ASUNCIÓN, Paraguay — The Biden administration on Tuesday imposed sanctions on a Paraguayan tobacco company for allegedly enriching the country’s controversial former president, a cigarette tycoon sanctioned last year by the White House for corruption.
The U.S. Treasury Department said it was targeting cigarette producer Tabacalera del Este over its links to Horacio Cartes, one of the Paraguay’s richest men who served as president from 2013 to 2018 and still wields significant political power in the country. Paraguay’s current president, Santiago Peña, is a political protégé of Cartes who also hails from the dominant conservative Colorado party.
Citing a “concerted pattern of corruption,” the Treasury Department last year sanctioned Cartes over accusations that he had paid millions of dollars in bribes to lawmakers to pave his way to power and that he had cultivated ties to Lebanon’s Hezbollah militant group, which is believed to operate in the porous Triple Frontier where Argentina, Brazil and Paraguay meet.
At the time, the Treasury also designated four companies controlled by Cartes that spanned the Paraguayan economy’s main sectors, including cattle ranching, tobacco and consumer goods.
Cartes has dismissed the corruption allegations as politically motivated. There was no immediate response from the Tabacalera del Este tobacco company. The phone numbers on the company website were disconnected.
Cartes says he no longer owns nor is actively involved in the management of Tabacalera del Este, a company that has roused competitors’ suspicions that smuggling was occurring given its massive volume of cigarette sales.
Nonetheless, the Treasury Department on Tuesday accused Tabacalera del Este of funneling millions of dollars to Cartes “pursuant to a sales agreement.” The department’s Office of Foreign Assets Control last year identified Cartes as owning a 50% or greater interest in the company, directly or indirectly.
“The United States remains dedicated to ensuring accountability for Cartes and to promoting meaningful anti-corruption reform in Paraguay,” said State Department spokesperson Matthew Miller.
Cartes currently faces no criminal charges in Paraguay and was elected last year as president of the Colorado party, which controls the majority of seats in both houses of Congress.
Controversy — and U.S. law enforcement inquiries — have followed the politician throughout his career as the country’s leading businessman. Currency fraud allegations sent him to jail for a few months early in 1986. All charges were later dropped.
Last year Paraguay’s attorney general launched a criminal investigation into the U.S. Treasury’s corruption allegations about Cortes, but there have been no results.
The State Department has said deep-rooted corruption in Paraguay often prevents convictions in money-laundering and terrorism financing cases.
Although last month Moody’s ratings agency lifted Paraguay to investment-grade status, citing the nation’s strong economic growth, analysts and investors have expressed concerns about endemic organized crime fueled by cigarette and drug smuggling.
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