Special Report: Right-wing ex-President Prime Suspect in IRS Fraud, President Funes Demands Action

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On Saturday, October 5, President Mauricio Funes revealed on his weekly radio show that the US Internal Revenue Service (IRS) has requested an investigation into $10 million-worth of tax fraud by Salvadoran government officials from previous administrations, the latest in a parade of corruption charges targeting the right-wing Nationalist Republican Alliance (ARENA) party. Funes has not revealed the names of the officials involved. Nevertheless, all signs point to former President Francisco Flores, the campaign advisor to current ARENA presidential candidate Norman Quijano. “I have knowledge, from reliable sources, of the request from the US IRS for an investigation into the crime of tax fraud, or tax evasion, and probable money laundering, and that it involves known former officials of previous governments and a former President of the Republic,” said Funes. On Wednesday, October 9, Funes claimed the $10 million in question was donated to the former president’s US-based foundation. Following the end of his term in 2004, Flores served as director for the right-wing International Foundation for Liberty in Washington, D.C., which defines its mission as a “response to the wave of neo-populism whose victory would be a serious setback in the process of modernization in Latin America.” Funes revealed, furthermore, that the funds came from a European electric energy company and a mining company currently suing the Salvadoran government, fueling speculation that the Italian energy company Enel Green Power and Canadian mining company Pacific Rim—the only two companies that fit the bill—made multi-million dollar donations to Flores’ foundation in return for government contracts and permits, respectively. Particularly significant is the implication that Enel paid off Flores for rights to the controversial 2002 public-private partnership contract with the public CEL energy company that is currently under investigation for corruption by the Attorney General. Indeed, journalists calculate that the Attorney General’s requests for financial information on Flores and other official implicated in the CEL-Enel case from US authorities likely produced the IRS request. Funes called upon Attorney General Luis Martínez to heed the IRS’s petition, alluding to Martínez’s known ties to ARENA: “If the Attorney General, with all due respect, delayed for hours in opening this investigation because ARENA asked him to, I would ask that he not continue to delay the presentation of the results of the CEL-Enel case, now that it has been several months.” Martínez said his office would solicit further information from US authorities, but added, “here we have masters of political intrigue; we are not going to lend ourselves to this sort of misinformation that seeks to discredit people during electoral periods.” The President also charged ARENA with using these ill-begotten funds to destabilize the country, referencing right-wing efforts to smear the governing party, the leftist Farabundo Martí National Liberation Front (FMLN), in the eyes of the US government. “What most worries me is that an entire lobbying operation has been launched to discredit the government and the country with these resources. There is no greater act of treason for the country than hiring lobbyists to discredit the country in order that [Millennium Challenge Corporation funding] not be approved,” Funes declared. ARENA, in turn, has responded by denying Funes’ charges and with veiled threats against the President: “He should think that in a few months he will no longer be President of the Republic, he will be come a common and ordinary citizen,” said ARENA vice-president of ideology, Ernesto Muyshondt.

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