Fitch Ratings expects electric generation companies in Colombia to spend up to $6 billion USD over the next two years on expanding current installed capacity as the El Niño phenomenon continues to recede in the Andean nation.

Though the El Niño weather phenomenon that began last year has significant consequences for the nation — particularly with water reservoirs near Bogotá falling to alarming levels — the New York-based rating agency noted in a recent report that the major electric generation firms have “successfully weathered low hydrology conditions…with only moderate impacts on profitability and liquidity,” largely due to their “high-quality diversified asset bases, healthy cash flow generations and adequate leverage.”

In it’s analysis, it expanded upon the dynamics that have been shaping the sector in recent months.

“Throughout 2023, El Niño placed considerable strain on Colombia’s predominantly hydroelectric-based electricity generation, which accounted for approximately 74% of the total energy produced throughout the year,” stated Fitch Ratings

“From December onward, the water flow into the nation’s dams has been declining, culminating in a record low in March 2024 at 45.6% below the historical average for the month. Data from XM Compañía de Expertos en Mercados S.A. E.S.P. (XM) indicates that the storage capacity of hydroelectric reservoirs hit 17,360Gwh/month. By April, the water levels in these reservoirs were at 28.6%, marginally over the critical 27% mark that could trigger energy rationing.”

It pointed toward Medellín-based public utility EPM’s ability to add 600MW online last fall when it brought two more units online at its Ituango mega-dam.

“This addition propelled Ituango as the country’s top hydro project in energy output, cushioning the rise in daily energy spot prices which averaged, 659COP/Kwh during 2H23, compared to 412COP/Kwh in 1H23,” noted the rating agency. “Termocandelaria Power S.A. increased capacity at the Termocandelaria plant to 555MW from its combined cycle project. Between January and April 2024, total generation in Colombia reached 27,521Ghw, 37% of which came from non-renewable sources, compared to 14% during the same period in 2023. Meteorological forecasts signal increased precipitation from May onwards.”

Looking more broadly, Fitch stated that Enel Colombia and Isagen, along with EPM, “adhere to cautious contracting strategies that enable them to reduce reliance on higher-priced spot market energy purchases” and “have created a cushion that has allowed them to cope with the ongoing drought conditions in 2024 and fulfill their firm energy obligations.”

With this backdrop and forecasters continuing to expect the El Niño period to soon be in the rearview mirror, Fitch expects even more investment into capacity-expanding initiatives this year.

“Colombian electric generation companies’ capex plans are focused on boosting installed capacity amid concerns that current energy supplies may not keep up with demand,” wrote Fitch Ratings. “EPM is prioritizing the completion of its Ituango hydroelectric project. Key components of this initiative include sealing the right-hand tunnel of the obstructed Auxiliary Diversion System and the anticipated launch of units 5 to 8 by 2027, which are expected to contribute an additional 1,200 megawatts of capacity. Enel Colombia and Isagen are setting their sights on advancing renewable energy initiatives, encompassing both solar and wind projects. However, some of these projects have been experiencing notable setbacks due to environmental permitting issues and negotiations with local communities.”

Photo: Hidroituango hydroelectric dam. (Credit: EPM)

It was a week of economic data reports and fiscal rule dicussion in Colombia.

Early in the week, focus was on Colombia’s first quarter GDP number (0.7%), which was above estimates. Industry (-5.9%) and commerce (-0.8%) continue to struggle, but the public sector (5.3%) and agriculture (5.5%) reported positive numbers. Construction (0.7%) finally rose, but the sector needs to offer much more in order to be the economic driver it should be.

The National Administrative Department of Statistics (DANE) also reported the latest real sector data for March, with manufacturing production (11.1%) and retail sales (5.6%) falling significantly once again. These compute with both the GDP and industrial activity data, not to mention Banco de la República’s continued stubbornness on reducing rates at the appropriate rhythm. The government has already stated that if the central bank doesn’t breathe life into the economy, it will via raising the debt ceiling — or putting some flex into the fiscal rule.

However, reacting to this, Fitch Ratings stated that tampering with the fiscal rule would only hinder the nation’s hopeful return to investment grade. They added that the same fiscal deficit was part of the reason that the administration of former President Iván Duque lost the investment grade in the first place.

Colombian David Velez has created a regional phenomena with Nubank, albeit he had to go to Brazil to do it, however his homeland has proven to be less welcoming. This week Velez spoke of the complicated regulatory environment in Colombian and the complications surrounding the banks plans to expand further.

Perhaps that is why he started in Brazil, a country that is light years ahead when it comes to its financial architecture and authorities that are far more enlightened when it comes to providing a more and efficient environment for clients.

Superfinanciera of Colombia is jurassic by comparison —  fearful of change — a fact borne out by its intransigence as Bolsa de Valores Colombian stock exchange has slowly died in front of our eyes, with the only recourse being to salvage itself via nuam exchange. Although, no doubt, Superfinanciera will have a say along the way.

As for the banking sector, it has been a high-cost oligopoly — for decades dominated by Bancolombia, BBVA, Grupo Aval and Banco Davivienda — with Asobancaria seemingly happy with the current situation. There is much chatter about open finance, etc. — but it will only happen on the terms of the current dominant players.

Colombia needs 10 neobanks, as well as a raft of other financial institutions, to both lower fees and improve client attention.

There is much chatter about startups and fintechs.

But most lack the size or expertise to compete with the big boys — and many will sink without trace.

Never miss Rupert’s latest commentary
Follow him now on LinkedIn to see What Jumps Out

This article, written by Marley Markham, was originally published by InSight Crime, a Medellín-based foundation dedicated to the investigation and analysis of crime and security in Colombia and Latin America.

US prosecutors have charged a purported member of the Cartier luxury goods family with laundering hundreds of millions of dollars in drug profits using cryptocurrency, underscoring an increased law enforcement focus on this relatively new modus operandi.

Authorities announced the charges on May 2 against Maximilien de Hoop Cartier, a singer and purported member of the famed Cartier family, and three Colombian co-conspirators, alleging they used an unlicensed cryptocurrency exchange to send drug profits from the United States to Colombia.

Two other Colombian nationals who made up the network were also charged for conspiracy to import over 100 kilograms of cocaine into the United States.

Prosecutors said that the group disguised the origin of the money made from drug trafficking by using it to buy a cryptocurrency called Tether, then sending it to companies controlled by Cartier to convert the cryptocurrency back into US dollars. Once laundered, the money was wired to Colombian shell companies controlled by his three co-conspirators, prosecutors said.

According to the indictment, the network laundered hundreds of millions of dollars since the beginning of Cartier’s involvement in January 2020, including an estimated $14.5 million between May 2023 and November 2023.

Cartier was arrested in February in Miami, while the five Colombian suspects were arrested in their home country in late April, according to a US Department of Justice press release.

InSight Crime could not reach the defendants or their attorneys, and prosecutors did not respond to a request for comment.

InSight Crime Analysis

While the indictment shows the vulnerability of cryptocurrencies to criminal misuse in Latin America and the Caribbean, it also suggests a heightened awareness of the issue within law enforcement and a more concerted effort in tackling it.

Due to its decentralized nature and an absence of strong governmental regulation, cryptocurrency offers attractive money laundering opportunities for criminal organizations from the region. The lack of a strong regulatory framework has rendered Latin America unprepared for the growth of crypto-crime, which has been exploited by a range of criminal actors.

Financial crime expert Kenneth Rijock told InSight Crime that money launderers are drawn to cryptocurrency because it operates “outside of normal financial compliance pathways,” making transactions virtually impossible to trace.

He added that “changing the nature of the asset, repeatedly, to confuse and deceive compliance, which is looking for normal pipelines of funds transfer, usually results in a successful operation.”

This lack of transparency negates law enforcement’s ability to follow the money. The region’s drug trafficking organizations often use virtual currencies to mask their supply chain payments. This is particularly true in the case of Mexican criminal organizations that produce synthetic drugs and import precursor chemicals from suppliers in China and India.

However, this indictment suggests significant steps being made by law enforcement in tackling the issue.

The US has led the effort against the misuse of cryptocurrencies. In 2021, it created the National Cryptocurrency Enforcement Team to “tackle complex investigations and prosecutions of criminal misuses of cryptocurrency.”

Some Latin American countries have followed suit. In recent years, Colombian financial regulators have worked together to reduce the prevalence of money laundering through virtual currencies and strengthen the regulatory framework around crypto. In 2024, Mexico also introduced stronger regulations around cryptocurrency transactions.

This article, written by Marley Markham, was originally published by InSight Crime, a Medellín-based foundation dedicated to the investigation and analysis of crime and security in Colombia and Latin America.

Earlier this month, the United States announced that it “took steps today to impose visa restrictions on executives of several Colombian transportation companies moving migrants by sea,” according to the US Department of States.

In a brief, but clear statement, the State Department alleged that “these companies prey on vulnerable irregular migrants by operating services designed primarily to facilitate irregular migration to the United States.”

The State Department noted that these actions fall under a February policy that “targets senior officials of companies providing transportation by land, sea, or charter air designed for use primarily by persons intending to migrate irregularly to the United States.”

It added that “several companies providing maritime transportation are knowingly facilitating the irregular movement of migrants and exposing migrants to exploitation and violence” and that issuing visa restrictions “send a signal that no one should profit from vulnerable migrants—not smugglers, private companies, nor public officials.”

“We will continue to take steps to impose visa restrictions against unscrupulous transportation company owners, executives, and senior officials as part of our broader campaign to eliminate such exploitative practices within and beyond the Western Hemisphere, in collaboration with partners in government and in the private sector.”

Photo: The United States Department of Justice headquarters in Washington. (Photo credit: Coolcaesar)

U.S.-based telecommunications service provider Broadvoice has established Colombia as its hub for Latin America while praising the Andean nation’s ongoing growth in the contact center industry.

“Colombia’s rise in the contact center industry reflects its inherent potential and resilience,” said the company in its announcement. “As the country continues to cultivate an environment conducive to business and innovation, it is poised to redefine the global services landscape.”

The move follows Broadvoice’s acquisition of GoContact in 2021, which has a local team of 40 people and is described by the firm as “consulting-centric” with strength in cloud and “AI-powered omnichannel management.”

“Colombia has become a key market for us,” said André Santos, vice president of sales for Latam at GoContact. “We are thrilled to strengthen our presence in the region and continue to provide innovative solutions that help our customers achieve peak performance and stability in their day-to-day operations.”

Broadvoice noted that Bogotá is the industry’s primary market in the country, employing around half of those working in the sector, while Medellín, Cali, and other smaller cities are growing as well.

“As we envision the future,” added Broadvoice, “Colombia is at the forefront of transformative change in the contact center industry … This strategic positioning not only capitalizes on the country’s linguistic and cultural affinities with the region, but also takes advantage of its proximity to North America.”

It added that the entire region is set for significant growth in the years to come.

“Latin America is poised to overtake operations in Europe and Africa in sales of contact center technology services, marking a fundamental shift in the global landscape,” stated the company.

Prior to 5th International Congress and Exhibition Lithium Latin America 2024, Vostock Capital has prepared a report featuring the full list of flagship projects of Lithium industry in Latin America, that will be further discussed at the event.

Among the projects:

• Pozuelos-Pastos Grandes, Argentina. Company: Ganfeng Lithium, status: Engineering development. Investment: US $338 M
• Carmen Lithium Plant, Argentina. Company: SQM, status: EIA Approved – with an estimated investment of around US $987 M
• Blanco Project, Chile. Company: Codelco, status: Modeling. Investment: US $700 M
• Falchani Lithium, Peru. Company: American Lithium Corp and Macusani Yellowcake, status: Environmental assessment. Investment: US $700 M
• BMW Battery Plant, Mexico. Company: BMW. Investment: US $865 M
• Oruro Salt Flats, Bolivia. Company: CATL BRUNP & CMOC (CBC), status: Feasibility studies. Investment: US $1.4 Bn
• Salinas Lithium, Brazil. Company: Latin Resources, status: Exploration. Investment: US $57 M
• 20 other projects in Latin America

Request the full list of projects

See you at the congress,

Catalina Velasco

Latin America Marketing Manager

[email protected]

New York-based ratings agency Fitch Ratings upgraded the long-term national rating of the Cartagena to ‘AA(col)’ from ‘AA-(col)’ while affirming the short-term national rating at ‘F1+(col)’ and set the Caribbean city’s long-term rating outlook to stable from positive.

The upgrade in Cartagena’s rating is explained by results that exceeded expectations in 2023, which consolidates a structural improvement in the district’s tax collection, originated from a significant increase in these revenues in 2022.

This has led to expectations of higher operating balance sheet production in Fitch’s scenarios, resulting in a decrease in the baseline repayment ratio in the rating scenario to 1.6x from 2.5x in the last rating review, and an increase in actual debt service coverage (CRSD) to 3.7x from 2.5x.

These metrics compare favorably against peers with higher rating levels.

However, Cartagena’s ratings continue to be constrained by high levels of accounts payable and contingent obligations, as well as a long history of institutional instability.

Key Rating Factors

In addition to releasing the above statement regarding its decision to upgrade key ratings for the capital of the Colombian department of Bolívar, Fitch Ratings included the following breakdown which factors most influenced its decision.

Risk Profile: Weaker

The risk profile assessment reflects a mix of four key risk factors (KHRs) assessed at ‘Weakest’ and two at ‘Mid-Range’.

Revenue (Strength): Weakest

The assessment of this factor continues to be limited by a moderate dependence on domestic transfers from a counterparty rated ‘BB+’, despite the good performance of Cartagena’s own revenues during the historical analysis period. Between 2019 and 2023, transfers accounted for approximately 59% of operating income.

Revenue (adaptability): Weaker

For the evaluation of this factor, Fitch considers that, although there could be regulatory space to increase the rates of the main taxes, the economic capacity of taxpayers to assume such an increase would be limited. This is attributed to Colombia’s unfavorable socio-economic conditions compared to international standards. The state has socioeconomic indicators that are relatively similar to both the national average and the median of municipalities and districts rated by the agency, so local taxpayers are considered to face the same limitations.

Expenses (Sustainability): Mid-Range

The agency believes that the entity’s spending is moderately influenced by variables correlated with the economic cycle and, therefore, expects its growth to be relatively predictable in the medium term; therefore, this FCR is evaluated in ‘Mid-Range’. Its main items of operating expenditure correspond to the payment of health insurance contracts for the population of the subsidized regime and personnel expenses in the education sector. Cartagena’s operating margins have been relatively stable during 2019 to 2023, remaining between 10% and 15%.

Expenses (Adaptability): Mid-Range

The evaluation of this FCR considers that more than 10% of Cartagena’s total expenditures are allocated to capital expenditures, which could be subject to cuts in the face of financial stress. In addition, these capital expenditures are mainly financed from current balance sheet resources. The current balance over total expenditure ratio, which Fitch uses as a determinant to assess this FCR, was close to 15% during the period between 2020 and 2023.

Liabilities and Liquidity (Soundness): Weaker

The evaluation of this factor is limited by the high amount of liabilities that Cartagena presents on its balance sheet. At the end of 2023, the entity reported accounts payable for a value close to COP475,000 million, an amount much higher than the balance of financial debt of around COP70,000 million. In addition, Cartagena registers approximately COP553,000 million of estimated liabilities for litigation and lawsuits, corresponding to those processes whose probability of ruling against it is considered high. Fitch believes that this results in a high risk that liabilities will be higher than estimated in the rating scenario. However, the agency observes that the amount of accounts payable has been on a downward trend since 2021, as these exceeded COP820,000 million at the end of 2020.

Liabilities and Liquidity (Flexibility): Weaker

Fitch assesses this FCR as ‘Weaker’ due to the fact that Cartagena’s liquidity surpluses are susceptible to the level of investment execution and payment of liabilities. In this regard, the agency still considers that the bank’s structural liquidity position is limited. In addition, the international ratings of most potential liquidity providers are ‘BB+’ or lower and, as of 2024, Cartagena will not be able to use treasury loans to finance cash insufficiencies that exceed the fiscal term.

Miami-based window and glass manufacturer Tecnoglass, Inc. (NYSE: TGLS) reported a 4.9% decrease in total revenues for the first quarter of 2024, bringing in $192.6 million USD compared to $202.6 million USD in the first quarter last year.

Gross profit in the quarter was also down, coming it $74.7 million USD (on a 38.8% gross margin) versus the $107.8 million USD (53.2% gross margin) reported in the first three months of 2023.

“The year-over-year change in gross margin reflected an unfavorable foreign exchange impact of nearly 800 basis points, reduced operating leverage on lower revenues, promotional activity on single-family residential products and an increased mix of installation and stand-alone product sales during the quarter partially related to the step down in single family activity during the period,” noted the company in an announcement accompanying its results.

Margins also continue to be affected by the “cash effect of a strong Colombian peso revaluation of approximately 18% year-over-year” as well as “non-cash effect related to an inventory mark-up associated with the valuation of inventory from when it was purchased in the fourth quarter of 2023 to when it was sold in the first quarter of 2024,” added Tecnoglass.

“The non-cash portion of the unfavorable currency effect during the quarter contrasted with a positive effect during the first quarter of 2023 and is related to the accounting of inventories in Pesos as the functional currency. On a sequential basis, gross margin compared to 42.6% in the fourth quarter of 2023 and was also impacted by a sequential Peso revaluation of approximately 5%.”

José Manuel Daes, chief executive officer of Tecnoglass, acknowledged the challenging environment and highlighted some of the positive news reflected in the results.

“I am proud of our team’s resilience to started off 2024,” he said. “In light of macroeconomic challenges, we maintained a steady course with our multi-family/commercial business executing against our record backlog while our single-family residential sales channel experienced inflationary constraints on consumer spending. That said, we were highly encouraged to see record levels of single-family residential orders during March and April, which we believe signals a positive shift in demand as we move into the second quarter.”

Commercial revenues were also up slightly, in line with scheduled project deliveries. Lower single-family residential revenues were impacted by slower activity resulting from end consumers experiencing higher interest rates and mortgage rates. Changes in foreign currency exchange rates had an adverse impact of $0.9 million on total revenues in the quarter.

These factors have led the executive to stay positive about a range of opportunities and strategic plans ahead in the 2024.

“We remain optimistic on the strength of our business, bolstered by vigorous quoting activity for our innovative vinyl windows and other offerings, strong customer partnerships, and substantial opportunities for geographic expansion in 2024 and beyond,” added Daes.

For his part, Christian Daes, the company’s chief operating officer, stressed the value of adaptability and said he expects deliveries to increase in the back half of the year.

“Our performance in the first quarter reflects our adaptability amidst a dynamic operating landscape,” he said. “We ended the quarter with another record multi-year backlog of $916 million, reflecting an expanding pipeline for multi-family/commercial projects into 2025.”

“Customer interest in our vinyl products continues to look very encouraging based on quoting activity,” added Christian, “and we are on track for deliveries to increase in the second half of 2024. Our strong backlog, strategic investments to broaden our product portfolio, and our best-in-class manufacturing capabilities give us confidence in our ability to drive further value creation in our business as we move forward.”

Photo: A Tecnoglass employee working in the company’s factory in Barranquilla, Colombia. (Photo credit: Liliana Padierna)

Insurance giant Mapfre grew by 1.4% in the Colombia in the first quarter of 2024, driven largely by performance in the automotive and individual life insurance lines, which jumped by 15.5% and 43%, respectively, over the same period in 2023.

Photo: Mapfre’s office in Barcelona. (Credit: Bengt Nyman)

This beat overall growth in net attributable profit for the Spanish insurer across its operations in the Latin American region, which saw an uptick of 0.7% in the quarter versus the first three months of 2023.

With total premiums of around €2,500 million in Latin America, the region accounts for more than a third of Mapfre’s total premiums.

“The good indicators of the first quarter, with an ROE of more than 10%, reflect the strength of our business model and are the first results of the new strategic plan,” said Antonio Huertas, chairman and CEO of Mapfre, in a statement released with the results. “Our geographic diversification continues to provide solid and profitable growth.”

Mapfre Q1 2024 Performance in Latin America

In addition to the overall results, Mapfre also released the following information about its first quarter performance in Latin America.

• Premiums grew by 8%, while net income stood at €33.5 million, with significant contributions from Mexico and Peru. Issuance in local currency grew with the evolution in Chile (13%), the Dominican Republic (12%), and Peru (12%).
• The combined ratio improved to 99.9% (-0.3 p.p.), with a positive performance in general and motor insurance, offsetting health and accident performance.
• The life business continues to contribute very positively and financial income continues its upward trend.
• In Mexico, premiums amounted to €368 million (+10.5%), also supported by the appreciation of the peso (+8%). Both the Automobile and Life branches have experienced strong business growth. The combined ratio stood at 96.9% and net profit amounted to €12.3 million.
• In Peru, premiums reached €203 million, up 12.1%, while net income stood at €12.3 million.
• Adjustments for hyperinflation, mainly from Argentina, have had a negative impact on the result of €17.9 million (€8.6 million in 2023).

 

This article, written by the Venezuela Investigative Unit, was originally published by InSight Crime, a Medellín-based foundation dedicated to the investigation and analysis of crime and security in Colombia and Latin America.

On November 29, 2022, the Monagas family heard from Lismar Monagas for the last time. Since then, the family has lived in uncertainty about what has happened to Lismar, a 21-year-old Venezuelan woman who, at the time, was living in Peru and being controlled by a group with ties to human trafficking.

Lismar left Venezuela on October 16, 2021, without any warning. Her grandfather, Leonel Monagas, learned afterward that Lismar, who he had raised as a daughter in the neighborhood of El Cementerio, a working-class sector located in the west of Caracas, had left the country irregularly, without a passport, by bus.

It was the first time Lismar had left Venezuela. She was happy and hopeful. She documented her journey through Colombia and Ecuador in videos and with video calls to her family. Leonel, however, feared the worst. And he was right: unbeknownst to her, Lismar had been captured by a human trafficking network.

“The first few days she told me that they gave her things and clothes, and I told her that this was dangerous, and that they were going to charge her because I suspected why they had taken her,” Leonel said.

Hundreds of Venezuelan women have fallen victim to human trafficking networks in recent years. But Lismar’s story shows how these networks are adopting new strategies, like increasingly recruiting victims beyond the Colombian border and increasingly using women to recruit.

Falling into Sexual Exploitation

Like the nearly eight million Venezuelans who have migrated, Lismar Monagas left her country to help her family — mainly her son, who is now eight years old, and her grandfather, Leonel. But instead of the situation she thought she was moving for, she became another of the many Venezuelan women victims of human trafficking.

According to Mulier Venezuela, a non-governmental organization that studies the trafficking of Venezuelan women in Latin America, 415 Venezuelan women were rescued from trafficking networks in 2021. And that number has since increased. In 2022, the year of the most recent statistics, 1,390 Venezuelan women were rescued, of whom 294 were girls and adolescents.

But these are only the women who have been rescued and recorded. The actual number of trafficking victims inside and outside of Venezuela is likely much higher. Venezuela’s Minister of Interior and Justice Remigio Ceballos Ichaso announced earlier this year that authorities had dismantled 16 criminal gangs dedicated to human trafficking and rescued 55 victims. But these cases are generally underreported, so government data is usually just a fraction, as well as unreliable.

“The state does not report data for many cases of violence against women. This is part of the Venezuelan government’s policy of opacity, where they do not fulfill their duties,” Estefania Mendoza, a lawyer and coordinator for Mulier Venezuela, told InSight Crime.

As the number of women trafficked has increased, trafficking victims are increasingly being recruited further from the Colombia-Venezuela border, like Lismar, in the center of the country. Due to the worsening economic crisis and the complex humanitarian crisis, criminals were pushed to seek victims in other areas, Mendoza explained.

“This context is what increasingly makes the exploitation of people an alternative form of income for unscrupulous people,” she said.

The Collectors

For Lismar, it all began when a friend, who lived in the same neighborhood of Caracas as she did, offered her a job as a sex worker in Peru. The friend said she had all the contacts that would allow Lismar to earn money, and coordinated the logistics for her to leave the country on a bus departing from the terminal in Caracas. But although Lismar knew she was going to do sex work, she did not imagine that she would end up being a victim of sexual exploitation.

Throughout the region, it is common for women to recruit their peers. Although there is no data disaggregated by nationality, women account for 45% of those prosecuted for human trafficking in South America, according to the latest United Nations Office on Drugs and Crime (UNODC) report on human trafficking.

Mendoza said this is because in general, women are the weakest link in sexual exploitation networks and so victims of exploitation are often forced to recruit other young women into the network. “[Women] use their gender and nationality to make a connection, to generate trust and recruit others,” she explained.

This modus operandi is becoming more and more common.

On March 12, 2024, the Scientific, Criminal and Criminalistic Investigations Corps (CICPC) officers rescued four young women in Táchira, a state bordering Colombia. It appears that they had been recruited by another previously recruited minor.

A CICPC official told InSight Crime that the unit also rescued four young women in 2022 in Aragua state who were recruited by friends. “They told them how much they earned doing sex work, and that they only had to take a few photos so they could go to Peru. That was a very notorious case,” said the official, who spoke anonymously because they were not authorized to speak to the press.

In addition to recruitment by other victims, the economic crisis in Venezuela has led to cases where family members and close friends hand young women over to sexual exploitation networks, who, in desperation, agree to what are actually fake job offers out of necessity, according to police sources interviewed by InSight Crime.

“We are not only talking about vulnerable migrant women being targeted, but also about women, girls and adolescents in Venezuela who are in a very precarious economic situation,” Mendoza specified. “Women’s bodies always end up being like a currency,” she said.

A Living Hell

When she arrived in Peru, instead of working with her friend, Lismar found herself in the hands of a criminal organization, which imposed a high-interest “debt” on her for the “investment” they had made to get her out of Venezuela, one of her friends told InSight Crime. She had to pay a daily fee, and if she did not make enough on any given day, the debt would grow.

For months, Lismar was sexually exploited by the human trafficking network that took her to Peru.

“They bought her clothes, put fake nails on her, and gave her money to buy makeup so she could work in a plaza. There were slow days when she had no business, and they would send her to a hotel in lingerie to be used by the men who visited. And when she did nothing, they took her away … to punish her,” her friend said.

Soon, her family learned that things were not going well.

“She started to change. She began to say that she had a debt and that they were making her do things against her will. That she wanted to pay that debt to come [to Venezuela],” said her grandfather Leonel. “On one occasion she called me crying, saying that she wanted to come home, that every day she had to be with three men … She had to pay 200 soles a day [$50] and when she didn’t make the money, it [her debt] grew,” he added.

But the debt was impossible to pay, and some time later, several of her relatives received extortion calls with death threats from a woman who identified herself as Oriana Hernández, and who was supposedly Lismar’s boss. In the messages, she demanded money to pay off Lismar’s debt in Peru.

Although Hernández never mentioned the name of a criminal gang, Leonel and Lismar’s relatives turned to social networks, mainly Facebook, to investigate. They began monitoring Lismar’s friends in Peru.

“One of them identified herself as connected to Hijos de Dios (Children of God), and in some publications she included some train [emojis], so it is possible that they have ties to Tren de Aragua,” said one of Lismar’s relatives, who asked not to be identified.

Tren de Aragua, the Venezuelan gang that has spread across the region, and one of its factions in Peru, Hijos de Dios, have been involved in the sexual exploitation of Venezuelan and Peruvian women for several years.

In December 2022, one of Leonel Monagas’ former neighbors, who is now based in Colombia and has ties to gangs in Peru, told Lismar’s family that she had been killed for failing to pay her debt. Peruvian authorities, however, have not confirmed the murder, nor do they have any trace of Lismar.

Since the young woman migrated to Peru, her grandfather Leonel has had trouble sleeping. He divides his days between his work as a laborer and his efforts to find his granddaughter, whom he affectionately calls “cachito.” He takes some comfort in an arrangement of balloons that she sent him in June 2022 for Father’s Day in Venezuela, and listening to voice notes that Lismar sent him before she lost communication with her family. For now, he said, he will keep following any trail that could lead to his granddaughter.

This article, written by the Venezuela Investigative Unit, was originally published by InSight Crime, a Medellín-based foundation dedicated to the investigation and analysis of crime and security in Colombia and Latin America.