Hotels seized from accused Salvadoran drug kingpin Chepe Diablo were awarded lucrative government contracts to serve as quarantine centers, according to an audit of pandemic spending by El Salvador's Court of Accounts that could serve as the basis for cases against officials accused of misusing funds.
The audit found that the government made $842,435 in payments between March and April 2020 to Hotesa, a chain of hotels confiscated from José Adán Salazar Umaña Salazar Umaña, alias "Chepe Diablo," El Faro reported. More than $170,000 paid to the hotel chain, which came under government control in an asset forfeiture process against Salazar Umaña, was considered excessive, according to the audit. The payments were made in the form of rent to the hotels to operate as holding centers for people with COVID-19.
Despite being under the authority of the National Council for the Administration of Assets (Consejo Nacional de Administración de Bienes - CONAB), the institution responsible for administering assets seized during legal proceedings, the Hotesa hotels operate as private, for-profit entities, El Faro reported.
The money generated by these assets while under the administration of CONAB are used to comply with salary and legal obligations, while profits are frozen until legal forfeiture is completed, a Salvadoran public prosecutor explained to InSight Crime. The public prosecutor asked to remain anonymous for lack of authorization to speak about ongoing cases.
In 2016, Salazar Umaña was charged with laundering more than $138 million through 38 front companies, including hotels. He was also accused of leading the Texis Cartel, one of the most important drug trafficking organizations in the country. Umaña is currently on trial in El Salvador.
InSight Crime Analysis
The revelation that Salazar Umaña's hotels profited from pandemic spending is part of a wider investigation by the Salvadoran Comptroller and Attorney General’s Office into the pandemic-related expenditures of El Salvador President Nayib Bukele's administration -- an investigation that points to the misuse of government funds.
According to the audit, El Salvador's minister of tourism overspent by about $764,100 when contracting to use 21 hotels -- including the ones owned by Hotesa -- and a private residence as spaces to quarantine people suspected of contracting COVID-19. The containment centers cost the government some $5 million, and the sites ultimately did not have adequate isolation measures in place and wound up becoming centers of contagion.
The cousin of Health Minister Francisco Alabí also received a contract to rent out his house as a containment center, according to the audit.
Accusations of profiteering have mounted over the government's use of emergency pandemic funds. In November, the Attorney General's Office conducted over 20 raids on various government institutions, including the country’s health and finance ministries, as part of a criminal investigation to gather documentation on possible irregular purchases.
Top officials in Bukele's administration have come under scrutiny for handing out lucrative medical supplies contracts to their relatives or to companies with no apparent experience. Alabí is alleged to have given a $225,000 contract for rubber boots to an auto parts company of which his aunt is president.
Treasury Secretary José Alejandro Zelaya was identified as being an associate of a company that sold 300,000 face masks to the health agency for $750,000 — a cost of $2.50 per unit, or double the manufacturer’s price, according to an investigation by El Diario de Hoy.
Several members of the administration have denied any wrongdoing in the use of $2 billion in emergency funds destined for the pandemic response.