STATEMENT 034 | Poto: Siglo 21.

The Special Prosecutor’s Office against Impunity (Fiscalía Especial contra la Impunidad, FECI) of the Attorney General’s Office (MinisterioPúblico, MP), with the support of the International Commission against Impunity in Guatemala (ComisiónInternacional contra la Impunidaden Guatemala, CICIG), carried out judicial proceedings authorized by the High Risk Court D, regarding 29 arrest warrants and 84 first-statement subpoenas for a new case called “Theft in the Ministry of Public Health”.

Twenty-seven arrest warrants were executed this morning, and 19 people were captured so far. Also, as a result of that investigation, impeachment petitions will be filed against 10 members of Congress.

Background

During the investigation on corruption actions in the health care sector carried out by FECI and CICIG, information was received regarding the operations of a criminal structure that, between 2012 and 2014, had co-opted the Ministry of Public Health and Social Welfare.

A more in-depth investigation into the matter, and after nearly three years of coordinated work between FECI-CICIG, it was possible to establish how the structure operated in that Ministry. The structure was fully organized and carried out illegal actions to the detriment of the public treasury by awarding contracts to get illegal individual benefits.

Facts

The criminal structure started its operations after the appointment of Jorge Villavicencio Alvarez as Minister of Health for the period 2012-2014. Mr. Villavicencio, together with his daughter Cándida Saraí Villavicencio Delgado and the former presidential candidate Luis Fernando Pérez Martínez among others, started the criminal organization composed of more than 50 people between public officials and other individuals.

Upon arriving at the Ministry of Health, the criminal structure “explored” the transactions that could be performed in the institution.

The areas identified included the purchase of goods and services, staff recruitment, and medicine procurement. According to ministerial statements, this group could not access the purchase of medicines, because that area was “already covered by the then Vice President of the Republic, Roxana Baldetti, and a person whose surname was Jarquín.”

Therefore, the structure focused on:

• The collection of kickbacks for the construction and renovation of hospitals and health centers.
• The collection of kickbacks for the procurement of goods and services.
• The hiring of 450 positions within the Ministry (through modalities like political favors, monthly payments, and phony jobs).

Support of the Investigation

The investigation is based on the analysis of police reports, criminal analysis, financial analysis, the Office of the Comptroller General of Accounts, 8 hours of recordings, 37,211 e-mails, one ‘cooperating witness’, the statement of two witnesses for other cases, and testimonies of people who worked in the Ministry of Health. The investigation had more than 100,000 pages.

The MP took the testimony of the then adviser to the Minister of Health, Jorge Estuardo Estévez Cabrera, who provided documentation, e-mails, and communications regarding said transactions. FECI and CICIG corroborated the information provided by Estévez Cabrera through other investigation means.

All the evidence proved the commission of different illicit actions that are grouped under the following lines:

1- PAYMENT OF KICKBACKS FOR CONSTRUCTION AND RENOVATION OF HOSPITALS

Members of the criminal structure, coordinated both internally and externally, to manipulate the awarding of construction works, from creating the need for the works to the development ofad hoc specifications aimed at specific companiesto the collection and distribution of the kickbacks. The works were distributed geographically and through intermediaries.

• Among those leading the structure outside the Ministry of Health were Saraí Villavicencio Delgado and Luis Fernando Pérez Martínez, who selected and hired individuals related to the organization in key and high-level positions.
• Links were established to award shell and core works that ensured the distribution of business between the members of the structure and other officials.
• The members of the structure, as well as entrepreneurs and intermediaries, held meetings in the office of the minister and other places like restaurants, private offices, among others.

Several people required to “participate” in the structure, especially members of Congress like Estuardo Galdámez (hospital in Quiché), Boris España (hospital in Chiquimula), Roberto Kestler and Rolando Pérez (hospital of Antigua Guatemala), as well as other officials like Heber Cabrera, then governor of Quiché (hospital of Quiché), and Juan de Dios Rodriguez (several hospitals).

Two particular events were included in this criminal modality:

Refitting and repair works were arising from the State of Calamity (Decree 33-12). An earthquake took place in Guatemala, in November 2012, that caused high-impact damage in the department of San Marcos.

One of the officials that asked to participate in the reconstruction was the then private secretary to the Presidency,Juan de Dios Rodríguez, who proposed Roberto Samuel Dávila Meza as his intermediary. The reconstruction works were divided between those granted to Juan de Dios Rodríguez – through his intermediary – and the ones that the Ministry of Health’s structure managed directly.

More than 50 irregular refitting and repair events for hospitals and health centers were registered, which represented more than 131 million quetzals.

Construction works within the framework of the Program to Strengthen the Hospital Network (new hospitals). It includes those new hospital construction projects that were not included in the State of Public Calamity declared after the earthquake in San Marcos but were part of the Program for Strengthening the Hospital Network.

In this section are included:

1. The construction of Medical Emergencies, Esquipulas, Chiquimula (later rescinded).
2. The construction of Ixcán Hospital, Quiché.
3. The construction of Rabinal Hospital, Alta Verapaz.
4. Other constructions (Enlargement of Antigua Guatemala Hospital).
5. The construction of Villa Nueva Hospital.
6. It includes the Villa Nueva Hospital. The works were stopped after the Ministry of Health delayed the payments because there was no advance. The payment of commissions (3%) was convened dependent on the criminal structure to expedite the payment of the estimates (physical progress of the work).

In this case, each company agreed to deliver a percentage for payments or disbursements and the physical progress of the works carried out by the Ministry of Health.

The money was sometimes distributed in the office of Saraí Villavicencio, while other times they met in shops in the capital city or the homes of those involved.

Luis Fernando Perez Martinez and Saraí Villavicencio established a percentage of commissions for each member of the structure, as well as for themselves.

In the case of hospital buildings, Saraí Villavicencio made the arrangements for at least three people of her trust to participate in the Tender Boards to ensure that the companies of her interest would be awarded.

The approximate value of the awards for the construction of new hospitals was 452,700,000 Quetzals (this amount consists of 368 million Quetzals of the events, plus 34,680,000 Quetzals for the Chiquimula project, which was rescinded).

What for Guatemalans meant tragedy and loss, such as the earthquake of November 2012, for the criminal structure meant an opportunity to carry out illegal transactions.

An estimate of at least 17 million Quetzals were kickbacks for refitting and repair works. In the case of hospital construction, the agreed bribes amounted to 36 million quetzals (a total of 16,900,000 corresponded to the project terminated in Chiquimula, so more than 19,900,000 Quetzals were paid).

The commissions that Juan de Dios Rodriguez, and the intermediary Roberto Samuel Dávila Meza, received for the awarding of works after the state of public calamity were 7 million Quetzals. On the other hand, the structure led by Saraí Villavicencio and Luis Fernando Pérez Martínez (and composed of other individuals and staff of the Ministry of Health), received at least 12 million Quetzals.

It is essential to mention that the scheme for money distribution considered a percentage for the people who, within the Ministry of Health, made possible the administrative and financial execution of the works. 

Surprisingly, the commissions considered for the repair works of health centers included approximately 3 thousand Quetzals for each member of the structure. The volume of awards under the co-opted scheme was significant.

2- COLLECTION OF KICKBACKS FOR THE PROCUREMENT OF GOODS AND SERVICES

Between 2012 and 2014, the structure co-opted the Ministry of Health and awarded a series of purchases of goods and services, in exchange for the payment of kickbacks, which consisted of: 

1. Purchase of infusion pumps.
2. The hiring of advertising events.
3. A project to buy ambulances.
4. A project to install X-ray machines in the National Hospital Network.
5. A project for the purchase of Modular Hospital in Mixco.

The participation of Jaime Pérez Castillo (nephew of then-President Otto Pérez Molina) was vital for the events of purchase of ambulances, infusion pumps, and installation of X-ray machines in several hospitals. For this purpose, they used intermediary companies and people.

As regards the procurement projects (ambulances, x-rays, and Modular Hospital of Mixco), they organized the events, companies, and kickbacks. However, for different reasons – such as prices and the replacement of Mr. Villavicencio in the Ministry of Health-, the works could not be implemented. In the case of ambulances, they were bought from another supplier.

To get these kickbacks, the structure that co-opted the Ministry of Health, tried to generate the needs for the purchase of inputs. The purchase was not the result of planning or need arising in a hospital, as in the case of infusion pumps, but instead was the fact that a supplier (Jaime Pérez Castillo), was offering a percentage of the sale.  Thus, they looked among the hospital managers those who could create the need for these purchases. It is estimated that kickbacks for the acquisition of infusion bombs were approximately Q500 thousand Quetzals.

In the case of advertising, a contract for Q 6,593,970.50 was awarded to a company owned by Rolando Pérez Martínez, brother of Luis Fernando Pérez. The structure would have received at least Q400 thousand quetzals. During Villavicencio’s administration, the line designated by the Ministry was executed almost in its entirety.

The events that could not be executed (i.e., purchase of ambulances, hospital module of Mixco, and x-rays) but whose kickbacks had already been agreed upon with the companies, evidence the mechanisms used both by the Ministry of Health and other actors such as Jaime Pérez Castillo, President Otto Pérez Molina’s nephew. 

For CICIG, it is of vital that Guatemala improves controls on the mechanisms for the procurement of goods and services in the health sector. This investigation has shown that public employees who are called to integrate bidding boards, but who are part of corruption structures, as the one presented, pose a serious threat to users of health supplies as these people are only focused on the commission they will receive not on the quality of the product.   

3- HIRING OF 450 POSITIONS

The investigation established that the Ministry of Health was being used by the criminal structure to hire people either as payment for political favors, charging a percentage of the salary or by getting a salary from phony jobs. Under this system, the investigation showed that at least 450 jobs were awarded this ministry.

The criminal structure awarded more than one hundred jobs of the Ministry of Health as part payment of political favors, which were required by various public officials. For the structure, it was important to place like-minded people in management positions, as well as the heads of human resources or the financial area, as they would continue to fill the positions in the areas of health or hospitals. They had an “internal control,” previously established to comply with the requirements made by officials. 

Under this scheme, several requests were made (and in most of the cases granted) by members of the Congress of the Republic, the Vice President of the Republic, as well as officials from the Office of the Comptroller General of Accounts, PARLACEN, USAC, some mayors, among others.

While members of Congress were the ones who requested most positions in the Ministry of Health, several requests from officials of other public entities, such as

the Office of the Comptroller General of Accounts, the General Property Registry, some mayors and governors were received as well.

Many members of Congress were part of this. They openly and with impunity used official documentation (letterheaded paper) from Congress to give instructions about the type of staff, position, and salary for each position.            

Progress has been made in other lines of investigation, so in the short term, the MP will be able to file the claims.

PROCEEDINGS

 The following arrest warrants were executed:

The following subpoenas were issued:

The following preliminary hearing requests were introduced:

PRESENTATION OF EVENT 01

PRESENTATION OF EVENT 01

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PRESENTATION OF EVENT 02

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PRESENTATION OF EVENT 03

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