PARAGUAY: Web of Intrigue

Paraguayans, angry at losing their life savings in the recent banking crisis, clash with police (Photo: AFP)

For four months, the Paraguayan press has relentlessly investigated government involvement in the illegal diversion to offshore accounts of nearly US$16 million in assets from two failed banks. In early May, President Luis González Macchi was forced to dismiss the nation’s central bank president and initiate proceedings to remove several other top banking regulators.

But Asunción’s independent ABC Color (May 3), which has published a series of exposés since January implicating high government officials in the widening scandal, warned that the cacophony of contradictory evidence proffered by the principals in the scandal threatens to distract the public’s attention from the challenge of restoring fiscal integrity and rooting out official corruption.

In contrast to widespread public outrage over security forces’ recent failure to prevent a gang from pulling off an $11-million heist at Asunción airport, the illicit transfers of an estimated $8 million each from Banco Oriental and Banco Unión to offshore bank accounts “have scarcely roused the public consciousness,” the ABC Color editorial observed. Yet these crimes involve “even larger sums and affect not just a few individuals but the entire nation.”

Dismissing claims that the funds diverted offshore would eventually be returned to the government, the editorial emphasized that the trail of corruption allegations has led to the doorstep “of the central bank, the superintendency of banks, and possibly even higher.”

Considered within the context of other recent scandals in public agencies, including alleged improprieties in management of the giant Itaipu Dam, “it is evident that corruption infects deeply and broadly the highest levels of our society,” ABC Color
asserted. “Faced with these problems, and in view of the fact that neither the government nor even the judiciary has made an energetic corrective response, the country has begun to live on a keg of gunpowder.”

The independent Diario Noticias of Asunción (May 1) described the banking scandal as merely the latest in a series of scandals in a “financial carnival...that began shortly after the country’s democratization, when a new group of thieves sunk their claws into the public treasury.”

As the web of financial intrigue grows more complex, the editorial speculated that more unpleasant “surprises” may surface as investigators delve deeper into official archives.
“What we require are prosecutors and judges who are capable of acting with valor, prepared to give their all for justice and their country in order to unravel the morass of financial corruption. It will be a hard task because they will meet the hidden face of power,” the editorial said.

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