HomeNewsBriefUS Arrests Honduras Elite for Allegedly Laundering Corruption Proceeds
BRIEF

US Arrests Honduras Elite for Allegedly Laundering Corruption Proceeds

ELITES AND CRIME / 3 MAY 2018 BY FELIPE PUERTA EN

The US arrest of a man tied to a graft scheme involving one of Honduras’ largest government institutions is a clear sign of the limits to Washington’s leniency with its regional allies as well as a demonstration of the Honduran government’s inability to prosecute corrupt elites.

On May 1, the US Justice Department announced the arrest of Carlos Zelaya, who is accused of conspiring to launder more than $1 million from bribes and misappropriated funds from the Honduran Social Security Institute (Instituto Hondureño de Seguridad Social – IHSS).

His brother, Mario Zelaya, the former president of the social security institute from 2010 to 2014, during the presidency of Porfirio Lobo, was arrested in September 2016 near the Honduras-Nicaragua border after living as a fugitive for seven months. In 2017, he was convicted of a series of crimes in connection with the embezzlement of more than $300 million from the IHSS, according to a report by La Prensa.

Carlos Zelaya is accused of conspiring with his brother to launder more than $1.3 million through international electronic transfers that he then used to purchase property in New Orleans, Louisiana, where he had been living.

SEE ALSO: Honduras News and Profiles

Part of this money could be the product of a series of bribes paid by two Honduran business leaders to Mario Zelaya when he ran the IHSS. Carlos Zelaya is also suspected of having used his brother’s position to benefit from lucrative Honduran government contracts and to have laundered that money in New Orleans as well.

The bribes occurred during the administration of former President Porfirio Lobo, whose son, Fabio Lobo, was sentenced to 24 years in US prison for drug trafficking in September 2017. Moreover, Porfirio Lobo's wife, Rosa Elena Bonilla de Lobo, was detained in Honduras in February on charges including misappropriation of public funds, money laundering and conspiracy.

In the US case against Fabio Lobo, Devis Leonel Rivera Maradiaga, the leader of drug trafficking group known as the Cachiros, named former President Porfirio Lobo in his testimony. According to a report by El Heraldo, Rivera testified that the Cachiros gave the senior Lobo up to $500,000 in exchange for various favors, but the ex-president has yet to face charges in Honduras.

InSight Crime Analysis

Carlos Zelaya’s arrest in New Orleans on money laundering charges illustrates the complex position the United States has had to adopt when its allies fail to bring successful corruption cases against their political elites -- particularly when those individuals go on to commit crimes in US territory.

After learning of the arrest, the top US diplomat in Honduras, Heide Fulton, tweeted that the United States “will not be a refuge for those who intend to flee from justice in Honduras, nor will [its] financial system be used to launder funds stolen from the Honduran people.”

The Attorney General’s Office in Honduras began its investigation into the IHSS at the end of 2013, later revealing that leadership within the National Party (Partido Nacional) of current President Juan Orlando Hernández received at least $90 million from the institute via more than 10 ghost companies.

As InSight Crime has reported, after Hernández admitted in 2015 that businesses linked to the IHSS embezzlement had financed his campaign, massive protests took the country by storm. These protests were one of the main precursors to the creation of the Support Mission Against Corruption and Impunity in Honduras (Misión de Apoyo contra la Corrupción y la Impunidad en Honduras – MACCIH).

SEE ALSO: InDepth Coverage of Elites and Organized Crime

However, despite accusations of links between his inner circle and organized crime, Hernández is one of the US government’s closest allies in the region. In fact, the United States supported Hernández when his reelection at the end of 2017 was plagued by allegations of fraud and violent political repression.

Meanwhile, the MACCIH has faced a series of roadblocks from the Honduran political elite, the most recent of which was the decision of three appeals court judges to dismiss some of the charges against former first lady Bonilla de Lobo. According to El Heraldo, the Attorney General’s Office has criticized the decision and plans to appeal it.

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