Guatemala prosecutors arrested a group of local officials who they say carried out a popular and juicy embezzlement scheme: the illegal attribution of government construction contracts in exchange for kickbacks.
Authorities captured 15 individuals on October 25, in Huehuetenango and Totonicapán, two neighboring departments of northwest Guatemala, announced the Attorney General's Office via a press release.
Among the arrested suspects are former local officials and employees from several municipalities spanning the two departments. Arrest warrants have been issued for another 11 individuals suspected of integrating the network. This includes Gerónimo Martínez, the current mayor of Huehuetenango -- the capital city of the department bearing the same name.
Authorities believe that several municipalities repeatedly fixed the attribution process of local government contracts to favor a particular construction company owned by Héctor Leonel Castillo Gómez. In return, Gómez allegedly gave everyone, from mayors and municipal treasurers to unionists and municipal employees, kickbacks.
Various tricks were used to conceal the scheme. The funds, for instance, were funneled through a non-lucrative association officially meant to carry out the bidding process, but whose function was in reality to serve as a screen between the municipalities and Castillo Gómez. Other construction company owners -- including the current Huehuetenango mayor -- appeared as bidding competitors, but were actually in on the scheme, authorities say. In certain cases, corrupt officials went so far as to tailor a public project so that Castillo Gómez's company would objectively be the best option to hire.
The investigation, focused on 2008 and 2009 and carried out with the help of the International Commission against Impunity in Guatemala (Comisión Internacional Contra la Impunidad en Guatemala - CICIG), found that Castillo Gómez's construction firm received more than 25 million quetzals (around $3.4 million) from the municipalities during the two-year period that was probed.
InSight Crime Analysis
The sums involved in local government contracts are considerable given that the works are often carried out in relatively remote areas. Due to this economic reality and thanks to the lack of efficient oversight, the illegal attribution of these contracts is more than just a means of illicit enrichment. It is also a powerful instrument to maintain local political control -- or wrestle it away from someone else, as InSight Crime detailed in an investigation into a construction company owner and alleged drug trafficker who became a mayor.
The same dynamics have also applied at a national level, as evidenced by the rise and fall of the previous administration. The illegal attribution of public contracts under former President Otto Pérez Molina did not only serve to fill politicians' pockets. They were also the closing of a transaction that had started in the form of financial contributions to Pérez Molina's campaign, which helped the candidate secure power.