomenon (of corruption in Guatemala) and attacked it. It is true that our institutions are not strong enough to face the backlash from those involved. And we can see that they are using all the weapons at their disposal: cutting the budget of the Human Rights Prosecutor’s Office, attacks on staff trying to make them quit, the infamous Truth Commission in Congress (which sought to undermine CICIG investigation). Those still working for FECI are like the rearguard of the Attorney General’s Office.
IC: What does this say about the rule of law in Guatemala?
JFS: It doesn’t exist. There is a systematic attack against any who fight to stop impunity, such as prosecutors, FECI and judges.
But since this phenomenon (of corruption within the government) was revealed, mechanisms of state to ensure impunity have only become more sophisticated.
IC: Looking back, would the existence of FECI, your technical methods of investigation, the political support which you received, would any of that have taken place without CICIG?
JFS: None of it. CICIG offered political and technical support. Before it arrived, the Attorney General’s Office didn’t carry out criminal analysis, for example. It barely had a witness protection program. The law against organized crime was three years old but we were not even tapping phones. We had no money and nobody was worried about that.
IC: And the Guatemalan government now has no intention of strengthening the fight against corruption?
JFS: On the contrary, it’s going backwards. When I visited Honduras three years ago, I thought, “What is happening in Honduras could never happen in Guatemala.” But we are actually worse off.
The Path to Corruption
IC: How did FECI and CICIG discover the extent to which the Guatemalan State had been taken over by criminal groups and the ensuing corruption?
JFS: CICIG uncovered two large-scale, but separate, corruption cases. First, there was a denunciation regarding contraband involving customs at the port of Quetzal, which became the case known as La Línea. They tapped some phones that revealed a network allowing the entry of goods into Guatemala without paying customs fees. As the investigation progressed, it uncovered the participation of agents from the Tax Administration (Superintendencia de Administración Tributaria – SAT). The importers needed to move their merchandise quickly and the tax officials pressured them to pay bribes. There were two situations: the bribes paid to public officials and tax avoidance by importers. It was a win-win.
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IC: And this was only about contraband?
JFS: As time went on, the scale of the officials involved kept growing. A larger-scale plot was uncovered. The name of Juan Carlos Monzón, the private secretary of then-vice president Roxana Baldetti, was discovered. The investigation got access to high-ranking government officials. That is when it became known as La Línea. It showed the complex web of companies owned by, in this case, the vice president.
When all these companies were discovered in April 2015, we were practically illiterate about the way they operated. We discovered a lot of names, information about a lot of accounts, but it didn't make any sense at the time. People who worked with Monzón explained it all to us and we began to discover which companies Baldetti controlled. We followed the money and discovered businesspeople financing political campaigns. But no report of this was ever made to the electoral authority.
IC: These businesspeople were among the most important in Guatemala.
JFS: They were legitimate businesspeople. But they sought to threaten the country’s electoral laws. Guatemala allows the private financing of campaigns but with a limit of 10 percent of the campaign funds. Their scheme was in masking the accounts being presented to the Supreme Electoral Court (Tribunal Supremo Electoral – TSE). They spent much more but, outwardly, they were respecting campaign financing limits.
And this is where the real threat to democracy comes. To who is the government going to give public works contracts? To those who financed them, to those they made a commitment to. And businesspeople then had to negotiate “leftover debt,” or amounts supposedly owed to the government from contracts with previous administrations for large-scale public works. These payments were made based on how completed the specific project was. For example, in the transition from the government of President Álvaro Colom (2008-2012) to that of President Otto Pérez Molina (2012-2015), a lot of this “leftover debt” was claimed. And this saw companies being asked to pay 5 to 15 percent of the value of public works contracts as a bribe.
IC: Was this the case that you began to refer to as the Cooptation of the State?
JFS: This case showed us corruption scandals within eight government offices, including the Agriculture Ministry, the Sports Ministry, the Health Ministry and the port administration, for example. But we saw that the Communications Ministry, which had the largest budget, was not involved. That ministry had its own source of illicit income. They created a whole machinery to launder illicit income, such as from bribes, into legal cash flow. The highest proportion of these bribes was paid to the president and vice president, Otto [Pérez Molina] and Roxana [Baldetti]. Another percentage went to their team, loyal public officials they had placed in key positions.
IC: And then there was a separate case involving bribes from construction companies?
JFS: Indeed. Nine large construction companies recognized that they entered this vicious circle of paying this “leftover debt.” For example, Odebrecht (the Brazilian construction giant which paid colossal bribes to government officials across Latin America) had the smallest capital of any of the construction firms in Guatemala, they only honored around half of one public contract and left the country. But they still paid a significant bribe of $18 million.
IC: How much was the total value of the corruption within the Guatemalan state investigated by FECI?
JFS: The Cooptation of the State case involved around $19.5 million. The construction case saw Odebrecht pay $18 million and other construction companies pay around $38 million in bribes. In total, it was about $75 million.
IC: And how did the businesspeople react to these cases?
JFS: This corruption scheme involved some of Guatemala’s most important and powerful companies and figures. This included certain businessmen that were part of the Coordinating Committee of Agricultural, Commercial, Industrial and Financial Associations (Comité Coordinador de Asociaciones Agrícolas, Comerciales, Industriales y Financieras – CACIF), large media groups and companies owned by former government figures. They were always going to react.
Iván Velásquez (head of CICIG from 2013 to 2019) said in an interview that these tycoons went to him and told him: “We have learned our lesson. Stop (your investigations), this won’t happen again.”
IC: But CICIG didn’t believe them.
JFS: Someone who is acting transparently is unlikely to say “Right, let’s delete everything and start over.” They were creating a vicious circle within the electoral cycle, they operated in the same way for the 2011 and 2015 presidential elections. The most powerful businesspeople in the country funded the National Convergence Front (Frente de Convergencia Nacional – FCN-Nación), the party of president Jimmy Morales (2016-2020).
They began to fight back. They teamed up to attack any efforts being made to break the culture of impunity.
IC: Was this a reaction to the spring of 2015 when Guatemala saw mass protests against corruption?
JFS: 2015 saw the coming together of many positive elements in the fight against corruption. We had a committed attorney general, Iván Velásquez led CICIG with all the support it had at the time. The US administration and ambassador at the time. All the forces were aligned but this slowly changed.
Donald Trump won the US election (in 2016). But the end of the commission really came with the hatred from the Morales administration for CICIG and the government slowly did away with it. One of the smallest cases we were investigating ended up involving the brother and the son of Morales, which ended up being a key moment in bringing out this repression.
IC: Is that when the Morales government really came after CICIG and the Attorney General’s Office?
JFS: From then on, the government went all-out to turn people against CICIG. We see the resulting polarization today. The army figures advising Morales at the time got what they wanted. They did away with the resolve we saw in 2015, 2016 and succeeded in scaring the population. And all this favored broader criminal enterprises. While we were busy dealing with this situation, drug trafficking routes were re-established across the country.
While the army was deployed in Guatemala City acting in ways it should never have against CICIG, drug trafficking had free rein. There are parts of the country where the State simply does not exist, such as Huehuetenango [in western Guatemala], where we cannot enter.
Intelligence Services Working for Drug Traffickers
IC: Are you referring to areas controlled by organized crime?
JFS: Yes, by drug traffickers. This was the case of Los Huistas (in Huehuetenango), for example, which have links to Mexico’s Sinaloa Cartel. The few among them who have been arrested were found in the capital. We have not been able to enter that, not even when we asked for help from the US DEA (Drug Enforcement Administration). Even they told us they don’t go there.
IC: Is this control by drug traffickers linked to what happened in Izabal? (Criminals allegedly killed three soldiers in October 2019 in Izabal, after which a state of emergency was declared.)
JFS: A state of emergency was declared across 22 municipalities in six departments, all of which are drug trafficking corridors. There is no state control in the region between Izabal and Petén, for example, which is the natural route to take drugs to Mexico. If you want to move something with nobody noticing, take it to Izabal and Petén.
That is part of Guatemala’s northern fringe where the army removed the population in the 1970s and organized crime took over. It is a natural crossing point with no government control.