Ecuador: Corruption Scandals Shake Up Election Campaign

By Luis Ángel Saavedra

The corruption unveiled at the state-owned oil company Petroecuador has also unveiled the cynicism with which the government can act to get rid of political actors whom they feel threatened by or to protect their supporters.

All started in April with the so-called Panama Papers — the publication of confidential documents of the Panamanian company Mossack Fonseca that revealed the use of tax havens by companies and individuals to evade taxes and for money laundering — in which several Ecuadorians were mentioned, among them Carlos Pareja Yannuzzelli, a key man in the oil business of several governments.

In the current government of President Rafael Correa, in addition to having held high governmental positions and in the state oil company itself, Pareja Yannuzzelli was given the responsibility for increasing the installed capacity of the Esmeraldas State Refinery, a project for which an investment of US$170 million was planned back in 2007, which ended up costing about $2.2 billion in 2015.

Pareja Yannuzzelli argued that the costs were of different projects, arguing that there had been talk of repowering since 2007, but the final project turned out to be almost the complete replacement of the refinery. But this argument did not convince oil experts like Fernando Villavicencio.

“The analysis of the 157 contracts subscribed for the repowering of the refinery, obtained exclusively by (the research portal) Focus Ecuador, reveals the most important fact: the project did not cost $1.2 billion as the government has argued, but almost double that amount. The sum of all the contracts at the hands of this portal exceeds $2.2 billion. After learning of this figure, it can be said with certainty, that this is the most expensive and questioned project of the current government,” Villavicencio said.

In Panama it was possible to detect some companies linked to oil officials of the current government, something that Villavicencio had already warned about; he had even denounced the existence of bribes in the oil dealings led by Pareja Yannuzzelli and Alex Bravo, the CEO of Petroecuador. Villavicencio was prosecuted and was issued an arrest warrant against him, according to the government, for having intervened e-mails from which he obtained the information on which he based his allegations. Villavicencio denied the accusations and after going underground, obtained a habeas corpus that now allows him to present his defense in freedom.

Pareja Yannuzzelli fled the country on Sept. 28 when it was no longer possible for him to hide his activities, highlighting the negligence of the Attorney General, Galo Chiriboga. Christian Viteri, party-liner legislator, reported that Chiriboga knew of the actions of Pareja Yannuzzelli before he fled the country, since he had already received a report from International Criminal Assistance, an international legal support mechanism.

The war room

Viteri presented a certified document from the Panama Ministry of Government, dated Sept. 26, reporting to the Ecuadorian Attorney General’s Office about the investments of Pareja Yannuzzelli in ghost companies. Viteri also asked for the lifting of bank secrecy of some 25 bank accounts in Switzerland, Hong Kong, the Virgin Islands, Cayman Islands and Venezuela, something that Attorney General Chiriboga has also refused to request through International Criminal Assistance.

Pareja Yannuzzelli escaped and many demanded the dismissal of Chiriboga as a result of his neglect. The Alianza País (AP) parliamentary bloc decided to set up a “war room”, as Blanca Argüello, coordinator of the ruling party legislators said is called the political body that should define whether or not to prosecute Chiriboga. This war room was formed in the end of October with President Correa; the President of the National Assembly, Gabriela Rivadeneira; and the National Secretary of Political Management, Paola Pabón.

Argüello said that “they will hold a meeting in the Presidency to analyze whether or not the political trial can proceed from the political perspective and the harm or benefit that this will have for the candidacies”.

Apparently, the decision of this war room was to leave the prosecutor alone and see how to strengthen the official candidacies for the presidential elections of Feb.19, 2017, as there was no mention again of the political trial that was requested, not even by government supporters.

Jorge Glas, the current vice president and vice presidential candidate, was in charge of all the country’s energy programs, including the oil sectors. Pareja Yannuzzelli and Bravo were directly dependent on him, so Glas would have to bear at least some political and administrative responsibility for these acts, as expressed by analyst Lolo Echeverría, in a debate held on Radio Democracia, of Quito, on Nov. 16.

As if this were not enough, Glas’s name was once again mentioned in other acts of corruption, this time in the processes of assigning radio and television frequencies. Marcos Párraga Quinteros, who was an adviser to Glas and a counselor to the Information Regulatory Council (CORDICOM), together with Tulio Muñoz, a member of the Manabita Corporation of Radio and Television, were charged with demanding up to $200,000 for the allocation of radio frequencies.

Election campaign

According to legislator Gerardo Morán, the money requested was to be used in the AP election campaign, apparently at the request of the vice president and Pabón. These officials have denied their participation in these events.

Juan Carlos Solines, a member of the Observatory of Frequencies, a citizens group created to monitor the process of awarding radio frequencies, denounced the existence of two more corruption cases in this area.

Although the legal secretary of the Presidency, Alexis Mera, assured that Glas has no allegations of corruption, the allegations seriously affected the pro-government formula, to the point that the presidential candidate Lenín Moreno sought Glas’s replacement, but the candidacy of Glas was imposed on him. According to electoral polls, which cannot be disseminated by mandate of the National Electoral Council, the official candidature would have fallen by five percentage points, putting it at risk of not reaching the second round to be held on Apr. 2, and favoring the immediate candidacies behind them: banker Guillermo Lasso, of the right-wing Movimiento CREO, and General Paco Moncayo, from the center-left Acuerdo Nacional por el Cambio.

In the event of losing the elections, the government seeks to ensure that its actions are not investigated by a new administration and for this reason it is promoting the re-election of Ramiro Rivadeneira as Ombudsman, who has kept silent regarding the human rights violations committed in the current regime.

Likewise, it will seek the appointment of Mera as National Comptroller of the Nation, which will ensure that the expenditure of the last 10 years of government is not investigated. And as for Chiriboga, it seems that his re-election as Attorney General will be supported, for which he is doing merit, since after letting the big fish out he has dedicated himself to imprisoning the small fish that remained in the country, an act with which he seeks to clean his image.

If Rivadeneira, Mera and Chiriboga are ratified, a trio will be formed to facilitate the impunity of the current government and its followers, according to a manifesto signed by 20 social and human rights organizations in the country, led by the Confederation of Indigenous Nationalities of Ecuador (COANIE) on Nov.15.

“The control of the Ombudsman, the Comptroller General and the Attorney General’s offices will keep intact that triangle of impunity that has benefited the interest of the government and its related groups,” the manifesto reads.