Mauricio Funes and the garbage bags full of cash
This article originally appeared on the website of InsightCrime with the title El Salvador Ex-President Funes’ Trash Bags Full of Money
Written by Héctor Silva Ávalos - JUNE 13, 2018
El Salvador has not sparked as much attention as its neighbors when it comes to corruption scandals, but a litany of accusations against former President Mauricio Funes and his relatives along with millions of dollars transferred in trash bags might change that.
The scheme was relatively straight forward. A member of the corruption network allegedly headed by former Salvadoran President Mauricio Funes during his 2009 to 2014 term would arrive at a state bank, fill up big black trash bags with thousands of dollars in cash and then drive them to the presidential residence.
The money was allegedly for Funes, his family and other members of his inner circle who used it to pay for travel, properties, luxury goods and services such as plastic surgery, according to El Salvador’s Attorney General’s Office.
The trash bags might seem like a small detail, but they aren’t. They speak not only to the large amounts of cash that the president’s men picked up on Funes’ orders, but also to the complicity of a broad network that included the head of the Banco Hipotecario, one of the main banks managing government funds in El Salvador.
In a June 8 press conference, El Salvador’s Attorney General Douglas Meléndez accused Funes and his network of embezzling $351 million, an amount equivalent to nearly 1.5 percent of the country’s gross domestic product (GDP) in 2017, or about seven percent of the government’s 2017 budget. The Attorney General’s Office has dubbed the case “Public Looting.”
The Salvadoran Attorney General’s Office has issued 32 arrest warrants in the case, including for Funes, his former private and communications secretaries, administrative personnel from his administration, the head of Banco Hipotecario, Funes’ partner and her parents, as well as his ex-wife and two sons. Twenty-seven of the suspects are accused of money laundering, while two are accused of obstruction of justice.
On June 5, six suspects were arrested. Among them was businessman Miguel Meléndez Avelar. Known by the alias “Mecafé,” Avelar is suspected of orchestrating the diversion of public funds into the construction of a spa tied to Funes’ partner, Ada Michelle Guzmán, according to an investigation by the news outlet El Faro.
For a short period, Mecafé served as the head of a state-run fairground and event space in the capital of San Salvador, where he met regularly with Funes and his inner circle, according to information two former officials in Funes’ administration gave to InSight Crime. In a video circulated in El Salvador, Mecafé can be seen giving money to former Attorney General Luis Martínez, who is currently under arrest in relation to a separate corruption case.
“We have found a sophisticated structure created by ex-President Funes and Miguel Menéndez Avelar to extract public funds from the state and subsequently launder and invest them using the names of frontmen, companies and individuals,” said Attorney General Meléndez during the June 8 press conference.
According to the Attorney General’s Office, the diversion of the funds began in El Salvador’s presidential palace. There, Funes ordered various government ministries to redirect money to his administration. Then the president’s private office deposited the money in the accounts of employees and companies through the Banco Hipotecario. One way the cash was brought back to the president and his collaborators was the aforementioned black plastic bags.
In 2009, Funes was the first Salvadoran president to enter office representing the Farabundo Martí Front for National Liberation (Frente Farabundo Martí para la Liberación Nacional – FMLN), a former guerrilla group that converted into a political party following the signing of a peace accord that ended the country’s civil war in 1992.
Funes’ campaign platform centered on the fight against corruption, which he attributed to El Salvador’s four previous presidents whose administrations spanned from 1989 to 2009 and who were members of the right-wing National Republican Alliance (Alianza Republicana Nacionalista — ARENA) party.
El Salvador’s justice system first initiated a civil lawsuit against Funes in 2016, after the country’s Supreme Court detected irregularities in the former president’s financial statements. Funes, supported by his party, fled to Nicaragua, where the government of Daniel Ortega granted him political asylum. Last week, Attorney General Meléndez announced that he will request the extradition of Funes and for an Interpol red notice to be issued for his arrest.
Funes insists that all of the accusations are fabrications orchestrated by his political enemies and that his life is in danger.
A judge in San Salvador has also ordered the arrest of Vanda Pignato, the former first lady of El Salvador, who has been accused of money laundering.
InSight Crime Analysis
If prosecutors’ accusations end in convictions, Funes will go down in history as one of the politicians who most ransacked the Salvadoran treasury.
Antonio Saca, Funes’ predecessor, who is currently in prison awaiting trial on charges of corruption and money laundering, has been accused by the Attorney General’s Office of stealing $301 million from government coffers. Francisco Flores, the president who preceded Saca, died while being prosecuted for diverting funds from international donations.
One suspect implicated in the case against Funes, Jorge Alberto Hernández Castellano, the vice president of El Salvador’s largest and most influential television network Telecorporación Salvadoreña, is also accused of having laundered money for Saca. According to two sources consulted by InSight Crime, Hernández Castellano has testified against Funes in exchange for leniency in his sentencing, such as serving time under house arrest. Hernández Castellano was part of the inner circle of both former presidents and is presumed, among other things, to have paid bribes to journalists using public funds.
The corrupt actors in El Salvador’s recent administrations appear to be many and varied, ranging from the press to private and state banks that received funds extracted from public accounts and government institutions. In total, the embezzlement attributed to Saca and Funes reaches nearly $700 million, equal to El Salvador’s fiscal deficit, which has recently brought the country to the verge of default.
The embezzlement schemes took place as the country’s public security conditions have worsened over the last decade, reaching an average of 20 homicides per day and rates as high as 100 homicides per 100,000 inhabitants.
Funes’ administration also leveraged a truce between the government and the MS13 and Barrio 18 gangs to engage in further acts of corruption. When the truce fell apart, it sparked a war between security forces and gangs, which has fueled extrajudicial executions attributed to police officers and soldiers.
When it comes to corruption in the Northern Triangle of Central America, El Salvador has not attracted the same level of attention as its neighbors Guatemala and Honduras, both of which receive support from international organizations for their fights against corruption. But the large sums of money ransacked from the coffers of the region’s smallest country, makes it at least equally relevant.
El Salvador has not sparked as much attention as its neighbors when it comes to corruption scandals, but a litany of accusations against former President Mauricio Funes and his relatives along with millions of dollars transferred in trash bags might change that.
The scheme was relatively straight forward. A member of the corruption network allegedly headed by former Salvadoran President Mauricio Funes during his 2009 to 2014 term would arrive at a state bank, fill up big black trash bags with thousands of dollars in cash and then drive them to the presidential residence.
The money was allegedly for Funes, his family and other members of his inner circle who used it to pay for travel, properties, luxury goods and services such as plastic surgery, according to El Salvador’s Attorney General’s Office.
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| Mauricio Funes |
The trash bags might seem like a small detail, but they aren’t. They speak not only to the large amounts of cash that the president’s men picked up on Funes’ orders, but also to the complicity of a broad network that included the head of the Banco Hipotecario, one of the main banks managing government funds in El Salvador.
In a June 8 press conference, El Salvador’s Attorney General Douglas Meléndez accused Funes and his network of embezzling $351 million, an amount equivalent to nearly 1.5 percent of the country’s gross domestic product (GDP) in 2017, or about seven percent of the government’s 2017 budget. The Attorney General’s Office has dubbed the case “Public Looting.”
The Salvadoran Attorney General’s Office has issued 32 arrest warrants in the case, including for Funes, his former private and communications secretaries, administrative personnel from his administration, the head of Banco Hipotecario, Funes’ partner and her parents, as well as his ex-wife and two sons. Twenty-seven of the suspects are accused of money laundering, while two are accused of obstruction of justice.
On June 5, six suspects were arrested. Among them was businessman Miguel Meléndez Avelar. Known by the alias “Mecafé,” Avelar is suspected of orchestrating the diversion of public funds into the construction of a spa tied to Funes’ partner, Ada Michelle Guzmán, according to an investigation by the news outlet El Faro.
For a short period, Mecafé served as the head of a state-run fairground and event space in the capital of San Salvador, where he met regularly with Funes and his inner circle, according to information two former officials in Funes’ administration gave to InSight Crime. In a video circulated in El Salvador, Mecafé can be seen giving money to former Attorney General Luis Martínez, who is currently under arrest in relation to a separate corruption case.
“We have found a sophisticated structure created by ex-President Funes and Miguel Menéndez Avelar to extract public funds from the state and subsequently launder and invest them using the names of frontmen, companies and individuals,” said Attorney General Meléndez during the June 8 press conference.
According to the Attorney General’s Office, the diversion of the funds began in El Salvador’s presidential palace. There, Funes ordered various government ministries to redirect money to his administration. Then the president’s private office deposited the money in the accounts of employees and companies through the Banco Hipotecario. One way the cash was brought back to the president and his collaborators was the aforementioned black plastic bags.
In 2009, Funes was the first Salvadoran president to enter office representing the Farabundo Martí Front for National Liberation (Frente Farabundo Martí para la Liberación Nacional – FMLN), a former guerrilla group that converted into a political party following the signing of a peace accord that ended the country’s civil war in 1992.
Funes’ campaign platform centered on the fight against corruption, which he attributed to El Salvador’s four previous presidents whose administrations spanned from 1989 to 2009 and who were members of the right-wing National Republican Alliance (Alianza Republicana Nacionalista — ARENA) party.
El Salvador’s justice system first initiated a civil lawsuit against Funes in 2016, after the country’s Supreme Court detected irregularities in the former president’s financial statements. Funes, supported by his party, fled to Nicaragua, where the government of Daniel Ortega granted him political asylum. Last week, Attorney General Meléndez announced that he will request the extradition of Funes and for an Interpol red notice to be issued for his arrest.
Funes insists that all of the accusations are fabrications orchestrated by his political enemies and that his life is in danger.
A judge in San Salvador has also ordered the arrest of Vanda Pignato, the former first lady of El Salvador, who has been accused of money laundering.
InSight Crime Analysis
If prosecutors’ accusations end in convictions, Funes will go down in history as one of the politicians who most ransacked the Salvadoran treasury.
Antonio Saca, Funes’ predecessor, who is currently in prison awaiting trial on charges of corruption and money laundering, has been accused by the Attorney General’s Office of stealing $301 million from government coffers. Francisco Flores, the president who preceded Saca, died while being prosecuted for diverting funds from international donations.
One suspect implicated in the case against Funes, Jorge Alberto Hernández Castellano, the vice president of El Salvador’s largest and most influential television network Telecorporación Salvadoreña, is also accused of having laundered money for Saca. According to two sources consulted by InSight Crime, Hernández Castellano has testified against Funes in exchange for leniency in his sentencing, such as serving time under house arrest. Hernández Castellano was part of the inner circle of both former presidents and is presumed, among other things, to have paid bribes to journalists using public funds.
The corrupt actors in El Salvador’s recent administrations appear to be many and varied, ranging from the press to private and state banks that received funds extracted from public accounts and government institutions. In total, the embezzlement attributed to Saca and Funes reaches nearly $700 million, equal to El Salvador’s fiscal deficit, which has recently brought the country to the verge of default.
The embezzlement schemes took place as the country’s public security conditions have worsened over the last decade, reaching an average of 20 homicides per day and rates as high as 100 homicides per 100,000 inhabitants.
Funes’ administration also leveraged a truce between the government and the MS13 and Barrio 18 gangs to engage in further acts of corruption. When the truce fell apart, it sparked a war between security forces and gangs, which has fueled extrajudicial executions attributed to police officers and soldiers.
When it comes to corruption in the Northern Triangle of Central America, El Salvador has not attracted the same level of attention as its neighbors Guatemala and Honduras, both of which receive support from international organizations for their fights against corruption. But the large sums of money ransacked from the coffers of the region’s smallest country, makes it at least equally relevant.
This article originally appeared on the website of InsightCrime with the title El Salvador Ex-President Funes’ Trash Bags Full of Money
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