The La Línea corruption case began in Guatemala on April 16, 2015 when the International Commission against Impunity in Guatemala () and State prosecutors accused a number of politicians in the administration of President Otto Pérez Molina of setting up a customs corruption ring with the help of high-ranking officials in the tax and customs administration. Several demonstrations ensued, calling for the resignation of Pérez Molina and his vice-president Roxana Baldetti. Among the accused were the retired captain Juan Carlos Monzón, (at the time Baldetti's private secretary) and the directors of the Tax Administration Superintendency or , (SAT), an entity analogous to the US Internal Revenue Service. Baldetti resigned in early May to the joy of thousands of demonstrators.
On 20 May 2015, the CICIG and Guatemalan Chief Prosecutor Thelma Aldana exposed another high-level corruption scandal, when they announced the Guatemalan Social Security Institute (Instituto Guatemalteco de Seguridad Social) -IGSS investigation, which found that the board of directors plotted to award a renal facility service contract to an external company that did not comply with the minimal requirements and caused the death of numerous patients. Investigations from both entities showed that the contract had been granted by heavy bribes to some of the board members, specially IGSS President Juan de Dios Rodríguez, Pérez Molina's former private secretary. The board members were sent to prison. A few weeks later, another corruption scandal broke when another of former Perez Molina's private secretaries went to jail, accused of being involved in a high stakes case with energy company .
On 21 August 2015, prosecutors and the CICIG asked for the arrest of Baldetti and the impeachment of Pérez Molina for their involvement in "La Línea case". In a press conference, CICIG chief, Colombian prosecutor Iván Velazquez reported that during the procedures carried out on 16 April 2015, they discovered that the president and the vice president were the masterminds of La Línea, not Juan Carlos Monzón. Furthermore, CICIG implied, the two might have been involved with the customs ring even before they were inaugurated on 14 January 2012. Baldetti was sent to the Women's Preventative Detention Center, after she had spent a few days in the VIP jail in the Army's Matamoros Fort.
Events came to a climax during Baldetti's legal hearing. An intercepted phone conversation was played in which one could hear the voice of President Perez Molina asking the SAT director for personnel changes, allegedly to accommodate the smuggling network. A national strike was called after the release of that conversation. In the end, on September 1, Otto Pérez Molina was impeached and stripped of his immunity; he resigned September 2 and was in custody on the 3rd.
Sindicato and Cofradía
In the 1970s, generals Manuel Antonio Callejas and Francisco Ortega Menaldo ― the son-in-law of then-president Carlos Manuel Arana Osorio ― created a powerful organization parallel to the (Ministry of Public Finances). The Guatemalan Army allegedly authorized the group to detect weapon smuggling for the guerrillas during the Guatemalan Civil War. In reality, this organization was heavily involved in smuggling and other illicit activities. From it two powerful groups emerged: the "Sindicato" (syndicate, union) and the "Cofradía" (brotherhood).
Moreno smuggling ring
During Álvaro Arzú's presidency (1996–2000) the smuggling ring was attacked when the National Prosecutor found evidence that implicated several high-ranking Army officers, among them general Luis Francisco Ortega Menaldo, colonel Salán Sánchez, general Efraín Ríos Montt, coronel Napoleón Rojas Méndez, major Byron Barrientos, and Mario Guillermo Ruiz Wong. Then-presidential candidate Alfonso Portillo was mentioned. According to the legal proceedings that took place between 2000 and 2002, the ring controlled container transfers, import prices, and the type of merchandise that was to be moved; the ring would take control of the containers and would not release them until a hefty bribe was paid. None of these names immediately came to public light, and a middleman operator named Alfredo Moreno Molinda was accused of being the ringleader. Moreno was previously captured on September 14, 1996. After Portillo's victory in the 2000 elections, the new Attorney General, Rodolfo González Rodas, dismantled the unit in charge of Moreno's case, allegedly due to the ring's connections to Portillo and Ríos Montt - leaders of Portillo's political party. Finally, in 2001, Alfredo Moreno paid a million quetzals jail bond and was released after serving five years in prison in the Zone 18 Preventive. On February 7, 2013, Moreno, who had health problems at the time of his 1996 arrest, died as a result of cardiac arrest.
Pérez Molina's presidency
Otto Pérez Molina was elected president in the 2011 general elections and shortly after his inauguration privatized the Empresa Portuaria Quetzal (English:Quetzal Harbor Enterprise) in Escuintla, on Holy Wednesday of the first Holy Week under his tenure; the Holy Week is a highly respected holiday in Guatemala and his move prompted several complaints about its legality. Later, Baldetti appointed Claudia Méndez Asencio - a close friend of hers - as SAT Customs Chief. Only two months later, Pérez Molina intervened in the Superintendencia de Administración Tributaria and placed military personnel in key points in customs, allegedly to increase tax collection and prevent smuggling.
When President Pérez Molina took office in 2012, Vice President Baldetti Elías brought a retired general, Luis Francisco Ortega Menaldo, to work with her in the vice president's office, acknowledging their close relationship. Ortega Menaldo has been considered the protégé of former president Carlos Manuel Arana Osorio, since he had married Arana's daughter, and Arana had helped Ortega get to the upper ranks of military intelligence in the 1970s. Ortega Menaldo, then a captain, was trained in the Telecommunication Regional Center, a.k.a. "La Regional", during Arana's government (1970–1974). In 1980, he was appointed as chief of the newly created Department of Security and Special Investigations in the Public Finances Secretariat, which allegedly was the origin of the smuggling ring. When Vinicio Cerezo was elected president in 1985, then-Secretary of Defense Héctor Gramajo appointed him as chief of Military Intelligence in 1987 while general Manuel Callejas ― the "Cofradía"'s boss ― was appointed as Defense Chief of Staff. Gramajo used the criminal enterprise for support against the Army's hard-line officers many of whom worked closely with the extreme right-wing party Movimiento de Liberación Nacional – MLN – and thus stop coup d'état attempts against president Cerezo. With CIA help, Ortega Menaldo founded the Military Intelligence School in 1987, and worked closely with the DEA.
Thus, the two executive leaders ― Pérez Molina and Baldetti Elías ― bought an alliance to the main military groups that formed during the Guatemala Civil War: "Sindicato" and "Cofradía". But the presence of Luis Mendizábal ― owner of Emilio's boutique, the alleged ring headquarters ― confirmed that yet a third group also had a strong position in the government: that of retired general Marco Tulio Espinosa Contreras, an Air Force general, who raised his profile during the Álvaro Arzú presidency.
Pérez Molina's government had faced with a constant fiscal deficit since 2012 and missed SAT's collection goals every single quarter; customs taxes dropped in 2013 from 15,800 million to 15,300 million quetzals and was even lower in 2014; the same happened with sales taxes over imports. The fiscal gap in those years was as high as 7,000 million of quetzals, which was covered by treasure bonds and international loans, increasing public debt. The financial crisis forced the Government to create new phone, cement, and mining taxes to balance its budget for 2015.
In September 2014, retired captain Byron Lima Oliva, who was already in prison with a 15-year sentence after being formally accused of being the material assassin of bishop Juan José Gerardi, was accused by CICIG of being the one that controlled the Pavoncito prison where he was committed and practically had control of the whole Guatemalan jail system. Investigations showed that Lima Oliva came and went as he pleased in armored SUVs with a police escort; when he was apprehended outside the prison and taken to the Supreme Court building to testify along with other accused, he reportedly said several times that he was a personal friend of Pérez Molina. It was not the first time he was captured outside his prison cell: in February 2013 he was captured in a SUV outside prison. CICIG accused Lima Oliva of creating a multimillion-dollar empire by controlling the prisons and charging up to US$12,000 for selling prison transfers.
In early April 2015, in discussions with the United Nations about extending CICIG's mandate for another two years, both Pérez Molina and Baldetti were adamant that the International Commission was no longer needed in Guatemala.
Investigation On April 16, the International Commission against Impunity in Guatemala (CICIG) accused a number of politicians within the administration of President Pérez Molina of setting up a criminal network within the Tax and Customs Administration. At the time, the CICIG believed that the La Línea network was headed by Monzón Rojas (Baldetti's secretary) and Omar Franco (Chief Officer of SAT, the Superintendencia de Administración Tributaria de Guatemala).
From May 2014 to February 2015, this corruption ring handled at least 500 containers, which benefited from lower customs duties in exchange for very significant bribes, thanks to the ring's control of the customs offices at Puerto Quetzal and Santo Tomás, as well as at the central customs administration.
The name of the corruption ring, La Línea – "the (telephone) line" – came from the phone number, which any import company could call to ask for reduced customs duties. The network involved dozens of people within the tax and customs administration as well as in the Pérez Molina administration itself.
Suspects
On the early morning of 16 April 2015, an operation with a total of 23 operatives with 250 Civil National Police officers, besides CICIG and public prosecutor officials, resulted in extensive information collection and 20 suspects captured, among them SAT personnel, customs agents and entrepreneurs.
The captured suspects were:
SAT personnel: Álvaro Omar Franco Chacón, SAT Chief Director; Sebastián Herrera Carrera, Human Resources manager; Anthony Segura Franco, SAT union general secretary; Karla Mireya Herrera España, Central Customs building manager; Gustavo Morales Pinzón, South division manager; José Rolando Gil Monterroso; Melvin Gudiel Alvarado, administrator; and Carlos Enrique Muñoz Roldán, former SAT Chief Director External ring: Adolfo Sebastián Batz; Carlos Ixtuc Cuc; Geovanni Marroquín Navas; Julio César Aldana Sosa; Mónica Patricia Jáuregui; Salvador Estuardo González; Osama Ezzat Aziz Aranki; Byron Antonio Izquierdo; Francisco Javier Ortiz Arriaga; Julio Estuardo González de León; Herbert Francisco Cabrera; Miguel Ángel Lemus Aldana.