Multiple Businesspeople Arrested in Colombia for Financial Crimes Stemming from Panama Papers Scandal

A year and a half after the Panama Papers scandal first rocked the world, Colombian authorities have arrested multiple businesspeople for their alleged involvement in related financial crimes, including money laundering, fraud, and illicit enrichment.

Luz Mary Guerrero Hernández, co-founder of courier firm Servientrega and legal representative of money-transfer company Efecty (Efectivo Ltda), was the biggest name arrested this week in the shakedown. In addition to her high profile in the Colombian private sector, Guerrero’s brother and co-founder of Servientrega, Jesus Guerrero, has announced that he will run for president in next year’s election.

The other people arrested include representatives of Efecty, Servientrega, and the Colombian office of Mossack Fonseca, the Panama City-based law firm at the center of the global scandal that came to light in April 2016.

According to Colombia’s attorney general, there is evidence that at least 14 different Colombian companies committed financial crimes through an elaborate scheme established by Mossack Fonseca and falsified their accounting “with the knowledge of legal representatives, accountants, and tax auditors.”

The Scheme of Financial Crimes

Between 2010 and 2016, according to the attorney general, the Colombian office of Mossack Fonseca concocted an “elaborate” financial and corporate scheme involving fake invoices from foreign companies being sent to businesses within Colombia. “The prosecutor’s office found that the foreign companies were mere facades controlled by Mossack Fonseca, with which Colombian companies signed contracts for fictitious services that were never provided.”

These front companies were located across the world — in Panama, Costa Rica, Spain, and England — and the invoices, according to the attorney general, were paid by a bank in the Bahamas. The Colombian office of Mossack Fonseca, in association with its parent company in Panama, would then take up to 4% of the invoice sum as a fee to facilitate the transactions, which helped the implicated Colombian companies evade taxes.

“This concealed the true fate of the resources and intentions of Mossack’s customers,” said the attorney general’s office in a statement. The implicated Colombian companies then allegedly falsified their accounting and “manipulated the income statements” submitted to the nation’s tax agency in order to shield their financial crimes.

The office of the attorney general said that the investigation is ongoing and that it is specifically looking into seven other known cases, the results of which will be revealed “in the coming weeks.”

Those Arrested and Implicated

The attorney general launched the investigation that led to this week’s arrests last year along with the cooperation of Colombia’s federal tax agency DIAN (Dirección de Impuestos y Aduanas Nacionales de Colombia).

The four named workers who have been arrested are: Luz Mary Guerrero Hernández, founder of Servientrega as well as shareholder and legal representative of Efectivo Ltda. and Circulante S.A.; Jorge Humberto Sánchez Amado, auditor of Efectivo Ltda. and Circulante S.A.; Sara Guavita Moreno, alternate legal representative of Servientrega S.A.; and Juan Esteban Arellano Rumazo, legal representative of Mossack Fonseca & Co. Colombia S.A.S.

Barranquilla-based newspaper El Heraldo, Inversiones Zambrano Pinzón Asociados S.A.S., Artextil S.A, Rymel Ingeniería Eléctrica S.A.S., and Medicina Nuclear Diagnóstica S.A.S are among the other companies that have been implicated in the investigation. The attorney general listed at least 15 employees or representatives of these companies as being involved in the falsification of documents.

The Panama Papers Come Roaring Back

The Panama Papers scandal began after some 11.5 million documents from Mossack Fonseca were leaked by an anonymous source to German newspaper Süddeutsche Zeitung.

The first journalistic reports were published in April 2016 about the papers, which included revelations of offshore financial dealings by the heads of state or prime ministers of England, Iceland, Argentina, Sudan, Qatar, and Ukraine, among other nations.

Among the hundreds of names mentioned in the Panama Papers leak, which includes documents that date back to the 1970s, are Argentine football superstar Lionel Messi, Peruvian Nobel Prize of Literature winner Mario Vargas Llosa, and Puerto Rican reggaeton legend Daddy Yankee.

Though some arrests followed, the Panama Papers did not lead to as many financial crime convictions as many expected in the wake of the bombshell leak. In recent weeks, however, the Panama Papers have re-emerged in the headlines.

In addition to the Colombian investigation beginning to bare fruit, former Argentina president Cristina Fernández de Kirchner is dealing with allegations of related impropriety during her campaign to join the country’s senate this month. And across the world, a former Pakistani finance minister is battling a related indictment in his country, while Iceland’s former prime minister is suing various media companies that reported about his finances in the wake of the Panama Papers.