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Guatemala - Corruption

The power relations that manifest themselves among the elites with respect to the Guatemalan state cannot be understood without examining the fragility of the state itself. In addition to the gradual loss of authority over society and the precariousness of its fiscal and institutional base, limited capacity to provide security and basic services, the state is sabotaged by corruption via influence peddling and openly corrupt practices. The result is that the state apparatus in Guatemala is suffering a degenerative process.

An estimated 80 percent of police are now considered unreliable. The homicide rate in Guatemala City hovers close to 90 per 100,000, one of the highest in the world, and impunity for violent crimes stands at 98 percent. Two-thirds of Guatemala’s adult male population carry firearms, and applications for gun licenses from women are growing. In short, the country is overwhelmed by criminal violence and citizen self-defense, which includes routine instances of vigilantism in vulnerable neighborhoods, the lynching of suspected criminals, and the widespread use of hired killers.

In recent years, drug trafficking has represented the most powerful form of organized crime in terms of the volume of money involved. This goes beyond crime, as drug activity absorbs political and security resources, inoculates the formal economy (financial, agricultural, and real estate), and has international implications -- above all by affecting relations with the United States. Two main drug groups are based in Guatemala’s eastern departments of Zacapa and Izabal, and several splinter factions maintain links with the Sinaloa Cartel. There are also emerging groups led by Mexican organizations like the Zetas.

Eventually, these groups became so well defined they were given a name: the “Illegal Clandestine Security Apparatuses (Cuerpos Ilegales y Aparatos Clandestinos de Seguridad - CIACS). Many of these CIACS were forged by blood pacts during the most intense military and police operations against insurgents at the beginning of the 1980s. The CIACS are a kind of Sicilian-style mafia in the sense that they thrive off the weakness of state institutions, they are at the service of both licit and illicit private interests, they provide security, and they arrange contracts or eliminate competition. They are always, however, jealously keeping watch over their principal task: to produce impunity.

Roughly 90 percent of cocaine consumed in the United States transits Guatemala, but only about 0.5 percent of that is seized during periods of heightened counternarcotics efforts. Drug trafficking funds political campaigns at both the local (mayors, deputies) and national (presidents, courts, legislators) levels. It also co-opts military officials located in strategic trafficking zones and police structures to the point of becoming an insecurity factor for drug traffickers themselves. Police groups have been known to steal drug shipments and sell them to the highest bidder at the Guatemala-Mexico border.

In 2004 the anti-corruption prosecutor (a US Embassy-supported program) brought cases against 383 individuals, including many high-ranking former government officials, army officers and police. These cases include the former vice president, finance minister, and head of the revenue and customs service. Former President Portillo fled to Mexico when it became apparent that he was about to be arrested on corruption-related charges. With support from US prosecutors, the GOG pursued two major embezzlement cases in which money was likely moved through US institutions.

In 2004 ghe Director General of the police established a "zero tolerance" policy on corruption. During 2004, more than 2,000 cases were opened against police officers, including 23 command-level officers. Half of the 650-person criminal investigative division was fired. A counter-drug prosecutor who solicited a bribe from a defendant was sentenced to 13 years in prison, and another counter-drug prosecutor is currently under investigation for theft of government funds. Endemic corruption within the SAIA (specialized anti-drug police), PNC (national civilian police), customs officials and port authorities made road and port drug seizures highly unlikely.

Bribery is illegal under Guatemala’s Penal Code; however, corruption remains a serious problem that companies may encounter at many levels. Guatemala scored 28 out of 100 points on Transparency International’s 2015 Corruption Perception Index, ranking it 123 out of 168 countries, a decline from the 2014 score of 32 points, ranking it 22nd out of 26 countries in the region.

The Comptroller General’s Office and the Public Ministry are responsible for combating corruption. The comptroller general’s mandate is to monitor public spending, and the attorney general’s mandate is to prosecute related crimes. Although both agencies actively collaborated with civil society and were relatively independent, they lacked adequate resources, which affected their ability to carry out their mandates.

Public officials who earn more than 8,000 quetzals ($1,064) per month or who manage public funds are subject to financial disclosure laws overseen and enforced by the Comptroller General’s Office. The financial disclosures were available to the public upon request. Administrative and criminal sanctions apply for inadequate or falsified disclosures of assets.

Investors have historically found corruption especially pervasive in customs transactions, particularly at ports and borders away from the capital. The Superintendence of Tax Administration (SAT) launched a customs modernization program in November 2006, which implemented an advanced electronic manifest system and removed many corrupt customs officials. However, reports of corruption at major customs locations such as ports and border points remain prevalent. Since 2006, the UN-sponsored International Commission against Impunity in Guatemala (CICIG) has undertaken numerous high-profile official corruption investigations, leading to significant indictments.

CICIG has gained private sector praise and the endorsement of the private sector for a rash of high-profile investigations uncovering official corruption in 2015, particularly a case revealing a customs corruption scheme, which led to the resignations of the president and vice president. In that continuing case, a current and former SAT Superintendent and at least 19 others were arrested. In a separate SAT corruption case, two high ranking SAT officials, together with 11 other SAT employees and private sector representatives were arrested in February 2016 on bribery and illicit association charges linked to a tax audit and fraudulent value added tax refunds.

In 2015, the people of Guatemala mobilized peacefully for 19 straight weeks against corruption, spurring government reforms and making corruption the defining issue of the 2015 national elections. Riding a groundswell of anti-establishment sentiment, actor Jimmy Morales won Guatemala’s October 25, 2015 presidential runoff election.

Since his 14 January 2016 inauguration, Morales reiterated anti-corruption and accountability themes, prioritizing health, education, and food security funding, improvements very much aligned with regional Alliance for Prosperity (A4P) and U.S. Strategy for Engagement in Central America. Public demands spurred the establishment of congressional working groups that drafted overdue reforms of the civil service, justice sector, government procurement, and electoral laws. Early in 2016, the new Congress passed legislation to strengthen the Attorney General’s Office, create a customs union protocol with Honduras, and provide incentives to Guatemala’s garment industry. Perhaps most significant to the public, Congress changed its own rules to become more transparent and restrict nepotism.

The corruption scandals that led to the resignations, and subsequent incarcerations, of former President Otto Perez Molina and former Vice President Roxanna Baldetti in 2015 continue to reverberate. Related investigations led to leadership changes within most law enforcement agencies and government ministries in 2016. Key Guatemalan officials are now more established and have demonstrated political will to counter drug trafficking, corruption, and violence.

Guatemala achieved some notable successes in 2016, including record drug seizures, the capture of high-profile criminals, improved interagency coordination, and enhanced regional cooperation. However, Guatemala’s fight against criminal organizations continues to be hindered by endemic corruption, weak public institutions, and inadequate budget resources.

On 02 June 2016, the Public Ministry accused former president Otto Perez Molina and former vice president Roxana Baldetti of money laundering and illegal political party financing. The Public Ministry/CICIG investigation eventually linked the case to additional charges against the former ministers of defense, government, energy and mines, and communications for using illicit funds to provide lavish gifts to Perez Molina and Baldetti. The government issued approximately 70 arrest warrants targeting former government officials and the highest levels of the banking, state procurement, telecommunications, media, construction, agricultural, and pharmaceutical sectors. On August 4, a high-risk court sent 28 defendants who were deemed a flight risk to pretrial detention and ordered house arrest for 19 more. Perez Molina and Baldetti were in pretrial detention since 2015.

On 13 September 2016, President Morales announced that his son Jose Manuel Morales and brother Sammy Morales would cooperate in a corruption investigation based on the allegation that they procured false invoices in 2013. The case involved former public registrar Anabella de Leon, who allegedly used these invoices in a corruption scheme that defrauded the government through phony contracts.

Major challenges for counternarcotics agencies and institutions include corruption, inadequate budget resources, and persistent violence. Widespread corruption, combined with some of the lowest tax collection rates in the world, starves law enforcement agencies, courts, and prosecutors of critical resources.

Guatemala is a major transit country for illegal drugs. An estimated 1,000 metric tons (MT) of cocaine are smuggled through the country every year, the great majority of it destined for the U.S. market. As evidenced by record drug seizures in 2016, Guatemala remains a major transit corridor. In 2016, authorities seized more than 18.5 MT of cocaine, the highest annual amount on record [readers who are handy with math will note that the US Government estimates the other 98% of product made it past the narks]. Criminal organizations exploit Guatemala’s porous borders and overburdened law enforcement agencies to traffic narcotics, cultivate marijuana and opium poppy, produce heroin and methamphetamine, and smuggle precursor chemicals. The virtual absence of a permanent law enforcement presence in many areas of the country enables other forms of transnational crime in addition to drug trafficking, including alien smuggling and trafficking in persons, weapons, counterfeit goods and other contraband.

The manufacture of methamphetamine and other synthetic drugs in Guatemala remains a major problem. Large quantities of precursor chemicals enter and transit Guatemala via its land borders and seaports, presenting the government with both law enforcement and chemical disposal challenges. Inefficiency and corruption at ports of entry likely facilitate the entry of precursor chemicals into the country.

Although the Guatemalan government had a system in place to safely destroy precursor chemicals, the current method was unable to neutralize the large backlog of stored goods or keep up with the pace of ongoing seizures. In response, the United States purchased a high-capacity incinerator for Guatemala’s Anti-Narcotics Police. Once operational in mid-2017, the incinerator will be able to efficiently destroy precursor chemicals used to manufacture controlled substances, as well as processed narcotics seized by law enforcement agencies.

Guatemala historically relied on manual eradication missions to counter opium poppy cultivation in the remote western region of the country. In a major policy shift, officials now consider this one-dimensional response inadequate and have embraced a new multifaceted approach to combat poppy cultivation. An interagency effort was launched in 2016 to supplement existing eradication efforts with regular community prosperity missions to promote health, education, and long-term economic development. The government successfully completed its inaugural community prosperity mission in July 2016 in the San Marcos region.

In 2016, the Guatemalan government employed a new methodology to estimate the number of hectares (ha) under poppy cultivation. While authorities previously focused on the San Marcos Triangle of Sibinal, Ixchiguan, and Tajumulco, they broadened their scope to include territory comprising roughly 275 percent more land compared to previous years. Out of the larger sample size of 32,133 ha in western Guatemala, host nation authorities estimate that 4,500 ha on average are under poppy cultivation, a dramatic increase over past estimates.

Guatemalan police on 17 July 2017 arrested 17 people in connection to a wide-ranging graft investigation, including a former ambassador to the United States and another top ex-official. The International Commission Against Impunity in Guatemala, CICIG, a U.N.-backed anti-corruption body, alleged that former U.S. Ambassador to Guatemala Julio Ligorria and former Communications Minister Alejandro Sinibaldi misused more than US$10 million in government funds.

Prosecutors called the case “Construction and Corruption” and divided it into two parts. In the first, Sinibaldi created a series of shell companies to launder money he collected in kickbacks for public works contracts, Ivan Velasquez, head of the CICIG, told a news conference. In the second, Ligorria used his influence to resolve litigation between phone companies in exchange for money paid through Sinibaldi’s shell companies, prosecutors allege.

Former Guatemalan President Alvaro Colom (2008-2012) was detained 13 February 2018 along with nine alleged collaborators following a court order for his arrest. The president, his cabinet and executives of the Association of Urban Bus Companies were accused of fraud and graft in a case known as Transurbano. Alberto Fuentes, former finance minister, and Salvador Gandara, former interior minister, were placed in pre-trial imprisonment. Fuentes, who has been Oxfam's president since 2015, is also linked to a prostitution scandal in Haiti and Chad. Abraham Valenzuela, former defense minister, and Luis Alberto Ferrate, former environment minister, were taken to health centers under police custody. Other detained ministers include Ana del Rosario (education), Edgar Rodriguez (labor), Oscar Velasquez (economy), Celso Cerezo (health) and Geronimo Chingo (culture).

The Public Ministry and the International Commission Against Impunity in Guatemala, known as Cicig, accused them of forming a criminal organization that took over US$36.7 million from the state coffers and transferred them to four private companies to run the public transportation system Transurbano, implemented by the National Unity of Hope government. According to investigations, the corruption case was planned before Colom became president. More specifically, during the presidential election of 2007 when the association gave political contributions to all parties leading the polls, especially to Colom’s National Unity of Hope party.

Once in power, Colom’s government formed a Commission to Modernize Public Transport responsible for negotiating and implementing the new Transurbano system. According to the Attorney General, four companies were created to receive the resources allocated to the Transurbano. They were owned by the association’s president and vice president. A month after the companies were created, they received roughly US$36 million of public money as an “investment financial contribution.”

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