#263 – The Expat Files: Extradition, Corruption, and Legal Realities in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:14] Hello there all you expat wannabes, I'm Johnny Mueller and you're listening to the Expat Files, living in Latin America. The show that tells you just what it's like to live, work, play and or retire down here in Latin America. It's a mix of the good, the bad, the ugly and the great and it's all right here so let's get started. Now in case you guys don't know about it, there's a big buzz going on down here in every country in Latin America. Front page headlines, gigantic type all over the news that for the first time in history a former Latin American president is being extradited to the United States for the crime of money laundering. Now whether you believe that money laundering is a crime or not, the problem is the US can call everything and anything money laundering if they want to and they do.

[01:00] So money laundering is a terrible catch all phrase. But in this case involving a thieving former president of a Latin American country, being extradited to the US on money laundering charges couldn't happen to a more deserving scumbag. Unless of course you want to count our own elected scumbags but we won't get into that. And you know the sad fact is, those three words politician, scumbag and thief nearly always seem to go hand in hand. Oh and let's not forget the words pompous, lying, two-face and blowhard either. But enough with the compliments. Now I'm not just talking about Latin American politicians. That goes without saying. But I'll get back to the point. Now if you're up in the States and you happen to have read a snippet in an article about this extradition case somehow, it might not mean much to you because in actuality up there

[01:47] you're only getting about 5% of the real story. And since that kind of reporting doesn't involve explosions, terrorism, natural disasters or Kardashian's pregnancy or dancing with the stars, only a tiny fraction of first world people know what I'm talking about. And if you're interested at all in this case, it's probably because of the big dollar numbers involved. Now normally when you hear about the US or some European country going after someone or other for money laundering, it's usually about drug money. And believe it or not, the US and European governments don't really care how the money was obtained. They're just mad because they couldn't tax it. But that's the part they don't like to talk about. And the way it works out, if you lose a money laundering case in a first world court, unless you're a giant too big to fail bank like Britain's HSBC bank did, someone generally goes to jail

[02:35] and the fine is up to two times the amount that was laundered. Which means if you and I were caught, we'd end up with nothing. But when you're too big to fail, you get a fine and it's business as usual. But you see, in this case, regarding ex-president of Guatemala, Alfonso Portillo, you just have to hear the details. What's really been going on with this guy, all of the amazing behind the scenes plays that you're never going to hear about up there. Let me start out by saying that this guy was president from 1999 till 2004. Like many Latin American countries, Guatemala only allows a one term presidency of five years, which is more than enough time for a president and all his cronies and friends and family and cabinet ministers to loot the country blind. And they always do that, and the average guy in the street knows that, but yet they remain

[03:22] forever local heroes. No matter how much they looted, how many poor kids go hungry, and how many schools and hospitals leak like sieves and remain without electricity, water, and even toilet paper. But you know, I guess we're all fickle when it comes to our elected thieves, because I can tell you this, when I was back up in Chicago, there wasn't a legislator in Congress named Dan Rustenkowski. He was chairman of the most powerful committee in Congress, the Ways and Means Committee. He got convicted of two felony charges, including mail fraud, tampering with grand jury witnesses, and having a number of ghost employees on his payroll, and much, much more. And after he got booted out of Congress in 1994, after 35 years of sucking from the government trough himself, he served 15 months in prison, and guess what?

[04:07] He was pardoned by Clinton. And because of that pardon, he still got until he died in 2010, his congressional pension of 125 grand a year, which, as a convicted felon, he would have lost. Hmm, doesn't that smell funny? Plus, with that pardon, he was able to keep his Cadillac medical and dental plan that all congressmen get, and you don't. Yep, surprise, surprise, Obamacare does not apply to members of Congress. And friends of mine up in Chicago have told me that when he got out of federal prison in about 1996, they'd see him at the local grocery stores and people would fall all over him just to shake his hand. Hail the conquering scumbag, huh? Like my brother said, everyone knew he was a crook, but hell, he was our crook.

[04:55] So knowing what politicians get away with up in the states, this story should come as no surprise to you. Well first off, I have to tell you that right now, in Guatemala, all over the place, in bars and restaurants, hotels and on the streets, there's wailing and gnashing of teeth. When you open the paper, you see women and children whining and complaining on the street corners. They just can't believe that such an injustice has been done that a former president of theirs has now been dragged kicking and screaming up to the United States, where he'll face 20 years in prison and a fine of $140 million. Twice the $70 million they're accusing him of laundering through New York banks. Now let me give you a little idea of what kind of people get elected president in Latin

[05:42] America. And this guy is pretty much a typical case. Now I'm not talking about the bad old days when a general would grab power or there'd be a coup d'etat. I'm talking about the last 20 or 30 years where most presidents are actually kind of democratically elected. But in Latin America, it's a little different. You cannot buy votes here with promises like you can get away with up in the first world because Latins aren't that dumb. No politician ever keeps a promise here. Instead they gotta put up or shut up. So right before any election, politicians are expected to hand out freebies like sacks of fertilizer, rice or flour, baseball caps, t-shirts and the like. And that's the democratic process in Latin America. And by the way, most of the time, those sacks of flour and fertilizer and stuff came as donations from first world do-gooders and somehow mysteriously end up as political giveaways.

[06:31] Hmm, how'd that happen? But on with our story. Now as a young man, future president of Guatemala, Alfonso Portillo, went to university in Mexico. And to give you an idea of his sterling character, he would often go to the bars and cantinas and get drunk with his buddies. As many of his friends would attest to later, unlike so many politicians who try to hide their drinking problem, Alfonso Portillo was nothing of the sort. He was an outspoken and courageous drunk. And one night, as a university student in Mexico, he was in a bar with his buddies drinking. And in an argument, he pulled out his gun and shot two people dead. And he plugged another guy who survived. Then he immediately escaped back to Guatemala. And with many eyewitnesses at the bar, it was an open and shut case.

[07:19] But that didn't matter. So for over 20 years, there's been an active two-count murder warrant out for his arrest in Mexico. But because this guy was so politically connected, the ever-so-corrupt Guatemalan court system never got around to extraditing him back to Mexico to face murder charges. Then in 1989, he became very active in an up-and-coming Guatemalan political party called the FRG, composed mostly of ex-military officers involved in Guatemala's earlier 35-year civil war. Guys that became very rich when the war ended on the over $1 billion in change that was donated by stupid first-world do-gooder nations. Money that was supposed to go to compensation for the victims and reconstruction after the

[08:08] war. And though the UN and other international organizations were supposed to supervise where all that money went, not surprisingly, more than half of it went unaccounted for. So anyway, Portillo becomes very active in that political party. In doing that, he becomes best friends with the party's leader, former general and genocidal dictator who led a coup himself back in the bad old civil war days and regarding this guy E. Franrios Montt. If you've been reading the international papers in the last couple of weeks, you might remember that he was the only former president from any Latin American country who's ever been tried and found guilty of genocide. Now during that 35-year civil war, where tens of thousands of indigenous people were murdered

[08:55] in cold blood, along with a lot of the country's intellectuals and university people who were considered dissidents, yep, back then there were death squads on orders of the military. And back then, guess who was head of the military, E. Franrios Montt, who later after the war became head of the FRG political party. Now this old guy, he's 86 now, was an absolute religious fanatic nutcase. He says on his bio that he's an ordained evangelical minister too. And how do I know he's a religious fanatic nutcase? You know you don't read things like that in a paper down here. Well it's because I know a few retired public school teachers. And one of them told me that after Rios Montt became dictator, he held a big assembly and forced all the teachers to attend, and he started by calling the female teachers whores

[09:42] and prostitutes because of the way they dressed. Dresses were too short and the women wore makeup. Ooh, they were going to hell for that. And that happened in 1982. Can you believe it? The good news is, he did get convicted of genocide, but the bad news? The court's ruling only held up for a week. And then, as things do happen here in Latin America, it was overturned by another court and he went free. And of course, since in all Latin American countries the courts are a hotbed of political incest, and that means almost no high level person gets convicted of anything. And if they do, they only spend a tiny amount of time in jail. And when they get out, they're even more famous and everyone wants to shake their hand. Sound familiar?

[10:29] In these small Latin American countries, it seems everybody's got a friend, or even ten friends who work in government and somehow owe their jobs to some lawyer, politician, military person, or powerful business guy. Even Supreme Court judges here owe their livelihoods to politicians and family connections. All the high level judges are appointed, so you think they're going to help put some powerful connected guy away when they might need a favor someday? Like a job or a road contract for a nephew or a son-in-law? Sounds a lot like Chicago politics now, doesn't it? Bottom line, if you're a connected politician in Latin America and you go to court in your own country, even if you get convicted, you might never do a day of time. There's just 16 million ways to keep a person out of jail down here if you got the connections

[11:16] and the money. So what does the Portillo Money Laundering Extradition case or the Efren Rios Month genocide case have to do with gringos and expats? Nothing, because we stay absolutely clear of politicians. The only time we ever have any kind of direct contact with them is when we're driving down the road and an entourage of bulletproof limousines and cop cars tries to weasel its way past you because that politician's in a big hurry to get to his mistress or the happy ending massage parlor or whatever. It's a pathetic little show that all of us expats have seen when we've been in the big city a while. And the only other time gringos and expats will run into these disgusting jerks is when they're invited to certain high end parties. Because after all, off the tourist trail anyway, your gringo advantage is in high gear.

[12:02] And eventually you will get invited to parties and get-togethers where high level military and political scumbags will be hanging around too. So you can either buy into it, observe the decadence, or opt out of it like I did a long long time ago. However, I do know a few gringo expats who bought right into that scene hook, line, and sinker. And it's something I can't stomach so I don't hang with them anymore. And it's all about the common gringo weakness for celebrity. I mean, look at the reality shows and stuff up there. Picture this, your average guy from Cleveland comes down to Latin America and suddenly he's going to parties and meeting with people who he'd never in a million years could have gotten within two blocks of when he lived back home up in the states. But down here, all of a sudden he's like a B-grade rockstar, getting invited to presidential

[12:48] palaces and quince annuals parties for mega millionaires. Now I'm not saying this is going to happen to every gringo, but it's happened to me, an expat Eddie, and a number of expat gringos we know. But that'll only happen when you're off the tourist trail and in a big city. So if you're the kind who's starstruck by fame and fortune and high level political parasites, Big City Latin America could be just the place for you. Like some expat friends I used to be close with, in no time you'll be dropping names to your heart's content. Now I also have to mention that all classes of Latin American people are starstruck by their own rich folks and dignitaries. Just as most people in the states secretly wish to be famous and have their own reality show, so do Latins. Which could be a big problem for you if you're a gringo hooked up with a Latin girl or married

[13:36] to one. Or a gringa expat married to a Latin guy or with a Latin boyfriend. Because if you are one of those gringos who gets invited to a lot of those high end parties, your Latin wife or girlfriend is going to love every second of it. And once he or she has had a taste of it, look out. In fact I have a few expat friends in that position right now, with wives who've been tainted by that kind of scene. And that makes me persona non grata around the household because I'm always dissing guys like that. I mean if I was 18 or 20 years old I might think it was a hoot, but at my age those people just make me want to vomit. On them. Okay enough of that. Back to that story about ex-president Portillo, who's just been unceremoniously shipped to the United States to face money laundering charges.

[14:22] To the tune of 70 million dollars. Now the obvious question is, where did he get that 70 million? Oh and by the way I have to tell you, that after he goes on trial in the States for that 70 million, he's immediately going to be shipped directly to France, where he'll go on trial from money laundering there too, to the tune of 120 million. So where did he get the dough? But like I've mentioned in past shows, Latin American presidents almost always start out in politics, basically middle class, making three to five hundred bucks a month. Salt of the earth, man of the people kind of thing, you know? Then they become the equivalent of a mayor or a state senator, and then they get into congress and finally make it to president or vice president, and they retire or get bumped out of office by the next guy, and they're always, and I mean always, worth over

[15:09] a hundred million dollars. Very interesting, hmm? But anyway, in Portillo's particular case, let me run down a few facts for you. Now according to the charges he'll be facing up in the States, between the years 2000 and 2004, while he was president, it says here, he used the international system of banking, going through New York banks, to deposit large amounts of money to bank accounts owned by his family members throughout the US and Europe. During that period, he made 17 different wire transfers, a total of 70 million dollars, to his ex-wife and to his daughter. During his presidency, accounts were opened up in the name of his daughter and ex-wife in New York, Paris, Panama, Luxembourg, Mexico, Liechtenstein, and Switzerland.

[15:59] But where did the money come from? Well, if you remember back when I hit on the subject of political thievery, I always mentioned how stupid it is for first world countries to donate money to any of these third world countries. Now, when the US tracked down the source of that 70 million bucks, the first thing they discovered, surprise, surprise, that there were a few million dollars in checks donated from Taiwan, which were supposed to end up in the accounts of the Guatemalan Defense Department. But instead, they got routed directly to the European bank accounts of Portillo's ex-wife and daughter. And guess what? The ambassador from Taiwan has known about this for some years and a complaint was never filed. In fact, Taiwan has actually handed over more money to the Guatemalan government since then.

[16:45] Which makes many people in the know down here believe that it was a payoff to Greece to skids for future Taiwanese investments in Guatemala. But here's the topper. It's been determined that another big chunk of that 70 million bucks came from the Guatemalan division of anti-corruption, no less. I mean, you can't make this stuff up. I mean, you don't know whether to laugh or cry about that one. And what about the other millions that ended up in France and various places in Europe? Well, that's an even more interesting story. As soon as Portillo got out of office in 2004, government accountants discovered 120 million dollars missing from the Guatemalan Department of Defense and they tracked that money down to Portillo. So what did he do? He immediately escaped to Mexico, which at first seems like a move only an idiot would

[17:35] make. For one, he's demonstrated his guilt automatically. And secondly, he's got a 20-year-old two-count murder charge hanging over him in Mexico. Well the fact is, throughout Latin America anyway, all presidents and ex-presidents have lifetime immunity from prosecution. Oh, and by the way, did I mention he transferred millions to a bank account in Mexico? Sounds like an insurance policy to me. Well, that worked for a while, in fact about four years. Then finally, public pressure in Mexico turned against him since there were quite a few unhappy Mexicans, knowing that he'd blown a few of their citizens away. And authorities there finally extradited him back to Guatemala to face charges of stealing 120 million from the Department of Defense. Meanwhile his other good friend, Francisco Reyes Lopez, who served as Vice President

[18:22] under Portillo, well he got caught red-handed in a land swindle and actually did go to prison because the fraud was so blatant. Oh, and did I mention that Portillo and his Vice President had 17 different offshore bank accounts in Panama, and were depositing a half a million dollars a month in those accounts until Panama realized something was rotten and wouldn't accept the deposits anymore. Meanwhile, Portillo's other good buddy, who served in a cabinet position under him as Chief of Police, Edwin Speersen, he fled to Switzerland where he had dual citizenship, escaping homicide charges in Guatemala too. And by the way, this Edwin Speersen, Chief of Police under Portillo, had no police or law enforcement experience at all. He was just a good old boy, Harley Ryden son, of one of Portillo's best friends.

[19:10] Oh, and they tracked down the remainder of the rest of the 200 million that Portillo stole. Stupid first world governments again. Get this, a couple of million dollars and some change, also donated by Taiwan, was donated for libraries and schools. And along with Taiwan, there were other stupid first world countries who earmarked their donations for infrastructure projects that never got built and school lunch programs that never got funded. Now you have to wonder why this crook Portillo thought he could get away with that. All those international wire transfers ending up in his ex-wife and daughter's bank accounts. Well, it's very simple. Normally, Latin American politicians do this kind of stuff all the time. The only difference is they don't carelessly wire transfer the money out. Instead, they carry it out in suitcases of cash.

[19:57] Like what happened not so long ago when the president of Argentina, Christina Kirchner, was on the receiving end of a multi-million dollar cash donation in a suitcase that was supposed to be handed over to her and her people but was intercepted at the Panama airport. So traditionally, when politicians steal money, it's with suitcases of cash. But here's another thing. A good percentage of thieving Latin politicians keep that money they've stolen within the borders of their country. They just love blowing money, showing off and playing the big shot in their home court. They buy gigantic beach houses and helicopters and estates and car dealerships and whore houses and housing developments. And they live like kings and sultans forevermore. And the public doesn't care. They revere these guys as local heroes.

[20:44] And even more funny, when someone steals so blatantly that he actually gets caught red-handed and goes to prison for a few years, or someone needs to be a fall guy while the rest of the crooks escape with their millions, when they get out, the population still treats them like royalty. And that's exactly what happened with Portillo's vice president, a fat, ugly, bad-smelling, snaggle-tooth character named Reyes Lopez. Now get this, out of the two dozen high officials in Portillo's administration that were indicted for fraud, theft, or other criminal activities, only one did any jail time, his vice president. And now that he's out of prison walking around town again, everybody, I mean everybody, wants to talk to him and shake his hand, even though he's got a bad case of BO and holotosis.

[21:30] And I should know, because I've had the bad luck of standing next to the guy in a checkout counter. So anyway, in 2008, Mexico got tired of harboring ex-president Portillo, a murderer. So they shipped him back to Guatemala to stand trial for that $120 million missing from the Guatemalan Defense Department. But now remember, since Portillo was so well-connected politically, the majority of the court and the judges in the cases owed their jobs to people in his party. So as usual, people got paid off, evidence disappeared, and Portillo was absolved for lack of evidence because eyewitnesses backed off and refused to testify. And for the next few years, until a couple days ago, he was everybody's man about town, shaking hands with people, giving speeches, living a good life with his millions tucked

[22:16] away and his entourage of bodyguards. Then suddenly, on May 24th, he got picked up, whisked to the airport in great secrecy, and now he's in New York awaiting trial. But you know what? The whole country of Guatemala is in mourning. And it's not that Latins are stupid about what's happening in their own country. They know their politicians are born thieves. But the common people have reason to mourn Portillo's extradition. Because he did something highly unusual, he actually kept a campaign promise, a promise he made to the masses of people out in the boonies. So no matter how big a cookie is, he's a hero to a huge voting bloc. He gave every little campesino and every small farmer in the country free bags of nitrogen-based fertilizer. Now if you know anything about the small farmers and campesinos in Latin America, they don't

[23:02] buy fertilizer. What they do is they use chicken crap and mulch, horse and pig manure, and what they call a bono, basically natural organic fertilizer, not petroleum-based. Because these farmers are always living on the edge and they just can't afford to buy chemical-based fertilizers. And since the agricultural population is huge, you give free bags of that concentrated magic fertilizer and suddenly every small farmer is your new best friend. And every president since Portillo has been stuck with that free fertilizer program. Now that campesinos have come to expect a few free sacks a year, and it would be political suicide for any politician to cut it off. But if you know anything about farming, ecology and renewable resources, you know, getting these third world farmers addicted to chemical-based fertilizers is a very bad idea.

[23:51] In the short term, of course, it works like gangbusters. But remember, it's a petroleum-based product, so enough said about that. And to show you just how clueless even educated Latins are, every Latin I've ever spoken to on this subject believes what the farmers need is more nitrogen-based fertilizer. In fact, I've never met a Latin who said a single word against it. And of course, the small farmers with the average of a 4-6th grade education are never going to look a gift horse in the mouth. Oh, and just one more thing about the Latin justice system. Now, the normal way down here that a politician or powerful guy gets a case thrown out of court, it's simply to pay off the judges or pay the witnesses not to show up. It's that simple. Or better yet, the witness gets a note or a telephone call threatening him or his family.

[24:39] And that's why about 95% of these types of cases eventually get thrown out of court for lack of evidence. That's the catchphrase. And you have to know that when cases go to court, any kind of case, postponements and reschedulings are nearly always the order of the day. And that's why even the simplest of civil cases can often take three to six months just to get on the schedule for the first hearing. And once that happens, lawyers can get these things delayed or postponed so many times. You could wait six months to a year for a decision. So what's that got to do with gringos and expats? Well, at first, of course, it sounds horrific. What if you really do have a legitimate gripe and you have to go to court and get a case heard? Well, you know what? Down here, as long as you're off the tourist trail, you let your lawyer handle it. And the result will almost always be satisfactory because

[25:26] 95% of all legal cases here are settled in your lawyer's office. Everyone knows it's a huge pain in the ass to try to get anything through the court system. And that's why you need to bond with a lawyer and use that guy or gal for all your legal needs. Opening a bank account, contracts, corporations, wills, trusts, and all that stuff. In fact, I never recommend that you jump around with lawyers like some gringos do. Even if years go by and you have no need for a lawyer, if something comes up, go back to the same one. Because then you'll get extra special care. You'll be one of his priority clients. And being a gringo, you already are. And remember this. If at some time you're down in Latin America and someone threatens to sue you for any reason, your best move might just be to pay the guy off. You'd be amazed how little people settle for down here.

[26:12] It's nothing like up in the US. Oh, and just one more thing about what politicians get away with. If by now you're thinking it's so corrupt you'd never want to move down here, just think of this for a second. It's like expat Eddie says. If, for example, in Chicago, they caught Mayor Daley red-handed stealing money and giving out jobs and contracts to his buddies, well, you tell me what would happen when they got him in court. I'd say he'd get his hand slapped and that's about it. Well, for one, since in Chicago, most people in the judicial system and everywhere else in government owe their jobs in one way or another to the democratic machine, no one's going to bite the hand that feeds them. And if for some reason Chicago's Mayor Daley got brought up on federal charges and got put away,

[26:58] I can tell you there'd be wailing and gnashing of teeth too. The whole city would be in mourning. Then when he got out of jail, he'd be the local celebrity again, shaking hands, making speeches and kissing babies. Just like in Latin America. Okay, and now for an update on my Latin American seminar. It's three weeks away now and I do have a couple of spots left. So just check out expatwisdom.com and click on the seminar link. Come on down and see for yourself what it's like to live, work, play and or retire down here off the tourist trail in Latin America. Let me show you how the gringo advantage really works. You've been listening to The Expat Files, living in Latin America, coming to you each week from somewhere south of the border.

[27:45] And don't forget you can email me on anything at all about Latin America. The Expat Files at gmail.com. See you next time.