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Paraguay's New Cabinet Shadowed by Criminal Ties
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Paraguay's New Cabinet Shadowed by Criminal Ties

COCAINE / 15 AUG 2023 BY CHRISTOPHER NEWTON EN

Paraguay’s new president, who was sworn in on August 15, will face entrenched organized criminal interests, some of which appear to have close ties to members of his own cabinet.  

Santiago Peña, a former finance minister under Horacio Cartes (2013-2018), promised economic growth, job creation, and poverty reduction, citing his extensive background as an economist in the private and public sectors. He also said Paraguay needed to root out corruption to cleanse its reputation and attract foreign investment, promising to investigate corrupt wings of the government.  

It was ironic: Many of those accused of corruption are linked closely to several members of Peña’s cabinet.  

New Cabinet, Old Faces  

Peña hails from Cartes’ wing of the Colorado Party. And more than a third of Peña’s cabinet were ministers under Cartes, who still heads the party.  

The connections between Cartes and Peña have raised eyebrows. Cartes -- who owns a number of media outlets, banks, and businesses, including a cigarette company -- is currently being investigated for corruption by the Attorney General’s Office. And in 2022, Cartes was  sanctioned by the US Department of State for “significant corruption.”  

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Cartes also has long been accused of being a major player in contraband cigarette trafficking and using his legitimate businesses to launder money through his banks. Both his uncle and cousin have been arrested for drug trafficking, and Cartes himself has been linked to transnational criminal organizations, including the PCC and Hezbollah.  

None of this has stopped Peña from forming a cabinet with close ties to Cartes. For instance, Peña’s pick for finance minister, Carlos Fernández Valdovinos, was the president of Paraguay's Central Bank under Cartes and served as the president of Banco Basa, which is owned by Cartes.  

“The spinning doors keep spinning,” said David Riveros García, Executive Director of the Paraguayan anticorruption organization, reAcción. “The question that keeps coming up in civil society and the private sector is whether Peña will be the president of the republic or Horacio Cartes’ puppet." 

SEE ALSO: Paraguay Election Dims Chances of Corruption Crackdown

Other ministries, such as urbanization, interior, environment, social development, and public health will also be led by people closely connected to Cartes.  

“The number of ministers tied to Cartes’ cabinet or even his businesses is due to the fact that Peña himself is a Cartes man,” Carlos Peris, a sociologist at the National University of Asunción, told InSight Crime. 

The ties have made Peña beholden to his former boss. Esteban Caballero, a political scientist from the Latin American Faculty of Social Sciences in Mexico City, said. And Peña, Caballero added, was trying to thread the needle by bringing in close allies who he knows can do the job, while at the same time keeping the party boss out of jail. 

“In this sense, Peña’s conducting a balancing act between forming a technically sound government and at the same time, creating a cabinet that could protect Cartes from any attempt to hold him accountable before the courts,” he said. 

Drug Connections 

Perhaps the cabinet member most responsible for keeping Cartes from prosecution will be Ángel Barchini, Peña’s new justice minister. Barchini was ambassador to Qatar under Cartes and has faced legal problems of his own. 

In 2004, Paraguayan authorities seized nearly four tons of cocaine at Asunción’s Silvio Petrossi airport. Authorities later accused Ahmed Hashem, a German citizen who had been staying in Paraguay, of arranging the massive shipment. Phone records from the case showed that Hashem had been in near-daily contact with Barchini and Barchini’s brother prior to the seizure.  

Hashem fled Paraguay and disappeared, and the Barchini brothers were never prosecuted. The brothers denied any knowledge of the cocaine shipment and insisted that their only contact with Hashem was limited to conversations about legitimate investment opportunities in Paraguay.   

In 2009, however, Ángel Barchini found himself embroiled in another cocaine case when his business partner, Arturo Luglietto, was arrested with 250 kilograms of cocaine in Italy. The two men organized concerts in Paraguay, and Barchini said he only learned of Luglietto’s underworld ties after his arrest.  

Follow the Money

Peña has also made questionable choices for his cabinet members in charge of handling white-collar crime.  

Incoming Minister of Finance Carlos Fernández Valdovinos, for example, was tied to suspicious money movement. Specifically, in 2015, while he was president of Paraguay’s Central Bank, he authorized a transfer of 15,123,028,872 Guaranies (about $2,000,000) to Ramón González Daher. González Daher has since been convicted of money laundering, false declarations, and usury. He also used banks owned by Cartes to launder $587,000,000 in ill-gotten profits. 

SEE ALSO: Paraguay: The New Safe Haven for Brazilian Traffickers, Money Launderers

Claudia Centurión, who Peña appointed public works and communications minister, also has business ties to Cartes. She was previously the general manager of the construction company, Jiménez Gaona y Lima, which is owned by the Cartes conglomerate. The company’s founder, Ramón Jiménez Gaona, ran the Public Works and Communications Ministry under Cartes. 

In April, Jímenez Gaona was indicted for misappropriating funds related to a failed company, Métrobus. Former Attorney General Sandra Quiñónez, who has been investigated for refusing to prosecute Cartes, was accused of covering up the case.   

A Sliver of Hope? 

Despite the many accusations and shady connections in Paraguay’s incoming government, Caballero remains surprisingly optimistic that Peña will tackle corruption. 

While Cartes’ ties to organized crime and continued influence are undeniably worrisome, Caballero said that Peña is the actual president, and the fact that Peña has not faced accusations of corruption is significant.  

“Peña could come out on top. He could build a certain autonomy from bad influences and move forward,” Caballero said. 

But others are skeptical. “The powers behind the powers-that-be have a clear agenda of impunity, isolation, and the concentration of power and wealth,” said Riveros García. 

“There are ministers with skilled profiles who could end up instituting good public policies -- they have those abilities,” Peris told InSight Crime. “But none of these policies or measures taken are going to go against the interests of the [ruling] party.”

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