Latin America Risk Report - 27 February 2020
Lessons from three jailbreaks in Latin America this year
In this edition:
Lessons from three jailbreaks
Bolsonaro calls for protests
Corruption Corner has a heavy focus on Mexico
Lessons from three jailbreaks
The three events below that occurred in early 2020 are unrelated to each other, but demonstrate several security lessons relevant to this year in Latin America.
In Mexico City, Mexico, three members of the Sinaloa Cartel escaped a prison before they could be extradited to the United States.
In El Progreso, Honduras, heavily armed men dressed in police and military uniforms stormed a courthouse and freed a top MS-13 leader who was being escorted to a court hearing.
In Pedro Juan Caballero, Paraguay, over 75 prisoners escaped in a breakout arranged by the PCC. Some escaped through a tunnel while others walked out the front door.
1) All three escapes occurred with help on the inside. In the Mexico case, several prison guards confessed to their involvement. In Honduras, sources within the country confirm that corrupt police officers provided information and handed over the prisoner to his armed allies, though they could not confirm rumors that some of those who broke the man out were members of the security forces. In Paraguay, at least 30 prison guards and officials were detained following the breakout. Authorities are now trying to determine which officials assisted and which ones simply allowed it to occur due to fear given the overwhelming manpower of the organization they were facing.
2) The escapes involved dominant criminal groups with transnational goals. While there is a narrative of criminal groups fragmenting, especially in Mexico, these events were caused by the opposite trend - a consolidation of power by large and dominant criminal organizations. The Sinaloa Cartel in Mexico, MS-13 in Central America and First Capital Command (PCC) in Brazil are among the strongest organizations within the territories they operate and have worked to consolidate control. They use their control over prison systems as a location to recruit new criminals and unify divided criminal groups.
The PCC escape highlights that organization’s expansion into Brazil’s neighbors (see this excellent interview in InSight Crime about the organization). Both the Sinaloa Cartel and MS-13 have organizations and leadership that move people and illicit products relatively easily across Central America’s borders. That sort of transnational growth demonstrates that rule of law weaknesses in one country impact neighboring countries.
3) Those dominant groups control the prisons and corrupt the security forces. This is well known but worth highlighting as it represents a critical threat to the state. The ability for the groups involved in these prison escapes to bribe and otherwise corrupt security forces represents a threat to governments’ abilities to improve security. The fact these groups can often operate out of prison with impunity and escape when they decide prison has become too uncomfortable makes a mockery of the arrests and prosecutions that occur.
4) Security in Latin America runs through prison reform. No politician in history has been elected on a promise of improving the conditions in prisons. There has been a multi-decade failure to reform prison systems to improve government control, reduce corruption and even provide more humane conditions for prisoners in order that they be rehabilitated. The region needs to find a way to make spending money on reforming prisons politically palatable if it wants to retake control from the dominant groups that threaten the state. Without effective prison reform, the gains from other rule of law initiatives are put at risk.
Bolsonaro calls for protests
In my Tuesday newsletter, I predicted March 2020 will be a hot month for protests in Latin America. What I didn’t predict was that the president of the region’s largest country would help organize them.
President Jair Bolsonaro sent private WhatsApp messages attempting to organize and support protests against Brazil’s Congress on 15 March. The messages were leaked to the media. Given that Bolsonaro needs the majority of Congress to approve his agenda, the fact the president was organizing protests against the institution was met with rejection by most Brazilian politicians.
Bolsonaro tried to dodge the criticisms by claiming that the messages were private and not intended to be shared with wider social networks. At the same time, he did not denounce the main message nor retract the call for protests. As someone who values loyalty, Bolsonaro will almost certainly attempt to find out who leaked the video and punish any journalistic networks that helped spread the information.
Corruption Corner
Mexico - Lopez Obrador said he is reviewing a contract Pemex signed with Braskem-Idesa and considering the cancellation of the contract based on corruption concerns. The contract stipulates that Pemex will sell ethane to the Etileno XXI petrochemical plant project well below market prices. While AMLO promised to review contracts for corruption during the campaign, he has not done so in a systemic way that has led to cancellations. Separately, Santiago Nieto has said the country’s Financial Intelligence Unit will be investigating union leaders and judges.
Mexico - El Universal published an investigation into companies and business partners of Emilio Lozoya, the former head of Pemex, including Grupo Interamericano de Financiamiento and Makech Capital. The investigation shows layers of companies sharing addresses and partners and suggests that the companies were used to launder money from corrupt contracts. The graphic below from the article describes the individuals around Lozoya.
Mexico - The United States detained the daughter of El Mencho on charges that she managed a portion of the CJNG’s money laundering network. Her arrest occurred on the same day the son of El Mencho, known as “El Menchito” faced a US judge following his extradition to the United States.
Peru - Investigations into former President Ollanta Humala are advancing through the judicial system. The former president is accused of receiving million in bribes in exchange for government contracts including some connected to the Odebrecht investigation. His bank accounts have been frozen.
Venezuela - The Miami Herald reports a new set of records from Swiss banks will assist with indictments of corrupt businessmen who bribed Venezuelan government officials for contracts, took advantage of currency exchange arbitrage, and laundered the money into Europe. Alejandro Betancourt, a client for Rudy Giuliani based in Spain, is among those who the article cites as likely to be indicted for corruption.
Reading List
World Food Program - Venezuela Food Security Assessment Main Findings
NYT - Venezuela’s Socialists Embrace Business, Making Partner of a ‘Parasite’
Washington Post - How Bolsonaro’s risky bet on China in the Amazon could backfire
BBC - Murder rate soars in Brazil state as police strike
AP - Violence, industry co-exist in conservative Mexican state (Guanajuato)
FT - Haiti president fights ‘PetroCaribe’ $2bn oil corruption scandal
Washington Post - Amid Ukraine swirl, Giuliani’s work for candidate in Dominican Republic caused unease
The Guardian - Costa Rican indigenous land activist killed by armed mob
Confidencial (Nicaragua) - Coalición Nacional desafía represión y estado policial
Americas Quarterly - Can Colombia’s Government Afford a Pension Reform?
Reuters - Chinese commodity-backed loans crippling Africa and Latin America
Thanks for reading
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