HomeNewsBriefOil Company Corruption Scandal Threatens Ecuador's Political Elite
BRIEF

Oil Company Corruption Scandal Threatens Ecuador's Political Elite

ECUADOR / 7 NOV 2016 BY JAMES BARGENT EN

Interpol has joined the hunt for a former Ecuadorian government minister and head of its state oil company, who is on the run from a corruption scandal that echoes Brazil's "Car Wash" investigation in its threat to corrupt elites.

On November 3, Interpol issued a capture order for Jorge Pareja Yannuzzelli, who fled Ecuador in September.

Pareja, who was the minister for hydrocarbons between November 2015 and April 2016 and had previously headed state oil company Petroecuador, is subject to a preventative detention order alongside eight others, all of whom are accused of bribery, reported La Hora.

Pareja and his associates stand accused of taking bribes in exchange for Petroecuador state contracts and then concealing the money in offshore accounts in Panama. According to prosecutors, $1 million in suspect funds were deposited in Pareja's accounts during his time as minister, reported El Universo.

President Rafael Correa denounced the case as "the most serious act of corruption" seen in close to a decade of his administration.

InSight Crime Analysis

While the bribery charges levied against Pareja and his associates are serious enough, there is evidence they are little more than the tip of the iceberg when it comes to corruption in Petroecuador. The complex web of offshore accounts linked to those investigated imply a far more sophisticated criminal operation dedicated to illegally profiting from the company in numerous ways.

The investigations of online magazine Focus Ecuador, which helped expose the scandal, suggest that at the crux of this is the overcharging for contracts and the siphoning off of extra money. According to Focus, the renovation of a Petroecuador refinery in Esmeraldas raises the most suspicions. Construction went $1 billion over budget, with Pareja responsible for over half of the contracting that resulted in the overspend.

SEE ALSO: Coverage of Ecuador 

The allegations contain echoes of the "Car Wash" (Lavo Jato) investigation into Brazilian state oil company Petrobras. Car Wash began with allegations of personal corruption among politically connected elites, but branched off into numerous different areas of investigation that have helped reveal the endemic corruption at the heart of the Brazilian political system.

The investigation in Ecuador has the potential to follow a similar path. Pareja, although now disowned by President Correa, was once one of his inner circle and his go-to man for issues related to the oil sector and it seems unlikely such high-level corruption would stop with him.

Indeed, hints at who may fall under suspicion next have already emerged. In early November, Panamanian newspaper La Estrella claimed the country's authorities are sitting on a hugely damaging report on Ecuadorian Vice-President Jorge Glas that involves allegations of money laundering -- a claim Correa dismissed as "trash" and "gossip."

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