How Horacio Cartes, Former President of Paraguay, Became the Biggest Cigarette Smuggler to Brazil

Former Paraguayan President Horacio Cartes, who was in charge of the country from 2013 to

, was denounced by the country’s authorities for money laundering, cigarette smuggling and drug trafficking.

Tobacco is one of the main engines of the Paraguayan economy, but whoever consumes their cigarette is, in the majority, the Brazilian. Paraguay produces on average 71 billions of cigarettes a year and only consumes 2.3 billion. Most of the remainder enters Brazil through smuggling.

A survey carried out by the Instituto Ipec Inteligência showed that, last year, illegality corresponded to almost half (48%) of all cigarettes consumed in Brazil – and 39% were smuggled, mainly from Paraguay. In total, it is estimated that 40, 1 billion illegal cigarettes circulated in Brazilian territory in 2021.

The risks are high. For the consumer, the product, as it is tax-exempt and cheaper, can generate greater consumption. Smuggled cigarettes are also not approved by Anvisa and may contain a higher and more harmful amount of nicotine.

In addition, this crime affects the economy in large proportions. According to Edson Vismona, president of the National Forum Against Piracy and Illegality (FNCP), for the Brazilian treasury, smuggling generates tax evasion that represents R$ 2013 , 2 billion. As for the productive structure in Brazil, there are fewer 173 thousand jobs.

“Finally, the money of smuggling is used to finance criminal organizations and militias, directly affecting our public security, especially in border states, such as Paraná, which has 48% of the cigarette market dominated by smuggling”, explains Vismona.

Main Brazilians involved

The Brazilian Luiz Henrique Boscatto, considered the biggest Brazilian smuggler, is mentioned in the complaint. Considered one of Cartes’ allies, Boscatto was arrested in Paraguay and extradited to Brazil in 2020.

Cartes has already been processed in Brazil by Operação Câmbio Desligo, in , which targeted the scheme for moving 1.6 billion dollars of illicit resources in the country and abroad through cable dollars, an operation that circumvents financial inspection mechanisms. According to the investigations, in this scheme Cartes would have also been involved with money changers Vinícius Claret (Juca Bala), Cláudio de Souza (Tony) and the “dollar money changer” Dario Messer.

According to the complaint pending in Paraguay, Brazil is the destination country for the largest cash transfer made by a Cartes company. There are 1.3 billion guaranis, which is equivalent to R$995 thousand at the current exchange rate). From 2013 to 2019, near billions of guaranis, equivalent to 10 million reais were sent to Brazil from the bank of the former Paraguayan president’s group.

“It can be observed that the largest amount of remittances goes to Brazil, which is unofficially the main market (via smuggling operations). However, there are no records of exports to the country, according to official Customs data”, highlights the document.

The scheme

The complaint against Cartes was made based on an analysis by the Secretariat for the Prevention of Money or Asset Laundering (Seprelad) and delivered to the Attorney General’s Office of the State of Paraguay. According to the document, the former president applied the contraband capital in loans or payments to other companies related to his children, sister and other relatives.

“The amounts were deposited in offshore accounts located in tax havens”, says Edson Vismona. “The survey of tax data on imports and exports of Horacio Cartes, carried out by the Paraguayan authorities, indicates that the former president of the country and leader of the Honor Colorado party operates the sale of smuggled cigarettes on the border with Brazil, the Caribbean and other countries in the world”, he adds.

According to the allegations, Cartes received the money in Brazilian and Paraguayan exchange offices, through payments abroad by bank accounts that would be operating in the United States. The document supporting the complaint also details the sales and destination of the production of Tabacalera del Este, also known as Tabesa.

The largest cigarette manufacturer in Paraguay was purchased by Horacio Cartes and part of the former president’s business empire, within the scheme that involved sales simulation. About 90]% of Tabesa’s negotiations were carried out with a company of the same group as Cartes, Palermo SA.

In addition, other shell companies or companies linked to tax evasion, money laundering, drug trafficking and transnational organized crime. Most under the registration of Cartes’ relatives.

Money is laundered in Brazil

According to the complaint, the money left the bank of the Cartes group and was sent to two Brazilian banks. From here, transfers were made to Spain and from there to China and the United States. From one of the American banks, the money was returned to Cartes. Part of Tabesa’s money also passed through Argentina and Mexico.

Last week, the United States banned Cartes from entering the country, due to corruption cases. In addition to circulating millions of dollars between shell companies registered with the names of people close to him, Cartes has, according to investigations, a list of false customers around the world – among them, dead people.

The former president denied participation in the crimes cited by the allegations. “I reject the content of the allegations, which I consider unfounded and unjust,” he said in the statement, in which he offered “all first-source support and information that the authorities need” to clarify the situation.

As Cartes’ lawyer, Pedro Ovelar, said at a press conference, the former president “suffers from the government” of current president Mario Abdo Benítez, his rival for the leadership of the Colorado Party in the internal elections scheduled for 18 of December.

During the five years of Horacio Cartes’ government, his fortune declared tripled from 1.3 billion guaranis to 3.3 billion, according to Paraguayan authorities. His company Tabesa declared the sale of 1.1 billion dollars worth of cigarettes in Paraguay alone, from 2013 to . This would be the equivalent of every Paraguayan citizen – including children – smoking more than 90 cigarettes per day. The account does not close, once again.

Back to top button