{"code":"24608","sect":"El Salvador","sect_slug":"el-salvador","hits":"1130","link":"https:\/\/elfaro.net\/en\/202007\/el_salvador\/24608","link_edit":"","name":"Development Bank of El Salvador Ignored Internal Warnings in Awarding Loan to Sister of Presidential Commissioner","slug":"development-bank-of-el-salvador-ignored-internal-warnings-in-awarding-loan-to-sister-of-presidential-commissioner","info":"The Development Bank of El Salvador, commercially known as Bandesal, ignored internal conflict-of-interest warnings in its dealings with two siblings of Presidential Commissioner Carolina Recinos: it hired one as manager of funding and cooperation and issued a loan of over $22,000 to another to finance an in-house cafeteria at the Treasury Ministry. The Ministry of Foreign Relations and the National Records Center each hired another of the commissioner\u2019s siblings.","mtag":"Corruption","noun":{"html":"\u003Cspan class='tint-text--dark' data_href='\/user\/profile\/elemus'\u003E Efren Lemus\u003C\/span\u003E","data":{"efren-lemus":{"sort":"elemus","slug":"efren-lemus","path":"efren_lemus","name":"Efren Lemus","edge":"0","init":"0"}}},"view":"1130","pict":{"cms-image-000034027-jpeg":{"feat":"1","sort":"34027","name":"cms-image-000034027.jpeg","link":"https:\/\/elfaro.net\/images\/cms-image-000034027.jpeg","path":"https:\/\/elfaro.net\/images\/cms-image-000034027.jpeg","back":"","slug":"cms-image-000034027-jpeg","text":"<p dir=\"ltr\">Caption: The Treasury Ministry awarded the contract for its cafeteria to the sister of Carolina Recinos, the presidential commissioner. Treasury Minister Nelson Fuentes Menj\u00edvar, center, offered no explanation for the selection of a businesswoman lacking the economic capacity to offer the service. Picture taken July 15, 2019 by V\u00edctor Pe\u00f1a\/El Faro<\/p>","capt":"\u003Cp dir=\"ltr\"\u003ECaption: The Treasury Ministry awarded the contract for its cafeteria to the sister of Carolina Recinos, the presidential commissioner. Treasury Minister Nelson Fuentes Menj\u00edvar, center, offered no explanation for the selection of a businesswoman lacking the economic capacity to offer the service. Picture taken July 15, 2019 by V\u00edctor Pe\u00f1a\/El Faro\u003C\/p\u003E"},"cms-image-000034028-jpeg":{"feat":"0","sort":"34028","name":"cms-image-000034028.jpeg","link":"https:\/\/elfaro.net\/images\/cms-image-000034028.jpeg","path":"https:\/\/elfaro.net\/images\/cms-image-000034028.jpeg","back":"","slug":"cms-image-000034028-jpeg","text":"<p dir=\"ltr\">Caption: Juan Pablo Dur\u00e1n, president of Bandesal. Photo courtesy of the Office of the President.<\/p>","capt":"\u003Cp dir=\"ltr\"\u003ECaption: Juan Pablo Dur\u00e1n, president of Bandesal. Photo courtesy of the Office of the President.\u003C\/p\u003E"},"cms-image-000034029-jpeg":{"feat":"0","sort":"34029","name":"cms-image-000034029.jpeg","link":"https:\/\/elfaro.net\/images\/cms-image-000034029.jpeg","path":"https:\/\/elfaro.net\/images\/cms-image-000034029.jpeg","back":"","slug":"cms-image-000034029-jpeg","text":"","capt":""},"cms-image-000034030-jpeg":{"feat":"0","sort":"34030","name":"cms-image-000034030.jpeg","link":"https:\/\/elfaro.net\/images\/cms-image-000034030.jpeg","path":"https:\/\/elfaro.net\/images\/cms-image-000034030.jpeg","back":"","slug":"cms-image-000034030-jpeg","text":"<p dir=\"ltr\">The Bandesal office building on Roosevelt Avenue in San Salvador. Photo: V\u00edctor Pe\u00f1a\/El Faro<\/p>","capt":"\u003Cp dir=\"ltr\"\u003EThe Bandesal office building on Roosevelt Avenue in San Salvador. Photo: V\u00edctor Pe\u00f1a\/El Faro\u003C\/p\u003E"}},"pict_main__sort":34027,"date":{"live":"2020\/07\/03"},"data_post_dateLive_YY":"2020","data_post_dateLive_MM":"07","data_post_dateLive_DD":"03","text":"\u003Cp dir=\"ltr\"\u003ESusana Elizabeth Recinos Montes won the contract to open an in-house cafeteria at the Treasury Ministry, despite lacking both the equipment and the cash flow for the project. So, after securing the deal with the ministry, Mrs. Recinos Montes submitted a file to the Development Bank of El Salvador, a private bank known commercially as Bandesal, to request a line of credit from the Economic Development Fund (FDE).\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EAccording to the documents, Mrs. Recinos Montes requested $22,514.02\u201475 percent of start-up costs\u2014to finance the equipment acquisition, meaning that the Treasury Ministry was not swayed by the fact that the businesswoman was unable to provide the services at the time she acquired the contract. El Faro left voice messages with Treasury Minister Nelson Fuentes requesting details about the ministry\u2019s call for proposals, yet at the time of publication the minister had not responded. Bandesal\u2019s records show that she stated in her credit request that she had already secured the contract with Treasury.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe credit request set off an alarm at the bank. Bandesal\u2019s credit committee judged that the application violated regulations set by the Superintendence of the Financial System (SSF) and its own internal guidelines to prevent the laundering of money and assets. In particular, the alarms were triggered due to the applicant\u2019s family relations. Susana Elizabeth Recinos Montes is the sister of a senior official at Bandesal and also the sister of Martha Carolina Recinos de Bernal, one of the most powerful women in the Bukele administration.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u003Cbr\/\u003E \u003Cfigure class=\"pict pict_land pict_move_posc 0 cs_img cs_img--curr rule--ss_c\" data-shot=\"pict\" data-hint=\"pict\"\u003E \u003Cdiv class=\"pict__pobj text-overflow\"\u003E\u003Cimg src=https:\/\/elfaro.net\/get_img?ImageWidth=2000&ImageHeight=1333&ImageId=34027 class=\"pobj\" style=\"max-width: 100%\" rel=\"resizable\" alt=\"Caption: The Treasury Ministry awarded the contract for its cafeteria to the sister of Carolina Recinos, the presidential commissioner. Treasury Minister Nelson Fuentes Menj\u00edvar, center, offered no explanation for the selection of a businesswoman lacking the economic capacity to offer the service. Picture taken July 15, 2019 by V\u00edctor Pe\u00f1a\/El Faro\" \/\u003E\u003C\/div\u003E \u003Cfigcaption class=\"pict__text cs_img_caption folk_content typo_buttons line--ss_s0c line--ss_s0c--auto block full-width text-overflow rule--ss_l relative\"\u003E \u003Cdiv class=\"__content block-inline full-width align-top tint-text--idle relative\"\u003E Caption: The Treasury Ministry awarded the contract for its cafeteria to the sister of Carolina Recinos, the presidential commissioner. Treasury Minister Nelson Fuentes Menj\u00edvar, center, offered no explanation for the selection of a businesswoman lacking the economic capacity to offer the service. Picture taken July 15, 2019 by V\u00edctor Pe\u00f1a\/El Faro \u003C\/div\u003E \u003C\/figcaption\u003E \u003C\/figure\u003E\u003Cbr\/\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ECarolina Recinos has been part of Bukele\u2019s inner circle for years. From 2012 to 2014, she was an advisor to Bukele during his term as mayor of Nuevo Cuscatl\u00e1n. She worked as a representative for Starlight, one of the businesses that Bukele used to \u003Ca href=\"https:\/\/www.insightcrime.org\/news\/analysis\/el-salvadors-nayib-bukele-tainted-money-laundering-allegations\/\"\u003Elaunder $1.9 million from Alba Petr\u00f3leos\u003C\/a\u003E, a subsidiary of Venezuela\u2019s Petr\u00f3leos de Venezuela, S.A. (PDVSA). She was a senior presidential campaign staffer and, after Bukele\u2019s June 2019 inauguration, was named presidential commissioner, where she now works on issues relating to the economy, public health, drinking water, diplomatic affairs, and legislative relations.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ETwo months after her official August 2019 nomination, Bandesal hired Herbert Orlando Recinos Montes\u2014Recinos\u2019s brother\u2014as manager of funding and cooperation, according to the government\u2019s freedom-of-information portal known as \u003Ca href=\"https:\/\/www.transparencia.gob.sv\/\"\u003ETransparency\u003C\/a\u003E.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EWhen Bandesal hired the commissioner\u2019s brother, the bank was led by Juan Pablo Dur\u00e1n Escobar, a man affiliated at different times with the Christian Democratic Party (PDC) and Democratic Change (CD). He left the latter party on the heels of accusations of corruption tying him to then-Secretary General Oscar Katt\u00e1n. Dur\u00e1n Escobar also spent a fleeting moment (June 2009 to April 2010) as president of the National Welfare Lottery, leaving on the heels of accusations of sexual misconduct. Former president Mauricio Funes was quick to recall the incident when Dur\u00e1n Escobar was named president of Bandesal under the Bukele administration: \u201cHow is it possible that a bank that was created to facilitate access to credit for sectors that have been historically excluded from the financial system, such as women, will be run by a sexual predator?\u201d asked Funes, a fugitive of Salvadoran justice, on June 2, 2019.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u003Cstrong\u003EThe credit line and conflicts of interest\u003C\/strong\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe banking system has mandatory protocols in place to prevent money laundering, such as a detection system that employees must activate when a client is a Politically Exposed Person (PEP). \u201cThe due diligence given to Politically Exposed Persons goes beyond that given to ordinary citizens, requiring more documentation. The first to activate this prevention mechanism should be the sales executives, under the observation of the compliance officer,\u201d explained a former prosecutor specializing in money laundering who agreed to speak on the condition of anonymity.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ESusana Elizabeth Recinos Montes met the requirements to be classified as a PEP on two counts. In her credit request, which would extend her a six-month grace period followed by 10 percent annual interest for a total of 60 months, she asked for \u201cthe co-signature of her husband Alejandro Rivera as a guarantor,\u201d according to Bandesal documents reviewed by El Faro. Alejandro Rivera served as vice minister of revenue for the Treasury Ministry during the administration of Salvador S\u00e1nchez Cer\u00e9n (2014-19).\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cAn official evaluates an application and puts little red flags as alerts for further evaluation by a higher authority,\u201d said a Bandesal source of the vetting process. In its report, the bank\u2019s credit committee detected a potential indirect conflict of interest in Recinos Montes\u2019s application, noting: \u201cThe applicant for financing is considered a Politically Exposed Person (PEP) due to her family relationship (sister) with Martha Carolina Recinos de Bernal, Presidential Commissioner of Operations for the Cabinet of the President of the Republic of El Salvador.\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EIt wasn\u2019t the only warning of a conflict of interest. \u201cThis organization would be connected, given that the applicant is the sister of a manager at the [Development Bank of El Salvador].\u201d The internal document didn\u2019t specify whom, but El Faro confirmed that Bandesal hired Herbert Orlando Recinos Montes, brother of the credit applicant and of the presidential commissioner, as manager of funding and cooperation in August 2019. In the afternoon on Wednesday, June 6, El Faro called the manager\u2019s office, which is situated in the Escal\u00f3n neighborhood of San Salvador, but the person who answered said he was unavailable. \u201cMrs. Susana Recinos is the sister of a manager at Bandesal, which, according to the committee, constitutes a direct conflict of interest,\u201d reads a second internal document.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u003Cbr\/\u003E \u003Cfigure class=\"pict pict_land pict_move_posc 0 cs_img cs_img--curr rule--ss_c\" data-shot=\"pict\" data-hint=\"pict\"\u003E \u003Cdiv class=\"pict__pobj text-overflow\"\u003E\u003Cimg src=https:\/\/elfaro.net\/get_img?ImageWidth=1999&ImageHeight=1333&ImageId=34028 class=\"pobj\" style=\"max-width: 100%\" rel=\"resizable\" alt=\"Caption: Juan Pablo Dur\u00e1n, president of Bandesal. Photo courtesy of the Office of the President.\" \/\u003E\u003C\/div\u003E \u003Cfigcaption class=\"pict__text cs_img_caption folk_content typo_buttons line--ss_s0c line--ss_s0c--auto block full-width text-overflow rule--ss_l relative\"\u003E \u003Cdiv class=\"__content block-inline full-width align-top tint-text--idle relative\"\u003E Caption: Juan Pablo Dur\u00e1n, president of Bandesal. Photo courtesy of the Office of the President. \u003C\/div\u003E \u003C\/figcaption\u003E \u003C\/figure\u003E\u003Cbr\/\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EIn its audit, the credit committee cited an SSF regulation: \u201cThose who are connected to a bank, or those who have a conflict of interests through a relationship or another tie to the bank\u2019s administration, are able to influence the decisions to issue credit.\u201d They also invoked the manual for preventing and detecting money laundering in calling on the executive board of Bandesal to make the final decision for people identified as PEP.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EBandesal, which began operating on January 19, 2012, oversees the Economic Development Fund to finance micro-, small, and medium-size businesses. According to one of its most recent reports, the fund issued $49.3 million in credit during the first half of 2019. The fund is managed by the bank\u2019s first-floor business office, which processed Mrs. Recinos Montes\u2019s application and, despite the conflict of interest, recommended that the bank\u2019s executive board approve the loan.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EOn February 11, 2020, the executive board unanimously approved Mrs. Recinos Montes\u2019s loan. Despite acknowledging the SSF and bank\u2019s money laundering regulations, the directors provided no reasoning for their authorization of the financial transaction with a PEP and neither confirmed nor denied that the family relation of the Bandesal manager constituted a conflict of interest. \u201cThey recounted the credit committee\u2019s findings, but offered no justification for approving the credit,\u201d explained the source from Bandesal.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EBandesal attempted to redact all information pertaining to the credit issued to Mrs. Recinos Montes in the executive board\u2019s meeting minutes from February 11 that it uploaded to Transparency. El Faro, though, has an unredacted copy of the meeting minutes, along with corroborating bank documents.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe lack of reasoning for issuing the loan to a PEP and the failure to confirm or deny the multiple conflicts of interest are not the only inconsistencies in the directors\u2019 decision.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EBandesal\u2019s corporate governance code states that those approving the issuance of credit have the responsibility to \u201censure that the risk undertaken be appropriate.\u201d In the case of the loan to the sister of the presidential commissioner, the agreement neither justifies the benefactor\u2019s ability to pay nor names a guarantor. The only justification offered for the loan was the debtor\u2019s agreement with the Treasury Ministry. \u201cMrs. Recinos will increase her responsiveness in light of the recently granted request to prepare and serve food to the employees of the Treasury Ministry\u2019s in-house cafeteria,\u201d said the board. \u201cMrs. Recinos has more than eight years\u2019 experience in the production and sale of prepared food and maintains a good relationship with the purveyors of the raw materials.\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EIn the morning of June 6, El Faro called and left voice messages on the cell phones of the presidential commissioner and the president of Bandesal. Carolina Recinos has yet to respond, whereas Juan Pablo Dur\u00e1n Escobar responded via WhatsApp at noon: \u201cI will happily receive you today at 2 pm here at BANDESAL. Can you give me the name of the alleged family member so that I can gather related information?\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cThe loan is in the name of Susana Elizabeth Recinos Montes. I will arrive at Bandesal at 2 pm. Thanks,\u201d responded El Faro.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EEn route to the Bandesal office building, the president of the institution cancelled the interview last-minute. \u201cRest assured that the Credit Processes of BANDESAL are carried out in strict compliance with the Norms and Approved Policies of our Executive Board. [...] On the basis of Article 232 of the Law of Banks and 92 of the Law of Bandesal we are prohibited to reveal information about our clients,\u201d wrote Dur\u00e1n Escobar in two messages, the last received at 1:51 in the afternoon, nine minutes before the scheduled interview.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u003Cstrong\u003EThe consul and the chief of security\u003C\/strong\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EIn his first week in office, President Bukele terminated some 20 family members of FMLN leaders employed by the executive branch, including family members of former president S\u00e1nchez Cer\u00e9n, former chancellor Hugo Mart\u00ednez, former vice president \u00d3scar Ortiz, and deputies Nidia D\u00edaz and Norma Guevara. \u201cI failed to understand the FMLN deputy\u2019s indignation at the firings from obvious cases of nepotism,\u201d wrote Bukele on his Twitter on June 5, 2019, minutes before ordering the National Administration of Aqueducts and Sewage (ANDA) to fire Mireya Lazo, wife of FMLN deputy V\u00edctor Hugo Suazo, also via Twitter.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EPresident Bukele took an impassioned stance against nepotism, despite the fact that \u003Ca href=\"\/en\/202006\/el_salvador\/24542\/The-Bukele-Clan-that-Rules-with-Nayib.htm\"\u003Ehe, too, had just nominated relatives to his cabinet\u003C\/a\u003E. Two months after nominating Carolina Recinos in August to lead the cabinet and announcing the wave of anti-nepotism firings over Twitter, state institutions and Bandesal began hiring her relatives. Then, on October 16, the Ministry of Foreign Relations hired another of her siblings, her sister Emilia Antonia Recinos Montes, as consul in Charlotte, North Carolina. According to her Unique Identity Document, Emilia Antonia has an associate\u2019s degree in business. When El Faro attempted to verify her diplomatic experience via Transparency, the CV section listed the following: \u201cRecent nomination. CV forthcoming.\u201d El Faro also emailed the Ministry of Foreign Relations and called the Charlotte consulate, but received no response.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u003Cbr\/\u003E \u003Cfigure class=\"pict pict_land pict_move_posc 0 cs_img cs_img--curr rule--ss_c\" data-shot=\"pict\" data-hint=\"pict\"\u003E \u003Cdiv class=\"pict__pobj text-overflow\"\u003E\u003Cimg src=https:\/\/elfaro.net\/get_img?ImageWidth=2000&ImageHeight=1333&ImageId=34030 class=\"pobj\" style=\"max-width: 100%\" rel=\"resizable\" alt=\"The Bandesal office building on Roosevelt Avenue in San Salvador. Photo: V\u00edctor Pe\u00f1a\/El Faro\" \/\u003E\u003C\/div\u003E \u003Cfigcaption class=\"pict__text cs_img_caption folk_content typo_buttons line--ss_s0c line--ss_s0c--auto block full-width text-overflow rule--ss_l relative\"\u003E \u003Cdiv class=\"__content block-inline full-width align-top tint-text--idle relative\"\u003E The Bandesal office building on Roosevelt Avenue in San Salvador. Photo: V\u00edctor Pe\u00f1a\/El Faro \u003C\/div\u003E \u003C\/figcaption\u003E \u003C\/figure\u003E\u003Cbr\/\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EEmilia Antonia is married to Jos\u00e9 Roberto Hern\u00e1ndez S\u00e1nchez, former San Salvador city councilmember during the tenure of mayor Carlos Rivas Zamora (2003-06). Hern\u00e1ndez S\u00e1nchez was expelled from the FMLN for refusing to support the 2004 presidential candidacy of candidate Shafick Handal. While a councilmember, his sister-in-law Carolina Recinos was chief of staff to the mayor. Emilia Antonia isn\u2019t the only family member of the presidential commissioner working in the Chancellery. Efr\u00e9n Arnoldo Bernal Ch\u00e9vez, husband of Carolina Recinos, has been the ambassador to Russia since April 2018, and is one of the few S\u00e1nchez Cer\u00e9n appointees that president Bukele has not replaced.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EFour months after the nomination of Carolina Recinos to lead the cabinet and the wave of Twitter firings for nepotism, and two days after the nomination of the commissioner\u2019s sister as Charlotte consul, another state institution hired a fourth sibling. On October 18, 2019, Julio Alexander Recinos Montes, a former police officer who had worked as chief of the National Civil Police department in Berl\u00edn, Usulut\u00e1n, was hired as head of security for the National Records Center (CNR).\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EEl Faro sent an email and called the office of Recinos Montes at the CNR. \u201cHe\u2019s not here at the moment, but I will give him your message,\u201d responded Sa\u00fal, the man who answered the phone in the security office. At the time of publication, he has not returned the call.\u00a0\u003C\/p\u003E"}