Finance minister Alberto Carrasquilla is under fire for allegedly abusing his position as finance minister to rip off one in 10 of Colombia’s municipalities for personal gain.
Carrasquilla was already well on his way to become the country’s least popular politician; in just one month he proposes to tax the lower class and impose sales tax on basic necessities.
Colombia’s new finance minister; an unapologetic Panama Papers star
But the controversial investment banker-turned-politician is in real trouble now; not just with Congress or over his appearance in the Panama Papers, but with the law.
According to Daniel Coronell, one of Colombia’s most renowned journalists, Carrasquilla endorsed a law that allowed municipalities to sell bonds on public services like water when he was finance minister in 2007.
The national government, then led by former President Alvaro Uribe, served as guarantor for the municipalities is case they were unable to pay back the investors, including Carrasquilla himself.
The minister left office months before the bill passed Congress and co-founded an investment firm in Panama that bought the so-called Carrasquilla bonds, demanding usurious interest rates.
The scheme put such a financial strain on local governments that the national government was forced to pay Carrasquilla’s firm Konfigura to bail out 117 municipalities. The former minister allegedly made a $5 million profit.
Carrasquilla’s business partner, a Peruvian politician, is currently investigated in his home country over 17 cases of alleged corruption, according to Coronell.
According to opposition Senator Jorge Robledo, Carrasquilla’s law imposed no financial conditions on issuing of the bonds, allowing local governments to irresponsible generate debts.
Senator Jorge Robledo
Robledo told Carrasquilla to come to Congress and explain the scheme that allegedly ended up enriching himself while impoverishing more than 10% of Colombia’s municipalities.
The Senator told Caracol Radio that Carrasquilla bought bonds with an 8% interest rate, but charged a 13% interest rate, earning $5 million (COP14 billion) in a period of five years.
Robledo also wants to know Carrasquilla’s exact ties to health intermediaries that almost collapsed Colombia’s public health care system because of dubious investments.