Marcelo Endara is a businessman who appears to have facilitated bribes through several offshore shell companies based in Panama and Trinidad and Tobago.
Alecksey Mosquera was Minister of Energy for Raphael Correa between 2007 and 2009. Mosquera and Endara are accused of receiving US$1 million to “expedite procedures in the Toachi- Pilatón project,” a hydroelectric project. President Rafael Correa has denied that the hydroelectric project is tainted by the corruption that the prosecutors have uncovered.
Mosquera is also accused of receiving US$920,000 from Odebrecht. It appears that he used these funds to purchase machinery in the United States and China, which he later sold to a company he was a general manager of. Prosecutors believe Mosquera’s purchases and sales may have been to conceal the illicit origins of the money.
This case has revealed an aspect of the corruption scandal that is not often examined, i.e. how dirty money gets cleaned.
Money Laundering 101
Money laundering is a three step process of placement, layering, and integration. According to Investopedia:
Placement refers to the act of introducing “dirty money” (money obtained through illegitimate, criminal means) into the financial system in some way; “layering” is the act of concealing the source of that money by way of a series of complex transactions and bookkeeping gymnastics; and integration refers to the act of acquiring that money in purportedly legitimate means.
In this case, the placement was Mosquera’s purchase of machinery in China and the United States. He then layered the money by shipping the machinery to Ecuador and selling it to a firm which he managed. Integration occurred when he financially benefited from the sale, which, on the surface, would have appeared legitimate.
While corruption in the form of campaign donations and cash transfers have received quite a bit of attention from media outlets across the Americas, the individual acts of money laundering have unfortunately been left in the dark.
However, an exception must be recognized. IDL Reporteros have done an outstanding at investigating the Odebrecht case in Peru.
Their investigation and reporting (a more concise, English version of which can be found here) show the complex web that dirty money goes through before it reaches the pockets of corrupt officials.
In-depth investigations by prosecutors and journalists show the scope of this scandal and the lengths that corrupt businessmen, politicians, and other officials are will to go to launder money.
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