LIMA, Peru (AP) — The United States on Thursday issued sanctions against former Paraguayan President Horacio Cartes Jara and current Vice President Hugo Velázquez Moreno, unveiling explosive allegations that they participated in widespread corruption schemes and have ties to members of a terrorist organization.
Cartes and Velázquez have been involved “in the systemic corruption that has undermined democratic institutions in Paraguay” and have ties to members of Hezbollah, which the United States designates as a terrorist organization, the Treasury Department said.
As a result, “these two people are now barred from using the US financial system,” Marc Ostfield, the US ambassador to Paraguay, told a news conference.
Both Cartes and Velázquez were included in a US bribery list last year, but now the charges against them have been expanded. The Treasury also issued sanctions against four companies owned or controlled by Cartes: Tabacos USA, Bebidas USA, Dominicana Acquisition and Frigorifico Chajha.
Velázquez said he was “surprised” by the allegations against him and “categorically” rejected the claims, adding that he was unaware of the details and had asked the United States for more information.
“I have absolutely no ties to Hezbollah … or any other terrorist group,” the vice president told a local radio station on Thursday. He added that he had no intention of resigning.
“I was elected by the Paraguayan people,” he said.
Cartes, who served as president from 2013-2018, “didn’t comment right away, but he dismissed allegations of US corruption last year. “I deny and reject the contents of the allegations,” Cartes wrote on Twitter in July 2022, and said he was “committed to offering all the support and primary source information the authorities need to clarify” anything.
The United States has long said that the porous tri-border region linking Argentina, Brazil and Paraguay is a hub for terrorist financing through money laundering of illicit activities. The United States has identified what it described as members of the Hezbollah group using front companies in the region to fund terrorist activities in the Middle East.
The State Department said corruption in Paraguay often prevents convictions in money laundering and terrorist financing cases.
Cartes, described by the United States as “one of Paraguay’s wealthiest individuals,” has “engaged in a concerted pattern of corruption, including the widespread bribery of government officials and lawmakers,” the State Department said on Thursday.
The sanctions rocked Paraguay’s political world, with opposition lawmakers calling for investigations to be launched into Cartes, Velázquez and any lawmakers who may have received bribes.
In his quest to become president, Cartes repeatedly doled out money to officials, a pattern that continued throughout his presidency and after his resignation, according to US officials.
They say that initially, after Cartes joined the Colorado Party in 2009, he bribed officials to get them to drop the party’s requirement that someone must be affiliated for 10 years before running as a presidential candidate. He then proceeded to pay some party members up to $10,000 to support his candidacy, the Treasury said.
While president, Cartes made monthly payments of $5,000 to $50,000 to a group of “loyal lawmakers” to ensure he maintained control over Congress, the US said. Those payments continued after he left office to make sure lawmakers voted in his best interest, the Treasury said.
Overall, the former president, who still leads the Colorado Party, has “leveraged his illicitly acquired wealth and influence to expand his political and economic power over Paraguayan institutions,” the State Department said.
The allegations against Velázquez were less detailed, with the Treasury stating only that the vice president “also engaged in corrupt practices to interfere with legal processes and protect himself and his criminal associates from criminal investigations,” including by bribing and threatening officials to make sure his illegal activity was not exposed.
The US also claims that “representatives of both Cartes and Velázquez collected bribes” at private events organized by Hezbollah in Paraguay.