HomeNewsNo Smoke Without Fire: Inside the Investigation into Paraguay's Horacio Cartes
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No Smoke Without Fire: Inside the Investigation into Paraguay's Horacio Cartes

BRAZIL / 28 JUL 2022 BY SERGIO SAFFON EN

Former Paraguay president, Horacio Cartes, is facing the worse moment of his political career: accused of money laundering at home, he also has US authorities on his tail.

The State Department accused Cartes of participating in "significant corruption" on July 22. The former president allegedly obstructed a criminal investigation and also maintained ties to "foreign terrorist organizations," according to a statement released by US Secretary of State, Antony Blinken. Cartes has dismissed the allegations as baseless.

But the accusations against Cartes are not new. In February this year, then interior minster Arnaldo Giuzzio presented the findings of an investigation containing extensive details on an alleged cigarette smuggling and money laundering network connected to the former president.

Giuzzio was removed from office weeks after presenting the operation because of his alleged links to Brazilian drug trafficker, Marcus Vinicius Espíndula Marqués de Padua.

The former minister admitted to discussing state contracts and hiring a vehicle from Espíndula in 2021, but says it was before he learned of the Brazilian's criminal record. Giuzzio was previously photographed with Espíndula, who owns a company that provided equipment for armor-plating vehicles.

Giuzzio has not faced criminal charges and, according to reports in local press, is now working with Paraguay's drug authorities.

Speaking to InSight Crime, Giuzzio described Horacio Cartes’ influence over the Paraguayan state and the implications of the US accusation.

InSight Crime: On July 22, the US Ambassador to Paraguay announced the designation of former president Cartes and his family as "significantly corrupt." What impact will this have in Paraguay?

Arnaldo Giuzzio: For me, the State Department's announcement has an underlying message. It is not only a question of revoking a visa or preventing some of these people from entering the US, but a message to our country directed at the entire Paraguayan judicial system and its officials, including those in the Attorney General’s Office.

IC: The allegations against Cartes have been known for a long time, even before he became president. Why does it seem that progress is only being made now?

AG: There are many things I'm not aware of, so all I can do is speculate. But our presentation to Congress [on Cartes' criminal activities] was an important breakthrough. It was a start, because no one in the country was aware of the magnitude of his criminal activity, even though it was an open secret.

He is a very powerful person. He currently controls 40 percent of media outlets in the country. That alone generates public opinion. Cartes was also smart enough to incorporate or keep people in important public sector roles who were ultimately more loyal to him than to the current president. It was very difficult to conduct an investigation, or even do intelligence work in the country, because he could easily get his hands on information or find out what was being investigated.

IC: Are we talking about people like Attorney General Sandra Quiñones, for example?

AG: [Information leaks] are impossible to avoid in all areas of the state and even the Attorney General's Office. Also the judiciary, and the institutions of the executive branch. Many are aligned with the president and others play both sides, also providing information to Cartes. That's why, in the presentation we made to Congress, we mentioned it was very important for President Abdo to get rid of the [compromised] people embedded in public institutions. That's why I said the message [from the State Department] is addressed to [Paraguay's] judicial system, because the Attorney General's Office has information [on Cartes] from 2019 to the present day.

The most recent claims against Cartes were made by anti-corruption minister, René Fernández, regarding reports of an aircraft registered in Iran and with Iranian crew that was directly connected to a terrorist group. The dubious plane was transporting goods or cigarettes manufactured by Cartes' company.

IC: Is the US announcement meant to put pressure on and provide support to the stalled investigations into Cartes' illegal activity in Paraguay?

AG: That's how it is in our country. The Attorney General's Office has investigated many people and most of them have been charged. The Cartes case is the only one that has remained in impunity, with many demanding action from the justice system and the Attorney General's Office. Why is Cartes and his entourage different? That's what annoys a lot of citizens.

IC: Do you mean the accusation against Cartes was possible because of information provided to Congress and allegations made earlier this year by the Ministry for the Prevention of Money and Property Laundering (Secretaría de Prevención de Lavado de Dinero o Bienes - SEPRELAD)?

AG: I don't have all the context, but I think the fire was lit at the beginning of the year with our presentation to Congress and our complaint to SEPRELAD. The claims made by Fernández about the Iranian plane have also been added to the mix. I think they are definitely relevant. For me, it's a new opportunity for the judicial system and the Attorney General’s Office.

The coming days are going to be key, and they're going to reveal the next steps. The only option left for the Attorney General’s Office is an indictment [and] a local arrest warrant allowing Cartes to be prosecuted and preventing his escape. I believe the US government, if they haven't done so already, will also starting building a case. There, an arrest warrant can be issued along with an extradition request.

IC: Did the government follow your recommendation and start removing key figures protecting Cartes?

AG: I think he still has people in key sectors, and others that we don't even know about. But they are there. They are informants who provide a lot of benefits for Cartes, as he is told about everything going on [in government].

IC: With presidential elections next year, is there a chance a candidate from Cartes' party wins and drops the case against him?

AG: All of this has come at a time of surgical precision. I believe the US government's decision [to designate] Cartes is the first step. It started with family groups, then it will move to his business sphere.

Next week, [SEPRELAD] minister Carlos Arregui will defend Paraguay at the Financial Action Task Force of Latin America (Grupo de Acción Financiera de Latinoamérica - GAFILAT) to prevent the country from landing on its grey list[of countries subject to increased scrutiny for money laundering]. They are going to judge the lack of measures implemented by Cartes during his time in office that, unfortunately, weakened the entire system of controls.

IC: What was Cartes' role in these criminal networks? If he is sent to prison, would it have a major impact on organized crime in Paraguay?

AG: From my point of view, he not only operates for himself, but also for other organizations that use the structure he created to launder his money.

Today, Cartes' operations are a kind of regional hub for money laundering throughout this part of the continent. I say this, because we now see how vulnerable Paraguay has become [to financial crime] because of a lack of investment in defense and state security.

IC: You were removed as interior minister because of your alleged ties to a Brazilian drug trafficker. You were photographed with him and one of his companies was lining up to sell protection equipment to the Interior Ministry. How do you explain that?

During a previous administration (2013-2018) I was a senator alongside current President Mario Abdo Benítez. We both opposed the Cartes government and his apparatus. Later, when I was assigned to the SENAD [the Paraguay National Anti-Drug Secretariat] and then the Interior Ministry, we were harassed by Cartes’ news outlets.

When we presented the accusations before SEPRELAD and revealed our case before the Paraguay Senate, we were literally declared persona non grata by those aligned with Cartes. [Cartes’ media group] pushed the idea that I had been on holiday with a vehicle owned by a drug trafficker. I insist that, at the time, I did not know that he was involved with a criminal organization. As far as I know, his company is still operating; it’s a firm that provides protection for vehicles in our country.

The [drug trafficker] had approached us because he was interested in selling his armor plating to the police and the security forces in general. He was offering vests that could resist calibre 50 weapons. That seemed impossible to me, so I summoned representatives of the other security forces to a meeting on police property to try out the equipment on the team. The photos were taken to document the trial. I don’t know how Cartes’ [media] group obtained the photos, but they used them to allege there was a personal approach [from the trafficker]. He was subject to an open investigation in Brazil – I don’t know the charges – but in Paraguay we checked and there was absolutely nothing on him.  

My case happened when I was heading to Brazil for vacation. I had a problem with my car and the only person I knew who rented vehicles, specifically armored ones, was that person. So, I signed a standard rental contract and used a vehicle. Later that was used to say that I was linked to a criminal organization.

*This interview has been edited for space and content.

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