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Paraguay's new president was targeted by the DEA

Associated Press
Aug 15, 2013 at 04:21pm IST

The man taking over as Paraguay's new president on Thursday has built a family fortune in one of the most unequal places in South America, dominating industries from banking to tobacco to soft drinks to soccer.

The 57-year-old Horacio Cartes also is a political neophyte who never registered to vote before running for president, and he's often faced accusations that his family's fortune was fed by money laundering, cigarette smuggling and drug trafficking.

Paraguayan voters overlooked these allegations, focusing instead on hopes that the boyish-looking businessman from the dominant Colorado Party can help the country reap more benefit from windfall soy profits that are boosting the economy at 10 percent a year.

Paraguay's new president was targeted by the DEA

Paraguay's new president was targeted by the DEA

His Grupo Cartes has grown quickly to include more than two dozen companies employing 3,500 people, and he won April's election with 46 percent support by promising to use his expertise to create more jobs.

Inaugural organisers said his most important encounter today would be a lunch with 150 foreign executives eager to improve the economic infrastructure in the country of 6.2 million people, where 39 percent of people live in poverty. "We have declared war on poverty, and from this government we will call no truce," Cartes said in his victory speech.

His elected predecessor, Fernando Lugo, also promised to combat poverty, and like Lugo, Cartes is a political outsider, having joined the Colorado Party only in 2009. Otherwise, the divorced tobacco magnate is about as different as can be from the sandal-wearing Lugo, a former Roman Catholic bishop who was impeached last year after losing congressional support. Smuggling, corruption and tax evasion are endemic in Paraguay, and analysts believe it's difficult for executives not to come in contact with criminals at some point.

The corruption watchdog group Transparency International ranks Paraguay 150th worst out of 176 countries. The US Congressional Research Service reported in 2010 that "corruption is a major impediment to consolidating democratic institutions" in Paraguay.

Accusations involving Cartes became widely reported after WikiLeaks published a 2010 U.S. State Department cable that labelled him the head of a drug trafficking and money laundering operation. He denied this in his only news conference with foreign media during the campaign, saying: "I wouldn't want to be president if I had ties to drug traffickers."

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