*This post will be updated regularly (updates at the bottom) as the crisis unfolds in Guatemala
Today, May 14, Alejandro Maldonado was named as Guatemala’s new vice president after Roxana Baldetti resigned on May 8 amid the revelation of a tax fraud scandal. Meanwhile, despite the vice president’s resignation, citizens have continued to call for the resignation of President Otto Pérez Molina and will move forward with a wave of national protests set for Saturday, May 16.
What’s going on in Guatemala?
The uncovering of a massive tax fraud ring in Guatemala has prompted widespread public outrage, steeping the country in what many are calling a “political crisis” as September’s general elections draw near.
On April 16, authorities arrested 22 people – including the current and former heads of Guatemala’s tax collection agency – in the culmination of an 8-month long investigation into a criminal network used to defraud the state.
The crime ring was dismantled by a joint investigation by Guatemala’s Public Prosecutor’s Office and the CICIG, and implicates officials in the highest levels of government. Although Vice President Roxana Baldetti was not directly linked to the fraud ring in the initial investigation, she was plunged into controversy when her private secretary, Juan Carlos Monzón Rojas, was identified as its leader. In the face of increasing public pressure, Baldetti submitted her resignation on May 8.
The criminal network has been called “La Linea,” (The Line), in reference to a certain cell phone number that businesses used to illegally negotiate the amount they were required to pay in customs taxes. Thanks to the network, businesses received a 25% “discount” on the fees when their property cleared customs; approximately 50% was paid to the state and the rest to the defrauders. Prosecutors estimate that Guatemala lost around Q940 million (US$120 million) in tax revenue to the scam, and the ongoing investigation has begun to reveal corruption that extends to the judicial branch. Continue reading