{"code":"27536","sect":"El Salvador","sect_slug":"el-salvador","hits":"511","link":"https:\/\/elfaro.net\/en\/202408\/el_salvador\/27536","link_edit":"","name":"El Salvador Overpaid $7 Million to Shell Company for Undelivered Milk During Pandemic","slug":"el-salvador-overpaid-7-million-to-shell-company-for-undelivered-milk-during-pandemic","info":"In the chaotic first week of the Covid pandemic, El Salvador paid a Virgin Islands company $27 million USD to provide milk powder for its hungry citizens \u2014 but the shell firm overcharged and under-delivered, pocketing $7 million, a government audit found.","mtag":"Corruption","noun":{"html":"Jimmy Alvarado and Jonny Wrate*","data":{"jimmy-alvarado-and-jonny-wrate-":{"sort":"","slug":"jimmy-alvarado-and-jonny-wrate-","path":"jimmy_alvarado_and_jonny_wrate_","name":"Jimmy Alvarado and Jonny Wrate*"}}},"view":"511","pict":{"cms-image-000040855-jpg":{"feat":"1","sort":"40855","name":"cms-image-000040855.jpg","link":"https:\/\/elfaro.net\/images\/cms-image-000040855.jpg","path":"https:\/\/elfaro.net\/images\/cms-image-000040855.jpg","back":"","slug":"cms-image-000040855-jpg","text":"","capt":""}},"pict_main__sort":40855,"date":{"live":"2024\/08\/22"},"data_post_dateLive_YY":"2024","data_post_dateLive_MM":"08","data_post_dateLive_DD":"22","text":"\u003Cp id=\"docs-internal-guid-cbedbeae-7fff-d008-d752-20d1c4f1da1f\" dir=\"ltr\"\u003E\u003Ca href=\"\/es\/202408\/el_salvador\/27530\/gobierno-pago-7-millones-a-offshore-de-islas-virgenes-britanicas-por-leche-que-no-llego-a-el-salvador\"\u003E\u003Cem\u003ELeer en espa\u00f1ol\u003C\/em\u003E\u003C\/a\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EIn the chaotic first week of the Covid pandemic, El Salvador paid an offshore company $27 million USD to provide milk powder for its hungry citizens \u2014 but \u003Ca href=\"\/es\/202408\/el_salvador\/27530\/gobierno-pago-7-millones-a-offshore-de-islas-virgenes-britanicas-por-leche-que-no-llego-a-el-salvador\"\u003Ethe shell firm overcharged and under-delivered, pocketing $7 million\u003C\/a\u003E, a government audit found.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe 2021 audit \u2014which probed the entire food distribution program, involving several firms and products\u2014 revealed little about the company tapped to deliver milk powder.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ENow, reporting by El Faro and OCCRP has shed light on the opaque company.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EAroum Group Inc. is registered in the British Virgin Islands, where regulations provide corporate anonymity. But the company\u2019s website reveals the identity of one person involved with the firm.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe man who set up Aroum Group\u2019s website was a Venezuelan named Wiomar Castillo, who described himself on LinkedIn as the firm\u2019s \u201cinternational trade manager.\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ECastillo\u2019s role, if any, in securing the contract for Aroum Group is unclear. He is from the same Venezuelan city as Tom\u00e1s Hern\u00e1ndez, an advisor to El Salvador\u2019s president, but it is not known if they are personally acquainted.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EHowever, Hern\u00e1ndez and Castillo\u2019s daughter have been interacting on social media for more than a decade. In a photo she posted to her charity\u2019s Instagram account, for example, Hern\u00e1ndez wears a T-shirt with the organization\u2019s logo, while he has posted messages on both her personal and philanthropic accounts.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EHern\u00e1ndez is\u003Ca href=\"\/es\/202106\/el_salvador\/25520\/El-gabinete-oculto-de-venezolanos-que-gobierna-con-Bukele-y-su-familia.htm\"\u003E reportedly\u003C\/a\u003E part of a clique of Venezuelans close to El Salvador\u2019s authoritarian president, Nayib Bukele. One of Hern\u00e1ndez\u2019 jobs was to oversee the pandemic food emergency response, and he would have likely played a key role in handing the lucrative powdered milk contract to Aroum Group.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ENeither Castillo nor Hern\u00e1ndez responded to requests for comment.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ERoss Delston, an American lawyer and anti-money laundering expert, said the powdered milk deal violated basic principles of due diligence, which should be carried out as a measure against corruption.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cDue diligence is an alien term when it comes to state contracts that are given to people who are known by and close to senior government officials,\u201d he said.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe fact that El Salvador contracted a company registered in the BVI also raises suspicions, Delston added.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cIt would be difficult to imagine how the government could reasonably understand who they were doing business with,\u201d he said.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe president\u2019s office did not respond to an emailed request for comment, and did not answer a phone call.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EAlthough it was registered in the BVI, Aroum Group\u2019s customs declarations listed its address at a business tower in Panama City. Edevisa, the law firm that shares the address, told El Faro the company has never been a client of theirs.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EOverseas Management Company Trust, another law firm that handled Aroum Group\u2019s corporate registration, declined to comment, citing internal confidentiality policies.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe nationalities of Castillo and Hern\u00e1ndez were not the only links reporters found between El Salvador and Venezuela, where a similar scheme saw state funds stolen via overvalued contracts for food, prompting U.S.\u003Ca href=\"https:\/\/home.treasury.gov\/news\/press-releases\/sm741\"\u003E sanctions\u003C\/a\u003E in 2019.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EMexican financial authorities investigated a company called Ilas Mexico S.A. de C.V. in connection to the Venezuela scheme, although the outcome of the probe was never made public. That same Mexican company supplied Aroum Group with the milk powder for El Salvador.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EDespite Mexico and El Salvador being closer geographically and sharing land transport routes, Aroum Group sent its shipment through Panama, where it had set up a bank account to receive the government paycheck.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EWhen El Salvador\u2019s government audited the purchase, it found that Aroum Group had overvalued the $27-million-contract by $5.3 million. In addition to pocketing that money, Aroum Group appears to have made another $1.7 million by failing to deliver the entire amount of milk powder it had promised.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ECastillo has since erased the LinkedIn profile where he publicized his role at Aroum Group, while the company has changed its name on paper to SM Intertrade Inc.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u003Cstrong\u003EPandemic corruption\u003C\/strong\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EEl Faro investigations have shown that pandemic-related government contracting was a hotbed for corruption shielded from public view. For months in 2020, after obtaining permission in March from the Legislative Assembly to bypass contracting protocols in order to expedite purchases, the Bukele administration \u003Ca href=\"\/es\/202005\/el_salvador\/24369\/Gobierno-incumple-compromiso-de-reportar-a-la-Asamblea-los-gastos-de-emergencia.htm\"\u003Erefused to submit detailed spending reports to legislative auditors\u003C\/a\u003E.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EIn May 2020, the Attorney General\u2019s Office \u003Ca href=\"\/en\/202208\/el_salvador\/26336\/Salvadoran-AG-Buried-Evidence-of-Corruption-in-Covid-19-Food-Contracts-Worth-$227-Million.htm\"\u003Eopened an investigation into $22.7 million in Covid-19 food purchases\u003C\/a\u003E made by the Ministry of Agriculture and Livestock (MAG) after finding evidence of favoritism and overcharging in contracts granted to the government\u2019s largest supplier.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ESix months later, by November, \u003Ca href=\"\/es\/202011\/el_salvador\/24995\/668--de-las-compras-de-insumos-m%C3%A9dicos-bajo-investigaci%C3%B3n-por-negociaciones-il%C3%ADcitas.htm\"\u003Etwo-thirds of spending on emergency medical supplies\u003C\/a\u003E across multiple state agencies were under investigation for insider dealing or other irregularities.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EProsecutors also found evidence that Vice Minister of Security Osiris Luna \u003Ca href=\"\/en\/202109\/el_salvador\/25736\/Top-Bukele-Official-Embezzled-$16-Million-in-Covid-19-Emergency-Food-Supplies.htm\"\u003Eembezzled $1.6 million in emergency food bundles\u003C\/a\u003E and, with the help of his mother, resold them to an accused contraband smuggler.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe following year, on May 1, 2021, the day that the ruling party Nuevas Ideas took two-thirds control of the Legislative Assembly, legislators \u003Ca href=\"\/en\/202105\/el_salvador\/25452\/New-Legislative-Assembly-Ousts-Supreme-Court-Magistrates-and-Attorney-General.htm\"\u003Eillegally removed Attorney General Ra\u00fal Melara\u003C\/a\u003E from office. They replaced him with Bukele loyalist Rodolfo Delgado, who dissolved the team of prosecutors in charge of these cases and shuttered the investigations.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp style=\"text-align: left;\" dir=\"ltr\"\u003EFour days later, on May 5 of that year, the Assembly passed legislation \u003Ca href=\"\/es\/202105\/el_salvador\/25462\/Asamblea-otorga-inmunidad-a-funcionarios-de-Bukele-por-compras-durante-la-pandemia.htm\"\u003Egranting public officials immunity from civil and criminal suits\u003C\/a\u003E related to pandemic spending.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp style=\"text-align: left;\" dir=\"ltr\"\u003ETop officials have faced international consequences for evidence of corruption. In 2022 the U.S. State Department \u003Ca href=\"\/en\/202207\/opinion\/26292\/Corruption-Cannot-Hide-Behind-Sovereignty-Claims.htm\"\u003Erevoked the visas\u003C\/a\u003E of Luna and Agriculture Minister Pablo Anliker. In 2021, the Treasury sanctioned Bukele\u2019s chief of cabinet Carolina Recinos for allegedly orchestrating \u201c\u003Ca href=\"\/en\/202112\/centroamerica\/25893\/Treasury-Dept-Salvadoran-Government-Pacted-with-MS-13.htm\"\u003Ea multi-ministry, multi-million dollar corruption scheme\u003C\/a\u003E\u201d involving inflated or suspicious pandemic contracts.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp style=\"text-align: right;\" dir=\"ltr\"\u003E\u003Cbr \/\u003E\u003Cem\u003E*Jonny Wrate is an investigative reporter from the Organized Crime and Corruption Reporting Project (OCCRP) based in Mexico. A version of this article was originally \u003Ca href=\"https:\/\/www.occrp.org\/en\/news\/the-venezuelan-connection-to-el-salvadors-pandemic-food-aid-swindle\"\u003Epublished in English by OCCRP\u003C\/a\u003E in partnership with El Faro.\u003C\/em\u003E\u003C\/p\u003E"}