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Guatemala’s Caso Gutiérrez Takes a Step Forward with Major Fraud Ruling

guateflag091008.JPGAlthough this blog is commonly regarded as a source of information and opinion about Russia, anyone who regularly reads us understands that my work interests include everything from Asia to Africa to Latin America. As such, I wanted to briefly take the opportunity to attempt to raise some awareness about the latest developments in one of my other main cases: the Caso Gutiérrez of Guatemala.

As many friends and colleagues are aware, for more than a decade I have served as counsel to the family of Juan Arturo Gutiérrez, and his son, Juan Guillermo Gutiérrez, who are engaged in a long-running multi-jurisdictional series of tax fraud lawsuits against two of Latin America’s most powerful and wealthy men: Juan Luis Bosch and Dionisio Gutiérrez Mayorga, owners of the famous Pollo Campero chicken restaurant empire. It is a case of historic significance which has extended far beyond the courts into Guatemalan politics and society, and just last week received a major ruling from a court in Bermuda (press release after the jump).

It is extraordinarily difficult for me to emphasize the extent of the political influence and raw financial clout of these men, who operate as a parallel power in the country, capturing the critical institutions of the state, and handpicking presidents much like Russia. They maintain an extremely high profile – Dionisio hosts a weekly television show where he pretends he’s a journalist, while Juan Luis Bosch appears at the OAS Private Sector Forum to give speeches alongside Condoleezza Rice and the U.S. trade secretary.

They have done everything in their power to build an image as clean, ethical businessmen … yet seem wholly unable to bury this tarnished alleged past of laundering hundreds of millions of dollars away from the government.Our case has been one of David fighting multiple Goliaths, which has resulted in a media boycott in Guatemala: any newspapers reporting on the forbidden story of tax fraud and money laundering would face crippling penalties from advertisers.

Those who have dared to report about the case were often censured, fired, threatened, sued, or isolated. One journalist, Vinicio Aguilar Mancilla, was shot in the mouth after doing a radio report.  In North America, the coverage has also been scant. Probably the only authoritative article written about the case dates back to 2005, when the highly regarded columnist Gerardo Reyes of the Nuevo Herald did a comprehensive piece exploring the urgent situation outlined by my client. Bosch and Gutierrez have clearly spent a great deal of money scrubbing the internet clean of this news coverage to protect their reputation, but the original text of Reyes’ article is still available here.

I encourage you to spread this news to journalists and colleagues interested in this region, to help bring attention to this important case.Most often, the excuse from reporters and editors not to give this case any coverage is based on the perception that it is “just a family feud” – a preposterous argument used adroitly by the defense to discourage public attention, along with threats of defamation lawsuits. Call me crazy, but last time I checked, tax evasion from the public internal revenue service of Guatemala is not a private family matter, nor is the use of U.S. financial institutions to launder money, as we allege in court complaints.

In many ways, we view this case as something much larger than much larger than a business dispute – it is a case which highlights everything going wrong in Latin America, from the impunity of the powerful, the greed and brutal exercise of power over rule of law, enduring poverty and underdevelopment, to the weakness of the justice system to enforce property and shareholder rights.

There are many, many parallels between the experiences of Guatemala and that of Russia, and especially I believe there is strong overlap in terms of the application of private law to individuals who find themselves politically exposed.So without further ado, below is the press release from the latest findings in Bermuda. I hope that you will not hesitate to contact me with any questions or requests for information about this case and the Guatemalan political and business environment in general. – Robert Amsterdam

Pollo Campero Owners Nailed in Fraud Case

Long running shareholder dispute within Guatemala’s largest business group takes a dramatic step forward with Bermuda court ruling

Sept. 10, 2008 – Last week a judge in Bermuda issued a major decision which found a reinsurance company owned by Guatemala’s immensely powerful Bosch-Gutierrez business group (Multi-Inversiones) liable for fraud committed against a minority shareholder, confirming long-standing allegations made by the plaintiff in diverse related cases in international courts.

“After nearly a decade of fighting, we were finally given the very first opportunity to present the merits and share the videotaped evidence of money laundering,” said Robert Amsterdam, one of the lawyers representing the family of Juan Arturo Gutierrez, owner of the Lisa holding company. “As we expected, the ruling confirms that my client has been the victim of ongoing fraud. We consider this finding to be relevant to more than this successful outcome. This analysis helps to peel back veils of impunity, tax evasion, money laundering, and systemic abuse of political power to expose the true face of these caudillos who have caused so much damage to the people of Guatemala.”

The case, LISA S.A. vs. LEAMINGTON REINSURANCE COMPANY LTD. and AVICOLA VILLALOBOS, heard in the Supreme Court of Bermuda (1999: No.108/2001 No. 79), is related to several other U.S.-based lawsuits of high-profile international attention pursued by the plaintiff against companies and interests belonging to Juan Luis Bosch and Dionisio Gutierrez Mayorga, among others, who are the principal owners of the popular fast food restaurant chain Pollo Campero. The case has received attention from the highest levels of government and business, involving everything from a journalist shooting and media boycott to a claim filed before the UN’s Anti-Impunity Commission (CICIG).

The Bermudan Court ruled in favor of Lisa and against Leamington, finding that Lisa had been defrauded of nearly $2.0 million, plus prejudgment interest and postjudgment interest at the legal rate of 7%. The Court, however, did not find liability on behalf of Avicola Villalobos, S.A., not because fraud had not been committed, but rather because evidence pointed to an unnamed party, Multi-Inversiones, S.A. of the Bosch-Gutierrez Group, as being the controlling mind directing the fraudulent practices of Leamington.

The ruling in this case confirms that high-ranking executives representing Bosch and Gutierrez “clearly admitted in a meeting which was secretly recorded that a substantial portion of the income generated by the Avicola Group, in particular cash generated from the sale of live chickens, chicken manure and oranges was kept off the books and used to fund distributions to shareholders,” and “admitted to institionalised practices designed to deceive his local tax authorities on the part of the primary insureds.”

The Court also found that the plaintiff had no knowledge of these illegal separate accounting books, as claimed by the defense. “Many points outlined in this ruling mean so much more than just the award,” said Juan Rodriguez, a lawyer representing the plaintiff. “For nearly ten years the defense has claimed that they never maintained more than one set of accounting books, only to change their story entirely last February before this trial in order to claim that the plaintiff was informed of the fraud scheme. With this lie openly exposed, we finally have a view of the potential political manipulation carried out by these individuals in Guatemala to escape our complaints and investigation by the state judicial authorities – which has long been an underlying problem of rule of law for the country.”

More information on this historic case can be found at http://www.casogutierrez.com.