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Honduras detains ex-official suspected of fraud

September 9, 2014

TEGUCIGALPA, Honduras (AP) — A fugitive Honduran government official suspected of misappropriating as much as $330 million from the country’s social security program was arrested on Tuesday.

Mario Zelaya was detained in southern Honduras, President Juan Orlando Hernandez said in comments broadcast on television. He praised cooperation by the military police, the national police, the attorney general and Honduran intelligence to secure the arrest.

Zelaya’s attorney, Marcelino Vargas, alleged that his client was improperly detained in Nicaragua by “two masked persons” who took him to the border and handed him over without a formal extradition process.

Oscar Alvarez, congressional leader of Zelaya’s and Hernandez’s ruling National Party, said the arrest “demonstrates that the government works against corruption no matter who it involves.”

Ricardo Nunez, the prosecutor in charge of the investigation, did not rule out further arrests and said Zelaya was being held by military authorities in the capital, Tegucigalpa.

Zelaya, a 46-year-old orthopedist, was head of the Honduran Institute of Social Security during the 2010-2014 administration of former President Porfirio Lobo. He had been a fugitive since January, and this spring the government offered a $50,000 reward for information about his whereabouts.

He is suspected of abuse of authority, breach of official duties, misappropriation of public funds, bribery, money laundering and fraud.

Officials allege theft and fraudulent spending that could total around $330 million involving funds that were supposed to pay for medicine, medical supplies and pensions for retirees and the disabled.

The alleged fraud involved overpricing by more than 100 percent for goods and services required under Honduras’ social security system. Businesses that benefited allegedly paid commissions to officials and at least one political party that has not been identified.

Officials say ambulances were purchased for $700,000 that were worth less than half that, and hospital beds valued at under $5,000 were bought for $50,000. They say outlays were made for technological services that were never delivered and medicines that were unusable.

The Social Security Institute’s entire 18-person board of directors is under investigation. The directors were nominated during the Lobo administration and were members or allies of the National Party.

Javier Pastor and Carlos Montes, the former health and labor ministers, respectively, have also been detained.

Since Zelaya’s flight in January, Honduran authorities have seized properties in Honduras and Chile apparently purchased in the name of proxies. Officials have also identified two homes in California and two more in Florida registered in his name.

National University rector Julieta Castellanos called Zelaya “the most visible face of the enormous corruption in the country.”

The Social Security Institute has about 900,000 pensioners. About 14 percent of the population is covered by a social security retirement plan, receiving a stipend averaging half the minimum salary, or around $170 a month.


Associated Press writer Alberto Arce contributed from Mexico City.

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