Nearshore Americas
President Juan Orlando Hernandez

Corruption Scandal Threatens to Unseat Honduran President

Honduran President Juan Hernandez is under tremendous pressure to resign after he admitted that his political party took donations from companies accused of skimming millions of dollars from the country’s social security funds.

During the past weekend, thousands marched through the streets in major cities across the country, including the capital Tegucigalpa, calling for Hernandez to resign and arrange for an international investigation, like that of the neighboring Guatemala, to probe the embezzlement.

Although Hernandez admits that his party took money, he argues that he was not aware of the origin of these funds at the time of the election campaign.

It all began after the Honduran Public Ministry said a network led by the then director of the Social Security Institute, Mario Zelaya, fraudulently misspent at least $120 million during the 2010-14 presidency of Porfirio Lobo.

The President’s National Party also got caught up in the swirl when the investigators went out to track down the beneficiaries of the scandal.

The scheme allegedly relied on mark-ups topping 100% on goods and services such as medicines and pensions, with kickbacks then being paid by businesses that benefited. At least part of the money purportedly ended up in the hands of the National Party, which counts both Lobo and Hernandez as members.

The 18-person social security board of directors, all of them appointed by Lobo, is under investigation. Two former vice-ministers of the health and labor departments have also been detained.

Some of the companies suspected of involvement in the embezzlement were formed by the former officials of the Social Security Fund. The scandal, which broke late last year involved bribery, money laundering and the overpayment to companies.

Opposition members have charged that the president received about $90 million of more than $300 million they say were skimmed from Social Security. Meanwhile, the prosecutor heading the case, Roberto Ramirez Aldana, has fled the country after receiving death threats.

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Protestors are asking the president to ask the United Nations to investigate the scandal, because in neighboring Guatemala a U.N.-backed anti-corruption body has helped uncover corruption.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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