HomeNewsBriefContraband Costing Guatemala 22% of Annual Budget
BRIEF

Contraband Costing Guatemala 22% of Annual Budget

CONTRABAND / 2 SEP 2016 BY TRISTAN CLAVEL EN

Representatives from Guatemala's agricultural industry have claimed food contraband has increased by almost one-third this year and cost the government over $2 billion in 2015, an accusation that does not bode well for the country's attempt to crack down on its corrupt customs agency.

Guatemala's trade union of food producers (La Gremial de Fabricantes de Alimentos - GREFAL) estimated that food contraband increased by 30 percent this year, reported La Hora. According to Luis Mazariegos, a union representative, contraband cooking oil from Mexico was particularly prominent, representing an estimated 30 percent of all total food contraband.

Other products where GREFAL noted an increase in contraband items included: rice, eggs, pasta products, liquor, tobacco, snacks and sweets.

On top of negatively impacting Guatemalan companies, Mazariegos said the total opportunity cost of these illicit products in 2015 amounted to 16 billion Guatemalan quetzales -- over $2.1 billion -- due to taxes and revenues not collected by the state.

As pointed out by elPeriódico, this lost sum would cover more than 20 percent of the Guatemalan government's 2016 budget of roughly $9.4 billion, underlining the magnitude of the problem. Indeed, the value of contraband passing through 113 border crossings with Mexico, Belize, El Salvador and Honduras is sufficient to cover the entire budget of Guatemala's Education Ministry ($1.8 billion), and is around three times that of the Health Ministry ($728 million).

GREFAL has called for the more enforcement and legal measures to address the problem, arguing that only 13 food contraband investigations were opened in 2015, and only three of those were adequately pursued.

InSight Crime Analysis

The figures presented by GREFAL are significant. Despite suspicion about their accuracy or exaggeration aroused by union's financial interest in the issue, Guatemala's failure to rein in contraband is beyond dispute.

Corruption within Guatemala's tax and customs authority (Superintendencia de Administración Tributaria - SAT) has gotten a lot of attention recently. Last year, President Otto Pérez Molina and his vice president, Roxana Baldetti, resigned from office and were subsequently arrested in connection with a customs fraud scheme, known as "La Línea." Prosecutors allege the scheme involved officials lowering import taxes on goods in exchange for kickbacks. Pérez Molina and Baldetti are currently in jail awaiting trial.

SEE ALSO: InDepth: Elites and Organized Crime

The United Nations-backed International Commission Against Impunity in Guatemala (Comisión Internacional Contra la Impunidad en Guatemala - CICIG) has been supporting the country's efforts to fight high-level corruption to good effect, as La Línea and several other emblematic cases demonstrate.

Despite this progress, the alarm sounded by agrobusiness over the scale of food contraband is a stark reminder that Guatemala still faces deep structural challenges and the fight against corruption must be waged at all levels of governance. 

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

GUATEMALA / 8 DEC 2010

Guatemalan Congress approved a law Tuesday that allows the state to seize the assets and property linked to criminal activity.

DISPLACEMENT / 17 OCT 2012

Researchers from the International Center for Migrant Human Rights (CIDEHUM) say that organized crime and violence have overtaken armed conflict…

GUATEMALA / 30 NOV 2015

The head of the United Nations' anti-impunity commission in Guatemala, Ivan Velasquez, said impunity will only fall when the government…

About InSight Crime

THE ORGANIZATION

Apure Investigation Makes Headlines

22 OCT 2021

InSight Crime’s investigation into the battle for the Venezuelan border state of Apure resonated in both Colombian and Venezuelan media. A dozen outlets picked up the report, including Venezuela’s…

THE ORGANIZATION

InSight Crime Tackles Illegal Fishing

15 OCT 2021

In October, InSight Crime and American University’s Center for Latin American and Latino Studies (CLALS) began a year-long project on illegal, unreported, unregulated (IUU) fishing in…

THE ORGANIZATION

InSight Crime Featured in Handbook for Reporting on Organized Crime

8 OCT 2021

In late September, the Global Investigative Journalism Network (GIJN) published an excerpt of its forthcoming guide on reporting organized crime in Indonesia.

THE ORGANIZATION

Probing Organized Crime in Haiti

1 OCT 2021

InSight Crime has made it a priority to investigate organized crime in Haiti, where an impotent state is reeling after the July assassination of President Jovenel Moïse, coupled with an…

THE ORGANIZATION

Emergency First Aid in Hostile Environments

24 SEP 2021

At InSight Crime's annual treat, we ramped up hostile environment and emergency first aid training for our 40-member staff, many of whom conduct on-the-ground investigations in dangerous corners of the region.