So much corruption
El Salvador's attorney general has announced several corruption-related prosecutions in recent weeks relating to officials in past governments of El Salvador. So far, the attorney general has not been seen acting on reports of potential corruption in the current government of president Nayib Bukele. And Bukele has rejected attempts to require greater transparency over his government's use of public dollars.
One case involves the Chaparral dam currently under construction. This is a major hydro-electric project originally contracted in 2008 during the administration of president Tony Saca which was controversial from the beginning. The attorney general's office announced corruption and money laundering charges against former president Mauricio Funes, currently in exile in Nicaragua after fleeing other corruption charges, against José Miguel Antonio Menéndez Avelar, known as "Mecafé" and other individuals. The corruption claim arises out of a contract dispute in which the Italian contractors, Astaldi, claimed that they would need to be paid more than $40 million to complete the work because of unforeseen geologic conditions which made the work more expensive. With the dispute over the contract amount, work came to a halt. According to the charges in the case, $3.5 million in bribes and illicit payments were paid to Funes and Mecafé in order to agree to a settlement of the dispute and additional payments to Astaldi, despite an expert report that said that Astaldi was not entitled to any more money. (President Bukele recently announced that when completed the dam will be renamed the 3rd of February dam to memorialize his election victory on February 3, 2019).
The second case involves an arms transaction between the Salvadoran armed forces and a local weapons merchant in El Salvador. According to the complaint, a barter transaction was set up in which the arms dealer, exchanged one set of weapons for functioning weapons of the Salvadoran military reportedly worth $2 million. The arms that the military received in the deal are alleged to have been non-functional and virtually worthless. The defendants include Gustavo López Davidson, a former president of the ARENA political party, and two former ministers of defense during past FMLN governments, David Munguía Payés and Atilio Benitez Parada.
A third case involves alleged tax evasion. A local textile factory in El Salvador was raided and its legal representative arrested. The charges are that the business avoided paying approximately $5 million in taxes on income of $293 million. (In a series of social media posts, top officials including president Bukele and the treasury minister asserted that the tax avoidance was $293 million, a clear misstatement. More on that in a future post).
Resurrecting an old case, the Attorney General also announced that he would pursue the ARENA political party for return of $10 million of earthquake relief donated by the government of Taiwan in 2001 and diverted by former president Francisco Flores. Flores died while charges were pending against him which alleged that the $10 million ended up in ARENA party accounts.
Meanwhile criminal charges are still pending which were filed by the Attorney General in February against figures in the FMLN and ARENA including Norman Quijano for negotiating with gangs to garner support in the 2014 presidential election.
Not being prosecuted at this time, as far as I can tell, are a series of contract irregularities as the Salvadoran government spends tens of millions purchasing supplies in responding to the current pandemic. The matters in question include contracts with companies linked to government officials at inflated prices and have been exposed by various investigative journalists in El Salvador at a time when the president and his allies are regularly disparaging the press.
The purchasing irregularities include:
- The government purchased $250,000 in protective masks at inflated prices from the business operated by the family of public official Jorge "Koky" Aguilar. When a press report exposed the purchase, Bukele fired Aguilar and ordered an investigation including a request that CICIES investigate.
- In another mask purchase, the government bought $344,000 worth of surgical masks from the business of an ARENA legislative deputy Rene Escalante at inflated prices. Prior to the COVID-19 pandemic, the business of Escalante had never been involved in selling medical supplies.
- In yet another face protector sale, a business linked to current Minister of the Treasury José Alejandro Zelaya Villalobo sold $750,000 worth of protective masks to the Salvadoran government. Zelaya was named Minister of the Treasury after the sale had already come to public light.
- The Ministry of Health bought $225,000 in PPE, consisting of rubber boots, from the uncle of current health minister Francisco Alabí. That business was previously a seller of automotive repair parts.
- A cousin of the health minister Alabí rented a house converted from business use to the Ministry of Tourism to become a seven bed quarantine center for $19,500.
- Questions have also been raised about the purchase of $12 million in medical supplies from a Spanish company, Javi Performance Parts. According to reporting in El Diario de Hoy, the Spanish company had failed to filed required financial reports in the Europaen nation for the past six years.
- The Ministry of Development reportedly signed a contract purchasing emergency food relief at inflated prices from a business in the process of being dissolved because it is linked to the organized crime figure, Chepe Diablo.
- The Ministry of Agriculture purchased canned tuna distributed in emergency food supply kits from a Mexican company B-Eminent which was black-listed in Mexico and has been linked to fraudulently selling food of dubious quality on other occasions.
- The Development Bank of El Salvador, commercially known as Bandesal, ignored internal conflict-of-interest warnings in its dealings with two siblings of Presidential Commissioner Carolina Recinos: it hired one as manager of funding and cooperation and issued a loan of over $22,000 to another to finance an in-house cafeteria at the Treasury Ministry. The bank and Recinos have denied any wrong doing.
- The section of integrity ("Probidad") of El Salvador's Supreme Judicial Court has found that former magistrate of the Supreme Electoral Tribunal (TSE) Walter Araujo cannot explain a more than $1.4 million increase in his assets during his time in office. Araujo has been a vocal supporter of Nayib Bukele and an attacker of critics of the president. After the Probidad finding were announced, Bukele came out publicly to support Araujo, and Araujo is now a candidate for deputy in the Legislative Assembly for Nuevas Ideas. It is up to the Attorney General to act on the findings of Probidad.