HomeNewsAnalysisLatest Guatemala Corruption Scandal May End in President’s Ouster
ANALYSIS

Latest Guatemala Corruption Scandal May End in President's Ouster

ELITES AND CRIME / 22 MAY 2015 BY DAVID GAGNE EN

Authorities in Guatemala have arrested the head of the country's social security agency, a man with close ties to President Otto Perez Molina, in the latest corruption scandal to threaten the presidency.

On May 20, Guatemalan authorities arrested the president of the country's Social Security Institute (IGSS), Juan de Dios Rodriguez, on charges of fraud, reported elPeriodicoFifteen additional suspects -- including Julio Roberto Suarez Guerra, Vice President of the IGSS and President of Guatemala's Central Bank -- had been captured earlier that day for their alleged ties to an irregular contract the IGSS awarded to pharmaceutical company Pisa in October 2014.

Following the first wave of arrests, Rodriguez -- a former military official and private secretary to President Perez Molina -- fled his home in Guatemala City. He was later captured in a hospital. 

The IGSS approved a contract with the pharmaceutical company worth over $15 million dollars, even though the company failed to meet basic government standards and was unable to provide dialysis treatment for patients with kidney problems, reported La Hora. According to prosecutors, the alleged participants in the scheme pocketed 15 to 16 percent of the money, roughly $2.27 million dollars. The faulty treatment is believed to have caused the deaths of at least 13 patients, reported Prensa Libre.  

Also among those captured was the former IGSS deputy finance manager Otto Molina Stalling, son of Supreme Court Judge Blanca Stalling, reported elPeriodico.

The day after the arrests, Mauricio Lopez Bonilla resigned as Guatemala's Interior Minister.

The President Under Fire -- Again

For years, Rodriguez was a powerful figure whose influence reached the upper echelons of Guatemalan politics. "Throughout [the Perez Molina] administration, [Rodriguez] has been part of the President's inner circle," Manfredo Marroquin, director of the Guatemalan civil society group Accion Ciudadana, told InSight Crime.

In April 2013, Perez Molina named Rodriguez head of the IGSS, which is "one of the most powerful posts in the government," according to Marroquin, because it is "one of the few institutions that has a lot of financial resources."

The IGSS has been suspected of using its large budget -- nearly $2 billion in 2014 -- to award phony contracts via no-bid selections to shady medicine purveyors. But analysts say the control political operators have over Guatemala's court system has kept any wrongdoing by IGSS officials largely under wraps -- until now.

Given Rodriguez's well-placed connections, his arrest indicates no government official has sufficient political immunity to skirt the latest corruption probe. That could include Rodriguez's former boss, Perez Molina. The president's administration is already embroiled in a massive corruption scandal, known as "La Linea," that has led to the resignation of former Vice President Roxana Baldetti. Amid massive demonstrations calling for his resignation, Perez Molina's close ties to Rodriguez may bring a premature end to his presidential term before he is scheduled to leave office in January 2016.

SEE ALSO: Coverage of Elites and Organized Crime

"Given more people are out in the street again, I wouldn't be surprised if [Perez Molina] is forced out," Mike Allison, head of the Political Science Department at the University of Scranton, told InSight Crime.

Marroquin echoed this comment. "The truth is, I don't understand why he would want to continue in office if he no longer enjoys practically any credibility," he said. "In the short term, I think he has no other option than to resign." 

A Guatemalan Spring?

Corruption at the highest levels of government is not a new phenomenon in Guatemala. To mention just one example, former President Alfonso Portillo was extradited to the United States in May 2013, where he spent time in prison for money laundering.

However, the latest scandals have generated an unprecedented level of public outrage. An estimated 60,000 people took to the streets during one recent anti-corruption rally, calling for Perez Molina's resignation.

GUATEPROTEST

Thousands of Guatemalans flooded Constitution Plaza demanding Perez Molina's resignation

"Things are happening that have never happened in Guatemala... there have never been protests this massive," Daniel Haering, Director of the Ibn Khaldun International Research Center at the University of Francisco Marroquin in Guatemala told InSight Crime.

There are likely many factors contributing to the strong public reaction to recent government scandals. But the investigative work of the International Commission against Impunity in Guatemala (CICIG) and the Attorney General's Office was surely the spark that lit the fire. "Obviously, everything began with the CICIG investigation. That was the catalyst," Haering said.

Protesters were also able to organize through social networking sites like Twitter, using the hashtag #RenunciaYa (Resign Now) to build support for their cause, according to Marroquin.

With presidential elections in September, the timing of the scandals also likely played an important role. The prospect of more corrupt politicians being swept into office probably fed popular unrest. "The people view the upcoming elections as more of the same... [They see the elections] as another four year sentence of continued corruption," Marroquin noted.

Indeed, Haering believes the current protests have as much to do with systemic corruption and impunity as with the politicians themselves. "I think all of this discontent is not only directed at Perez Molina... It's more the understanding that this is just one more case of how the system works and that the politicians basically prey on the [state] budget," Haering said.

SEE ALSO: Guatemala News and Profiles

It is difficult to predict whether or not this massive public outcry will lead to lasting political reforms. Attacking structural impunity is a much more complex and difficult task than outing flagrant officials conducting large-scale government fraud schemes. Nonetheless, the major victories against impunity in the past month are cause for hope.

UPDATE: Media outlets have reported that Perez Molina requested the resignation of Lopez Bonilla as well as the Minister of Energy and the Minister of Environment.

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