Guatemala's biggest metallurgic company reportedly set up a complex scheme involving front companies, corrupt officials and fake documentation to evade taxes for years, a blueprint for defrauding the state in a country that has long suffered from criminal conduct by elites.
The scheme set up by Aceros de Guatemala S.A, the largest metallurgic company in the Central American country, reportedly involved around thirty front companies and 27 different owners, according to an investigative series published recently by the Guatemalan media outlet Plaza Pública.
Plaza Pública had previously reported in February 2016 that Aceros de Guatemala was under investigation by the Attorney General's Office and the United Nations-backed International Commission against Impunity in Guatemala (Comisión Internacional contra la Impunidad en Guatemala - CICIG) for allegedly evading 255 million quetzals (roughly $35 million) in taxes between 2006 and 2009.
According to the investigation, the company achieved this in part by bribing officials from Guatemala's Superintendency of Tax Administration (Superintendencia de Administración Tributaria - SAT). But the firm also created a sophisticated network of corporate structures to obscure their business activities.
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The tax evasion scheme started with the creation of five companies that began billing Aceros de Guatemala for nonexistent services or construction materials as early as 2008, Plaza Pública reported. Several of the owners of the five initial companies have also been implicated in other tax fraud plots.
However, these companies were but the first layer of a complex criminal structure. The original companies then subcontracted with other firms, some of which were registered in the name of unwitting people whose identity cards had been stolen, and even, in several cases, in the name of deceased individuals.
Plaza Pública's investigation showed that four of the owners of the five initial companies shared the same accountant and auditor. In addition, the media outlet unearthed numerous ties between the front companies of both the first and second layer, which included shared accountants, notaries and company addresses, as well as family ties between owners in certain cases.
InSight Crime Analysis
Although Plaza Pública's investigation draws heavily on official documentation, the suspects in the scheme have not been convicted of any criminal wrongdoing. But the main themes of the case -- namely, powerful elites exploiting financial schemes that involve corrupt officials -- are strikingly reminiscent of those seen in other cases that have deeply shaken Guatemala.
In fact, the probe of Aceros de Guatemala by the Attorney General's Office and CICIG was based on evidence discovered during an investigation into a separate, but similar, corruption scheme known as "La Línea," which also involved corrupt SAT officials. In the now infamous case, Guatemala's former President Otto Pérez Molina and former Vice President Roxanna Baldetti were accused of having headed a network of corrupt customs officers who accepted bribes in exchange for helping companies avoid tariffs.
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In addition to this scandal, Guatemala has suffered from a variety of other schemes revolving around corrupt officials and elites attempting to siphon government funds one way or another. In particular, these have repeatedly involved the fraudulent awarding of public contracts, a mechanism deeply rooted in political corruption.
As the latest incident shows, these recurrent and sizeable frauds have involved not only the political but also the economic elites of the country. And beyond the financial damage incurred to the state budget, these widespread criminal schemes undertaken by certain elements of the elites have severely undermined faith in Guatemala's democratic governance and rule of law.
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