Corruption Network in Guatemalan Health System Exposed

May 22, 2015

by Nic Wirtz

Guatemalan authorities arrested 17 people, including the head of the Guatemalan Central bank, on Wednesday in an ongoing investigation into fraud at the Instituto Guatemalteco de Seguridad Social (IGSS—Guatemalan Institute of Social Security) that resulted in the deaths of at least five kidney failure patients.

In December 2014, IGSS changed its supplier of kidney dialysis treatment from Baxter to PISA, a Mexican firm, awarding it a 116 million quetzal contract ($15.67 million). This was to provide dialysis for 530 patients. However, CICIG wiretaps revealed that IGSS employees, businessmen and the head of the Bank of Guatemala stood to make 15-16 percent of the contract in kickbacks.

The Procuraduría de Derechos Humanos (PDH—Human Rights Ombudsman) received a number of complaints this year about the treatment, including a lack of personnel and poor facilities. Since December, a number of patients have died, while others have contracted peritonitis, an inflammation of the abdomen. On May 15, IGSS revoked the contract with PISA, citing "deficiencies in the educational plan" of patients and announced there would be a new tender for the service.

Ramiro Lorenzana, a doctor and spokesman for PISA, responded to complaints in an interview with, saying, “Patients are already in a terminal phase of the disease. Anything that happens today is down to them experiencing a failure of their kidneys. I insist they will die sooner or later.”

The 17 suspects arrested in connection with the scandal have been charged with an array of offenses, including fraud, bribery, conspiracy, influence peddling, illegal collection of fees, illicit association, and insider trading. Depending on investigations to be carried out by the Ministerio Público (Public Ministry—MP), further charges of culpable homicide in the deaths of at least seven patients could be filed.

"We found documentary evidence that members of the board [...] were committing the crime of fraud, due to the board unanimously approving the bid, "said Iván Velásquez, head of the Comisión Internacional contra la Impunidad en Guatemala (CICIG—International Commission against Impunity in Guatemala).

Julio Roberto Suárez Guerra, the president of the Bank of Guatemala, is among those facing charges of fraud. Other notable captures include Otto Fernando Molina Stalling, son of Supreme Court Judge (CSJ) Blanca Stalling—whose sister-in-law, Marta Sierra Stalling, is currently being investigated for her role in a bribes-for-bail scandal. Max Schoeder, the private sector go-between with IGSS, was an Air Force reserve during Guatemala’s civil war and was linked to bombing raids on Indigenous civilians in the 1980s.

Another suspect, IGSS’ board chairman Juan de Dios Rodríguez, was captured in a private hospital in Zone 13 of Guatemala City. Dios Rodríguez is a lawyer and retired Colonel, who was appointed as private secretary to Guatemalan president Otto Pérez Molina when he assumed power in January 2012. A year later, he was made the chairman of IGSS.

Dios Rodríguez will stay in the hospital until he is examined by a team of independent medical personnel.  He was admitted to Hospital Maranatha on Tuesday evening, suffering from depression, anxiety, a peptic ulcer, gastric reflux, and diabetes. 

The case is expected to continue with the first hearings on Friday, chaired by Judge Silvia Violeta de León Santos of the Sixth Court of First Penal Instance. In a CICIG report from November 2012, the judge was one of 18 judges flagged for investigation for decisions that favored criminal networks, according to Francisco Dall'Anese, CICIG commissioner at the time. In 2013, CICIG asked for immunity against the judges to be revoked, but the CSJ denied every request.

Carmen Aida Ibarra of the civil society organization Movimiento Pro Justicia (Pro-Justice Movement) claimed that the defrauding of IGSS went further, with Dios Rodríguez using cash from the organization to influence election results. Nominating committees for the attorney general, comptroller and judicial appointments were allegedly compromised.

Guatemala City was the scene of yet more protests on Wednesday as President Otto Pérez Molina faced continued calls for his resignation. Thousands of farmers marched on the capital to protest poor public services, the appointment of a controversial new vice president, Alejandro Maldonado, and an appeal for compensation for those families affected by a confrontation with soldiers in Totonicapán in October 2012 which left seven dead.

At a news conference, Pérez Molina brushed calls for his resignation aside. "I put my trust in all of these people, but that does not mean that I become responsible for what they did (the charges the suspects face and patient deaths); they have defrauded the trust,” said Pérez Molina. “I am the first to regret this situation and if they are responsible they should be brought to justice and convicted."

However, following the Caso SAT customs fraud scandal and now IGSS, Pérez Molina is facing increasing pressure. How untenable a position must Pérez Molina occupy before it is too untenable? At the very least, the last seven months of his presidency should be spent cleaning up Guatemala’s public services and putting systems into place so that history will not repeat itself.

More protests are set for this weekend and the next, heaping further pressure on the president to resign. Many worry that civic action could either turn violent or be violently repressed. No matter which party wins the election this fall, Guatemalans have lost patience with corruption and the pillaging of public funds.

Tags: Guatemala, Comisión Internacional Contra la Impunidad en Guatemala

Additional Guatemalan Officials Resign Amid Allegations of Corruption

May 22, 2015

by AQ Online

Guatemala’s Ministers of Interior, Energy and Mining, Environment, and the Secretary of Intelligence resigned on Thursday, amid a series of corruption scandals. The resignations come two weeks after Vice President Roxana Baldetti was forced to step down due to a top aide’s involvement in customs fraud.

Despite the resignations, President Otto Pérez Molina refuted claims that his government is collapsing. “[Rumors] that the cabinet is being dismantled [are] totally false, none of the ministers have indicated that they want to leave, not even in the most difficult of moments. I am making this decision with each one of them. Therefore, this is just a speculation. They are leaving their post at my request,” the president said.

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Tags: Guatemala, corruption

Veteran Judge Sworn in as Guatemala’s New Vice President

May 18, 2015

by Louisa Reynolds

Judge Alejandro Maldonado Aguirre was sworn in as Guatemala’s new vice president on May 15 after his predecessor, Roxana Baldetti, was forced to step down in the wake of a major corruption scandal.

Maldonado Aguirre was not originally included in the shortlist of candidates that President Otto Pérez Molina sent to Congress. The original list included police reform commissioner Adela Camacho de Torrebiarte, Minister of Labor Carlos Contreras and Adrian Zapata, executive secretary of the Cabinet for Rural Development. But due to a constitutional impediment, Contreras was replaced by PP Congressman Oliverio García Rodas.

However, if Congressman García Rodas left his seat in Congress, he would have been replaced by former Vice President Roxana Baldetti’s personal assistant, Daniela Beltranena, which would have exacerbated the widespread discontent with the current administration. This forced Pérez Molina to remove García Rodas from the shortlist and replace him with Maldonado Aguirre.

In the final vote count, 115 members of Congress voted for Maldonado Aguirre, 14 voted against him and 29 were reported absent.

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Tags: Guatemala, Alejandro Maldonado Aguirre, Otto Perez Molina

Guatemalan Customs Fraud Scandal Taints Lawyers, Judges

May 14, 2015

by Louisa Reynolds

On May 8, Guatemalan authorities arrested three lawyers representing defendants in a massive customs tax fraud case known as Caso SAT that has thrown the current administration into a state of disarray and forced Vice President Roxana Baldetti to resign.

The UN Comisión Internacional contra la Impunidad en Guatemala (International Commission Against Impunity in Guatemala—CICIG), which launched the investigation into the La Linea corruption network, accused lawyers José Arturo Morales, known as “Chepito,” Jorge Luis Escobar and Ruth Emilsa Trigueros of running a “law firm of impunity” that bribed corrupt judges to make unjustified decisions favoring organized crime groups. 

A total of 27 individuals—including the director and former director of Guatemala’s Superintendencia de Administración Tributaria (Tax Administration Superintendency—SAT)—Álvaro Omar Franco Chacón and Carlos Enrique Muñoz Roldán, have been arrested as part of the wider investigation into La Linea.

Wiretap recordings show how six other leading defendants in the case—Francisco Javier Ortiz, known as “Teniente Jerez,” Salvador Estuardo González, known as “Eco,” Miguel Ángel Aldana, Mónica Patricia Jáuregui, José Rolando Gil, and Carlos Ixtuc—used the three lawyers to bribe the judge presiding over the case, Marta Josefina Sierra González de Stalling, in exchange for obtaining release on bail and unguarded house arrest instead of prison.

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Tags: Guatemala, Caso SAT, corruption

Baldetti’s Resignation Deepens Guatemalan Political Crisis

May 13, 2015

by Nic Wirtz

Guatemalan Vice President Roxana Baldetti resigned last Friday, ending a tumultuous three weeks of protests after an investigation raised questions about her possible involvement in a high-profile corruption scandal known as Caso SAT. Baldetti’s former private secretary, Juan Carlos Monzón, was recently accused of organizing a corruption network targeting Guatemala´s tax collection agency—the Superintendencia de Administración Tributaria (SAT)—and is now at large.

President Otto Pérez Molina praised Baldetti’s “brave decision” in a press conference on Friday.  He said, “This was a voluntary, personal decision of the vice president.  It was thoughtful, difficult, courageous, but consistent with her principles and values.”

The vice president was facing a congressional impeachment hearing this week, after the Supreme Court unanimously ruled to send one of the four motions filed against Baldetti about her possible involvement in Caso SAT to Congress. 

Baldetti’s resignation marked the culmination of a difficult period. In March of this year, she was left on the sidelines of U.S. Vice President Joe Biden’s visit to Guatemala.  She received further scrutiny after the disappearance of Monzón, who is suspected of masterminding the SAT’s fraud. By the time Guatemala’s business elite from the Comité de Asociaciones Agrícolas, Comerciales, Industriales y Financieras (Coordinating Committee of Agriculture, Commercial, Industrial and Financial Associations—CACIF) withdrew their support for Baldetti, the writing was on the wall.  A few days later, the Conferencia Episcopal de Guatemala (Episcopal Conference of Guatemala—CEG) publically condemned fraud committed by the SAT.

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Tags: Guatemala, Roxana Baldetti, Caso SAT, corruption

Customs Fraud Sparks Guatemalan Protests

May 1, 2015

by Nic Wirtz

Tens of thousands of Guatemalans protested last Saturday, calling for the resignation of Vice President Roxana Baldetti for her alleged role in Caso SAT, a scandal involving the defrauding of hundreds of millions of quetzales from the Guatemalan government.

On April 16, Guatemalan authorities arrested 22 people in the culmination of an eight month investigation by the Fiscalía Especial contra la Impunidad (Special Anti-Impunity Prosecutor’s Bureau—FECI)—part of the Comisión Internacional contra la Impunidad en Guatemala (International Commission against Impunity in Guatemala—CICIG) and the Ministerio Publico (Public Ministry—MP).  A number of officials from the Superintendencia de Administración Tributaria (SAT), Guatemala’s tax collection agency, were detained, including the head of SAT, Omar Franco, his predecessor, Carlos Muñoz, and the private secretary of Baldetti, Juan Carlos Monzón. 

CICIG was investigating an alleged corruption network called “La Linea” (The Line) that targeted Guatemala’s customs system. Businesses that had their goods in two ports, Puerto Quetzal or Puerto Santo Tomás, would call a certain cellphone number to negotiate the rate to have their property released after passing through Customs.  A review of 500 containers revealed that 40 percent of customs taxes would be paid to the state, 30 percent to the fraudsters and the remaining 30 percent was a discount to the company.

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Tags: Guatemala, CasoSAT, corruption, Roxana Baldetti

Government Clashes with Guatemalan Indigenous Leaders Over Radio Station

April 15, 2015

by Louisa Reynolds

The murder of Indigenous activist Pascual Pablo Francisco, whose body showed signs of torture when he was found dead on March 27 in the northern department of Huehuetenango, is the latest episode in a long-standing conflict between the Guatemalan government and the Mayan Q’anjob’al community over the construction of a hydroelectric dam on the K’anbalam River.

The conflict dates back to 2011, when Guatemalan President Otto Pérez Molina’s government granted the company Hidro Santa Cruz, a subsidiary of Spanish corporation Hidralia Energía, a license to build the dam.  Indigenous communities that would be affected by the project say that they were not consulted—a violation of International Labour Organization (ILO) Convention 169 on the rights of Indigenous and tribal people, which states, among other things, that governments should establish or maintain procedures to consult affected Indigenous communities “before undertaking or permitting any programmes for the exploration or exploitation of […] resources pertaining to their lands.”

The government has since held a series of meetings with community leaders conducted by the Oficina Nacional de Diálogo (National Office for Dialogue) to resolve the conflict, but participants have been unable to reach an agreement.

Meanwhile, two other licenses were subsequently granted to the company Promoción de Desarrollos Hídricos, S.A. (PDHSA) in the nearby municipality of San Mateo Ixtatán. The Ministry of Energy and Mining is also evaluating three other license applications for hydroelectric dams to be built in the municipalities of San Mateo Ixtatán, Santa Eulalia and San Pedro Soloma. According to a recent report published by Contrapoder magazine, if these applications are successful, Huehuetenango would become the third most important department in Guatemala in terms of hydropower.

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Tags: Guatemala, hydroelectric power, Indigneous rights, consulta previa

Family Members of Guatemalans Infected in Disease Study File Lawsuit

April 2, 2015

by AQ Online

On Wednesday, nearly 800 people filed a $1 billion lawsuit against Johns Hopkins University for its role in a research study that infected more than 1,600 Guatemalans with sexually transmitted diseases in the 1940s and 1950s. The plaintiffs include family members of individuals who died from complications from diseases they contracted during the study, which sought to study penicillin’s effect on the spread of gonorrhea, chancres and syphilis among sex workers, mental patients, prisoners, and soldiers.

The research, known as the U.S. Public Health Service Sexually Transmitted Disease Inoculation Study of 1946-1948, came to light in 2010, prompting apologies from President Barack Obama and then-Secretary of State Hillary Clinton to then-Guatemalan President Álvaro Colom. The next year, a presidential commission on bioethical research called the study a “gross violations of ethics,” and said the experiments constituted “especially egregious moral wrongs because many of the individuals involved held positions of public institutional responsibility.”

Such individuals included the U.S. surgeon general, the U.S. attorney general, Army and Navy medical officials, the presidents of the American Medical Association and the National Academy of Sciences, and experts from Harvard, Johns Hopkins, and the Universities of Pennsylvania and Rochester, who participated on a government committee that reviewed the research proposal and approved it for funding.

Johns Hopkins spokesperson Kim Hoppe called the lawsuit an “attempt by the plaintiffs’ counsel to exploit a historic tragedy for monetary gain.” Robert Mathias, the lead counsel for Johns Hopkins, called the lawsuit "baseless,” saying the university “did not initiate, pay for or direct” the study. A Rockefeller spokesperson called the experiments "morally repugnant," but said the foundation would fight the lawsuit, stating that it had no role in the study’s planning, funding or execution.

The lawsuit, filed in Baltimore Circuit Court, also named the Rockefeller Foundation and pharmaceutical company Bristol-Myers Squibb as defendants. The victims’ lawyer, Paul Bekman, said the case was about “accountability and responsibility.”

Wednesday’s lawsuit isn’t the first related to the nearly 70-year-old study. Victims and their families filed a class-action lawsuit against the U.S. government in 2012, but the government rejected the suit on the grounds that the U.S. government can’t be sued for damages it caused abroad.

Tags: Guatemala, Public Health, Johns Hopkins, Lawsuit

Journalists’ Murder Highlights Lack of Press Freedom in Guatemala

March 17, 2015

by Nic Wirtz

Three Guatemalan journalists were killed and another seriously injured last week, exposing the high price to pay for reporting in the nation’s provinces.  All three were murdered in the department of Suchitepéquez about 96 miles from the capital, Guatemala City.    

Danilo López, a 38-year-old correspondent for national newspaper Prensa Libre, and Federico Salazar, a reporter for Radio Nuevo Mundo, were killed just yards from police and government officials in the central park of Mazatenango.  The two were covering an event commemorating International Women’s Day.  The suspected gunmen escaped on a motorbike, but one of them, Sergio Waldemar Cardona Reyes, was captured hours later.  Another suspected gunman, Artemio de Jesús Ramírez Torres, was apprehended last Friday in Champerico, an hour from Mazatenango.

According to local cable television presenter Marvin Israel Túnchez, who was taken to the hospital with gunshot wounds to his arm and leg, López was the target of the assassination.  López’s investigations in 2013 into public works in the department of Suchitepéquez had revealed 2.8 million quetzales ($368,000) worth of non-existent work. 

“Journalism is one of the most dangerous jobs in Guatemala,” said Túnchez, who  works for Canal 30, the same channel as Carlos Orellana, a journalist who was murdered in 2013.

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Tags: Guatemala, Press Freedom, Suchitepéquez

President Pérez Molina Refuses to Renew CICIG’s Mandate

March 16, 2015

by Louisa Reynolds

During a recent visit to Guatemala on March 2, U.S. Vice President Joe Biden praised the achievements made by the UN-sponsored Comisión Internacional contra la Impunidad en Guatemala (International Commission Against Impunity in Guatemala—CICIG). He also urged Honduran and Salvadoran leaders to follow the Guatemalan example by replicating the CICIG model in their own countries or to consider the creation of a regional CICIG.

However, Central American leaders do not share Biden’s enthusiastic support for CICIG, particularly Guatemalan president Otto Pérez Molina, who refuses to renew its mandate for the third time. Civil society groups that regard CICIG as the last remaining bulwark of judicial independence in Guatemala say this does not bode well for the country’s fight against organized crime and corruption.

During their recent meeting, Biden urged President Pérez Molina to renew CICIG’s mandate—which expires on September 3, absent another extension—and stressed that Central American leaders must cooperate with efforts to reduce levels of impunity in the region as a condition for receiving a $1 billion aid package from the U.S.

“The work of organizations like the International Commission Against Impunity in Guatemala are so important,” Biden wrote on his official Twitter account.

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Tags: Guatemala, corruption, Central America