Guatemalans protest corrupt status-quo

By Roger Noriega - American Enterprise Institiute

On Saturday, 60,000 protesters took to the streets in 13 cities in Guatemala demanding the resignation of President Otto Perez Molina. Guatemala has been rocked by a corruption scandal involving several members of the Perez Molina administration, including former Vice President Roxana Baldetti, who was forced to resignon May 8 due to her alleged involvement in a customs fraud scheme. Although President Perez Molina has denied any involvement in the scandal, nationwide demonstrations now entering their fourth week are calling for him to step down. Perez Molina’s four-year term ends next January, and elections are scheduled in September to choose his successor.

This political crisis started on April 16 when Álvaro Omar Franco, director of Guatemala’s Superintendent of Tax Administration (SAT), was arrested by authorities for being part of the multimillion-dollar conspiracy to skim customs revenue.

The scheme, known in Guatemala as La Linea (The Line), involved cutting deals with importers to steal tariff revenue. According to the Guatemalan newspaper Plaza Pública, The Line charged importers only 40% of legal tariffs; after paying corrupt officials 30 percent, the importers realized a 30% discount. So far, 24 people have been arrested for their involvement, and 50 others are suspected of being part of the ring. Former Vice President Baldetti’s private secretary, Juan Carlos Monzón Rojas, is believed to be the ringleader of The Line. Monzón remains a fugitive and was seen last in South Korea during a trip with Baldetti.

The office of Guatemala’s Attorney General and the International Commission Against Impunity in Guatemala (CICIG), a UN-run oversight body, have cooperated on this kickback investigation and have also uncovered a network of corrupt transactions in Guatemala’s judiciary. In the latter case, Guatemalan Justice Blanca Aída Stalling has been linked with a network of judges that received bribes from lawyers in order to reduce sentences of individuals being charged in the customs fraud.

In recent months, the United States Congress has been considering President Obama’s proposed $1 billion aid package for Central America’s Northern Triangle, which includes Guatemala, El Salvador, and Honduras. Regional experts have warned that these countries suffer from systematic corruption and the erosion of democratic institutions that do not guarantee the proper use of these funds.

Theoretically such aid should help these countries grow their economies and improve their social and institutional development. However, unless explicit conditions are imposed to require the transparent use of these resources in support of fundamental political reforms, US aid could do more harm than good by reinforcing the corrupt status quo.