The FCPA Blog

Carlos Castresana Fernández ranks as an anti-corruption superhero. For two-and-a-half years, the Spaniard headed the International Commission against Impunity in Guatemala, or CICIG, a partnership between the U.N. and Guatemala's government. It was set up to reassert the rule of law in the country after 36 years of civil war. And it succeeded beyond anyone's expectations.

But last week Dr. Castresana resigned. The former Public Prosecutor of the Supreme Court of Spain and a specialist in white collar and drug-related prosecutions said he needed a break. No one blamed him. His job was always dangerous because he took it seriously. Even through his resignation he managed to remove another corrupt official. This time it was the new attorney general, whom he accused in his final hours in the job of being tied to organized crime. Within a few days, the country's Constitutional Court ordered the AG out of office, the first time any court in Guatemala had acted against such a high-ranking office holder.

During Castresana's tenure, according to U.N. reports, some 2,000 Guatemalan police officers, or 15 percent of the force, were fired for corruption. Because of lack of cooperation, a prior attorney general, 10 prosecutors and three supreme court justices had been dismissed. Through criminal prosecutions, 130 people were sent to jail, including a former president as well as former ministers of defence, finance and interior. 

Castresana drove the process but credited success to "reliable police officers and prosecutors and with the support of some 90 per cent of the population and civil society and the private sector."

Police and judicial corruption is a special kind of nightmare. It strips power away from honest citizens and hands it over, irrevocably, to their enemies. Once that happens the system is powerless to fix itself. Outside intervention is the only way. That's where Castresana came in.

Guatemala hasn't been the subject of FCPA enforcement actions so it's off the usual compliance radar. But the country's 13 million people have suffered under the burden of corruption for a long time. No doubt they're worried today as their superhero packs his bags. They should be.

On Friday, the Guatemalan Times carried this item: "Yesterday also, four decapitated heads were discovered in prominent places of the city. Messages where attached to the heads directed at the Ministry of the Interior and the prison system. The real intent of this gruesome display of violence can also be interpreted as a very clear statement of the dark forces that promote impunity in Guatemala, who felt empowered after Dr. Castresana resigned. The groups wanted to send an unequivocal message to the population, to the justice system and to the President of Guatemala."

As reported Friday, one of the 22 shot-show defendants, Daniel Alvirez, is expected to plead guilty soon to charges of conspiracy to violate the Foreign Corrupt Practices Act. The government's two-count superseding information alleged that he plotted to bribe defense officials in Africa and the Republic of Georgia.

What to expect now? We asked someone familiar with the evidence, who requested anonymity. Here's what he or she told us:

The government's video and audio tapes are of good quality and the confidential informant, Richard Bistrong, should be an effective witness despite some baggage. Overall, the cases appear to be strong and supported by ample evidence.

There are indications of more foreign bribery involving the military-equipment industry; the allegations in the first 16 indictments (available here) and the superseding information may be the tip of the iceberg. 

The Justice Department is seeking to build bigger cases against some current defendants. It may also indict other individuals.

Investigators could also be looking at involvement by some well-known industry leaders -- an Indian military-equipment supplier, three U.S. public companies, and two large private security contractors among them.

Countries and governments involved may include not just Georgia (mentioned in the superseding information) but also Peru, Mexico, Saudi Arabia, Guatemala, the Philippines, Colombia, and others. Representatives from some of the countries could be targeted by the Justice Department.