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| How hitmen and high living lifted lid on looting of Honduran healthcare system | |
| (34 minutes later) | |
| At first, the attempted murder of a travel agent by two gunmen on motorbikes seemed to be just another grim example of the lawlessness that plagues San Pedro Sula, the second largest city in Honduras – and one of the most of the most violent in the world. | At first, the attempted murder of a travel agent by two gunmen on motorbikes seemed to be just another grim example of the lawlessness that plagues San Pedro Sula, the second largest city in Honduras – and one of the most of the most violent in the world. |
| But the intended victim, John Bográn, is widely believed to have been targeted for his alleged role in a massive fraud involving high-ranking government officials who were reportedly involved in the theft of hundreds of millions of dollars from the social security system using a network of sham companies which left dying patients without life-saving medicines. | But the intended victim, John Bográn, is widely believed to have been targeted for his alleged role in a massive fraud involving high-ranking government officials who were reportedly involved in the theft of hundreds of millions of dollars from the social security system using a network of sham companies which left dying patients without life-saving medicines. |
| Related: Protesters across Honduras take on alleged social security embezzlement | Related: Protesters across Honduras take on alleged social security embezzlement |
| As the scale and audacity of the fraud in the Honduran institute of social security (known by its Spanish initials as the IHSS) has come to light in recent weeks, thousands have taken to the streets to demand the resignation of President Juan Orlando Hernández. | As the scale and audacity of the fraud in the Honduran institute of social security (known by its Spanish initials as the IHSS) has come to light in recent weeks, thousands have taken to the streets to demand the resignation of President Juan Orlando Hernández. |
| The protests – led by non-partisan groups fed up with blatant political corruption – have parallels with a similar movement in neighbouring Guatemala, where a separate corruption scandal has already led to the fall of the vice-president and several ministers. | The protests – led by non-partisan groups fed up with blatant political corruption – have parallels with a similar movement in neighbouring Guatemala, where a separate corruption scandal has already led to the fall of the vice-president and several ministers. |
| The twin scandals have unfolded even as the Obama administration urges Congress to approve a $1bn aid package for Central America’s northern triangle of Honduras, Guatemala, and El Salvador in an effort to curtail undocumented migration to the US by creating jobs through US-funded infrastructure projects. | The twin scandals have unfolded even as the Obama administration urges Congress to approve a $1bn aid package for Central America’s northern triangle of Honduras, Guatemala, and El Salvador in an effort to curtail undocumented migration to the US by creating jobs through US-funded infrastructure projects. |
| But allegations of criminal wrongdoing in the highest echelons of both governments challenge the assurances given to Congress about improved governance in both countries – which are also key allies in America’s war on drugs. | But allegations of criminal wrongdoing in the highest echelons of both governments challenge the assurances given to Congress about improved governance in both countries – which are also key allies in America’s war on drugs. |
| “The gravity of the evidence is shaking to the roots the legitimacy of both governments and producing mass protests,” said Annie Bird, Central America expert at the Center for Political Ecology. “The US Congress must seriously examine the responsibility of appropriating large sums of taxpayer dollars to governments in which top officials are implicated in major corruption.” | “The gravity of the evidence is shaking to the roots the legitimacy of both governments and producing mass protests,” said Annie Bird, Central America expert at the Center for Political Ecology. “The US Congress must seriously examine the responsibility of appropriating large sums of taxpayer dollars to governments in which top officials are implicated in major corruption.” |
| The IHSS is a government-run national insurance system which until a few years ago provided good quality healthcare for those in the formal labour market, from factory workers to public servants, who made monthly payments linked to salary levels. | The IHSS is a government-run national insurance system which until a few years ago provided good quality healthcare for those in the formal labour market, from factory workers to public servants, who made monthly payments linked to salary levels. |
| Allegations of corruption first emerged in 2013 amid reports of major shortages of medicines, equipment and staff at IHSS hospitals. | Allegations of corruption first emerged in 2013 amid reports of major shortages of medicines, equipment and staff at IHSS hospitals. |
| Prosecutors said the institute’s director, Mario Zelaya, and his cousin José Zelaya, the head buyer at the IHSS, had embezzled millions of dollars to pay for extravagant lifestyles which included mansions, flashy cars and foreign travel for themselves, their wives and model girlfriends. | Prosecutors said the institute’s director, Mario Zelaya, and his cousin José Zelaya, the head buyer at the IHSS, had embezzled millions of dollars to pay for extravagant lifestyles which included mansions, flashy cars and foreign travel for themselves, their wives and model girlfriends. |
| Mario Zelaya was named as IHSS director in early 2010, just a few months after a military-backed coup d’état deposed the elected president, Manuel Zelaya (no relation), and created a law-and-order vacuum that enabled organised crime to proliferate in the country. | Mario Zelaya was named as IHSS director in early 2010, just a few months after a military-backed coup d’état deposed the elected president, Manuel Zelaya (no relation), and created a law-and-order vacuum that enabled organised crime to proliferate in the country. |
| By 2014 the list of IHSS officials and associates wanted for money laundering, fraud and misuse of public office had grown, and Interpol issued several arrest warrants. | By 2014 the list of IHSS officials and associates wanted for money laundering, fraud and misuse of public office had grown, and Interpol issued several arrest warrants. |
| Mario Zelaya was arrested in Nicaragua in September. His girlfriend, model Natalia Ciuffardi Castro, was arrested in Chile in December. Prosecutors say she received cash and real estate through contracts with sham companies – set up to launder IHSS money, but as there is no extradition treaty between Chile and Honduras, Ciuffardi has yet to be charged and denies any wrongdoing. | Mario Zelaya was arrested in Nicaragua in September. His girlfriend, model Natalia Ciuffardi Castro, was arrested in Chile in December. Prosecutors say she received cash and real estate through contracts with sham companies – set up to launder IHSS money, but as there is no extradition treaty between Chile and Honduras, Ciuffardi has yet to be charged and denies any wrongdoing. |
| José Zelaya is still on the run, but his wife and girlfriend have both been detained. His girlfriend, Honduran model Ilsa Vanessa Molina, was arrested by US immigration officers in January while trying to enter illegally through New Mexico. Molina, who allegedly received almost half a million dollars, is seeking asylum in the US. | José Zelaya is still on the run, but his wife and girlfriend have both been detained. His girlfriend, Honduran model Ilsa Vanessa Molina, was arrested by US immigration officers in January while trying to enter illegally through New Mexico. Molina, who allegedly received almost half a million dollars, is seeking asylum in the US. |
| As the drama unfolded, the governing National Party – which won the 2013 election following a multimillion-dollar campaign – distanced itself from the scandal. | As the drama unfolded, the governing National Party – which won the 2013 election following a multimillion-dollar campaign – distanced itself from the scandal. |
| But in early May, Globo TV revealed a cache of leaked documents, including cheques that purportedly showed that in the runup to the election the National Party secretly received hundreds of thousands of dollars, including large amounts from at least 10 sham companies that were given IHSS contracts approved by Congress – led at the time by the future President Hernández – during late-night parliamentary sessions. | But in early May, Globo TV revealed a cache of leaked documents, including cheques that purportedly showed that in the runup to the election the National Party secretly received hundreds of thousands of dollars, including large amounts from at least 10 sham companies that were given IHSS contracts approved by Congress – led at the time by the future President Hernández – during late-night parliamentary sessions. |
| Hilda Hernández, the president’s sister, was one of three officials in charge of party funding at the time. She has not been arrested or questioned. | Hilda Hernández, the president’s sister, was one of three officials in charge of party funding at the time. She has not been arrested or questioned. |
| In total $350m was allegedly stolen from IHSS. The scams included overpaying almost $400,000 for 10 ambulances and buying overpriced medicines which were then repeatedly stolen and resold to the IHSS. | In total $350m was allegedly stolen from IHSS. The scams included overpaying almost $400,000 for 10 ambulances and buying overpriced medicines which were then repeatedly stolen and resold to the IHSS. |
| The drip-drip of damaging evidence has continued for the past month. At first, the president accused opposition parties of orchestrating the revelations to destabilise the government, but prosecutors said the leaked cheques were genuine. | The drip-drip of damaging evidence has continued for the past month. At first, the president accused opposition parties of orchestrating the revelations to destabilise the government, but prosecutors said the leaked cheques were genuine. |
| Amid growing public outrage, Hernández then appointed a commission to investigate the scandal alongside 11 other old and new corruption cases. He has accepted that his election campaign received money from companies linked to the scandal, but denies any personal knowledge. | Amid growing public outrage, Hernández then appointed a commission to investigate the scandal alongside 11 other old and new corruption cases. He has accepted that his election campaign received money from companies linked to the scandal, but denies any personal knowledge. |
| The case has prompted fury among ordinary Hondurans over the collapse of the IHSS – which before the fraud had provided good quality healthcare to 1.6 million Hondurans – and its imminent privatisation. | The case has prompted fury among ordinary Hondurans over the collapse of the IHSS – which before the fraud had provided good quality healthcare to 1.6 million Hondurans – and its imminent privatisation. |
| Even as the scandal unfolded, the government was negotiating a £188m loan with the International Monetary Fund (IMF), which insisted that the IHSS – now saddled with huge debts thanks to the embezzlement – should be privatised. | Even as the scandal unfolded, the government was negotiating a £188m loan with the International Monetary Fund (IMF), which insisted that the IHSS – now saddled with huge debts thanks to the embezzlement – should be privatised. |
| “The IMF knows the privatisation of all our public institutions has been preceded by huge deficits and insolvencies created by government-appointed corrupt and incompetent officials,” union leader Carlos Reyes told the Guardian. “A functioning hospital system was dismantled and sick people died unnecessarily in order to win an election and justify privatisation.” | “The IMF knows the privatisation of all our public institutions has been preceded by huge deficits and insolvencies created by government-appointed corrupt and incompetent officials,” union leader Carlos Reyes told the Guardian. “A functioning hospital system was dismantled and sick people died unnecessarily in order to win an election and justify privatisation.” |
| The IMF said its prerequisite reforms also include steps to eliminate waste and fraud in the IHSS. | The IMF said its prerequisite reforms also include steps to eliminate waste and fraud in the IHSS. |
| The political fallout of the scandal has yet to be established. Protesters are angered by prosecutors’ unwillingness to acknowledge political links to the fraud until the documents were leaked.They have called for the establishment of an independent criminal investigative body like the UN-backed International Commission against Impunity in Guatemala (Cicig), which also promotes witness protection. | The political fallout of the scandal has yet to be established. Protesters are angered by prosecutors’ unwillingness to acknowledge political links to the fraud until the documents were leaked.They have called for the establishment of an independent criminal investigative body like the UN-backed International Commission against Impunity in Guatemala (Cicig), which also promotes witness protection. |
| Keeping witnesses alive to testify is a serious problem in Honduras, which has one of the highest murder rates in the world. Bográn, the travel agent accused of selling the Zelayas flights to US cities at inflated prices, was shot alongside his bodyguard days after the allegations first came to light. At the time, he was wanted by Interpol and, allegedly, also a protected witness working with prosecutors. | Keeping witnesses alive to testify is a serious problem in Honduras, which has one of the highest murder rates in the world. Bográn, the travel agent accused of selling the Zelayas flights to US cities at inflated prices, was shot alongside his bodyguard days after the allegations first came to light. At the time, he was wanted by Interpol and, allegedly, also a protected witness working with prosecutors. |
| That same week, model Ilsa Vanessa Molina’s mother filed a case with the National Commission of Human Rights claiming two men had threatened to kill her and her daughter if they cooperated with investigators. | That same week, model Ilsa Vanessa Molina’s mother filed a case with the National Commission of Human Rights claiming two men had threatened to kill her and her daughter if they cooperated with investigators. |
| Meanwhile ordinary Hondurans continue to suffer the consequences of the fraud. Pedro Amador, an English teacher, said his father José received no treatment from the IHSS after he was diagnosed with cancer two years ago. He died at home last month. | Meanwhile ordinary Hondurans continue to suffer the consequences of the fraud. Pedro Amador, an English teacher, said his father José received no treatment from the IHSS after he was diagnosed with cancer two years ago. He died at home last month. |
| “My father paid into IHSS all his working life but since he got cancer two years ago, they did nothing apart from give us prescriptions,” said Pedro. “We had to buy every medicine he needed and my elderly mother and sister basically nursed him at home as there were no staff to attend to him. He died from negligence, because all the money was stolen.” | “My father paid into IHSS all his working life but since he got cancer two years ago, they did nothing apart from give us prescriptions,” said Pedro. “We had to buy every medicine he needed and my elderly mother and sister basically nursed him at home as there were no staff to attend to him. He died from negligence, because all the money was stolen.” |