HomeNewsAnalysisHow the Scandal that Rocked Guatemala Threatens the Presidency
ANALYSIS

How the Scandal that Rocked Guatemala Threatens the Presidency

CIACS / 30 APR 2015 BY DAVID GAGNE EN

Guatemala President Otto Perez Molina and Vice President Roxana Baldetti have come under intense scrutiny for their potential links to one of the country's biggest corruption scandals in recent years.

On April 16, authorities announced the arrests of the head of Guatemala's Superintendency of Tax Administration (SAT), Alvaro Omar Franco Chacon, and his predecessor, Carlos Enrique Muñoz Roldan, for their alleged participation in a customs fraud network.

Dubbed "La Linea," or "The Line" by investigators, the network reportedly charged importers just 40 percent of standard import taxes, and received kickbacks of 30 percent. The importers kept the remaining 30 percent, meaning the government was receiving less than half of the tax revenue on imports that it would earn under normal circumstances. In addition to Franco and Muñoz, more than a dozen other individuals implicated in the corruption network were arrested in the sting.

However, Guatemala's Attorney General's Office and the United Nation's International Commission against Impunity in Guatemala (Comision Internacional contra la Impunidad en Guatemala - CICIG), which conducted the joint investigation, consider Baldetti's then-private secretary, Juan Carlos Monzon, to be La Linea's top boss. So far, Monzon has managed to avoid arrest.

Measuring Degrees of Separation from La Linea to the Presidency

On April 13, just days before the arrests, Monzon accompanied Baldetti on a trip to South Korea, where she received an honorary degree. During a press conference on April 19, Baldetti admitted that this was the first time Monzon had traveled with her outside the country. The Vice President said she knew Monzon was under investigation, but was not aware of the specific details, even though she is the president of the National Commission Against Contraband (CONACON).

According to Baldetti, Monzon left her to attend to "personal things" just hours before she found out about the arrests. The Vice President said she called Monzon as soon as news reached her of the scandal and fired him, demanding that he return to face justice in Guatemala. Nevertheless, Baldetti stated that she does not know where Monzon currently resides. 

The Vice President said she knew Monzon was under investigation, but was not aware of the specific details. Baldetti is the president of the National Commission Against Contraband.

There are a few more degrees of separation between President Perez Molina and the customs scandal. However, as Manfredo Marroquin, head of the Guatemalan civil society group Accion Ciudadana, told InSight Crime: "All of the pieces provoke suspicion of the president as well."

La Linea's alleged second-in-command, Salvador Estuardo Gonzalez Alvarez, is the president of a news corporation that owns Guatemalan newspapers Siglo 21 and Al Dia. According to elPeriodico, Gonzalez Alvarez -- who was among those captured during the raid -- is the son of former Guatemalan Defense Minister Marco Antonio Gonzalez Taracena. 

SEE ALSO: Guatemala News and Profiles

ElPeriodico states that Gonzalez Taracena was Perez Molina's boss when the president served in the now-dissolved Estado Mayor Presidencial (EMP), the intelligence wing of the presidency, similar to the United States Government's National Security Agency. Gonzalez Taracena also reportedly assisted Perez Molina in designing his national security plan when he became president.

Shortly after Gonzalez Alvarez took over as president of the news corporation in July 2013, he pressured Siglo 21 editors to publish articles that portrayed Perez Molina and Baldetti in a favorable light, according to a former Siglo 21 journalist interviewed by elPeriodico. What's more, an alleged member of La Linea, Giovani Marroquin Navas, recently declared in court that last year Perez Molina attended a meeting organized by Gonzalez Alvarez to discuss a plan designed to improve Guatemala's tax collection services.

Click through the presentation below to view the links between alleged La Linea members and the President's Office

The Customs Fraud Network That 'Never Disappeared'

Perez Molina's possible ties to customs fraud networks could go back much further than just La Linea.

From the 1970s until the mid-1990s, a powerful contraband ring made up of corrupt military, police, and other government officials known as the Moreno network collected large sums of money by confiscating contraband shipments and forcing their owners to pay bribes in order to recover the goods, according to a 2003 Washington Office on Latin America (WOLA) report (pdf) on illegal armed groups in Guatemala.

In the same report, WOLA listed Perez Molina as one of the leaders of a clandestine group within the military known as "El Sindicato." El Sindicato was one of Guatemala's "hidden powers," or CIACS as they are known by their Spanish acronym, shadowy groups made up mainly of former military and intelligence officials that have their origins in the country's civil conflict. Another prominent member of El Sindicato, according to WOLA, was General Roberto Letona Hora, who was also allegedly part of the Moreno network. WOLA noted the unusually high level of cohesion and fraternity among members of El Sindicato.

SEE ALSO: Coverage of CIACS

Perez Molina may also have connections to the link between La Linea and the Moreno network. A suspect arrested as part of the La Linea investigation, Francisco Javier Ortiz Arriaga, had previously served as the top deputy for the Moreno network's leader, Alfredo Moreno Molina, reported Prensa Libre. According to elPeriodico, Ortiz Arriaga helped arrange the 2014 meeting both Perez Molina and Gonzalez Alvarez attended.

Perez Molina's possible ties to customs fraud networks could go back much further than just La Linea.

Ortiz Arriaga's involvement in both La Linea and the Moreno network indicates that the criminal structure that largely controlled Guatemala's customs system for decades was never fully dismantled. "The customs fraud structures that were dismantled yesterday have operated since the Moreno network in 1995, and never disappeared," CICIG Commissioner Ivan Velasquez stated at a press conference.

Perez Molina is also facing scrutiny for his decision to select first Muñoz in 2013 and then Franco in January 2015 to head the SAT. During a press conference on April 17, Perez said he did not know Franco was part of La Linea, and that there were no outside influences affecting his decision-making process. Muñoz was reportedly dismissed as head of the SAT for failing to collect sufficient tax revenue two years in a row.

None of this evidence would be enough to convict Baldetti or Perez of wrongdoing in a criminal court, even if it has provoked Guatemalan citizens to hold massive protests calling for their resignation. But that doesn't mean more incriminating evidence won't come to light in the coming weeks and months.

"The investigation [into La Linea] has not concluded... the [Attorney General's Office] and the CICIG made it very clear in saying this investigation has just begun," Marroquin told InSight Crime. "A second stage of the investigation could directly involve the vice president," he added.

And perhaps Baldetti's boss as well. 

share icon icon icon

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

What are your thoughts? Click here to send InSight Crime your comments.

We encourage readers to copy and distribute our work for non-commercial purposes, with attribution to InSight Crime in the byline and links to the original at both the top and bottom of the article. Check the Creative Commons website for more details of how to share our work, and please send us an email if you use an article.

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

Related Content

ELITES AND CRIME / 29 JAN 2021

Guatemala's congress has named to the country's Constitutional Court a judge who is under investigation for obstruction of justice, in…

BARRIO 18 / 17 FEB 2020

The evidence used to indict several high-ranking politicians in El Salvador for negotiating with gangs has been around for years,…

EL SALVADOR / 26 SEP 2016

Mexico's crackdown against Central American migrants has increased human rights violations and crimes against the migrants, according to a new…

About InSight Crime

THE ORGANIZATION

Combating Environmental Crime in Colombia

15 JUN 2021

InSight Crime presented findings from an investigation into the main criminal activities fueling environmental destruction in Colombia.

THE ORGANIZATION

Collaborating on Citizen Security Initiatives

8 JUN 2021

Co-director Steven Dudley worked with Chemonics, a DC-based development firm, to analyze the organization’s citizen security programs in Mexico.

THE ORGANIZATION

InSight Crime Deepens Its Connections with Universities

31 MAY 2021

A partnership with the University for Peace will complement InSight Crime’s research methodology and expertise on Costa Rica.

THE ORGANIZATION

With Support from USAID, InSight Crime Will Investigate Organized Crime in Haiti

31 MAY 2021

The project will seek to map out Haiti's principal criminal economies, profile the specific groups and actors, and detail their links to elements of the state.

THE ORGANIZATION

We Have Updated Our Website

4 FEB 2021

Welcome to our new home page. We have revamped the site to create a better display and reader experience.