In early May 2024, Guatemalan Finance Minister Jonathan Menkos submitted a proposal to Congress to increase the national budget by Q14.5 billion ($1.8 billion). The announcement itself was expected; the government of President Bernardo Arévalo, anxious to launch a political agenda focused on stamping out corruption, had been working with the previous administration’s budget since taking office months earlier. But the contents of Menkos’ proposal caught many by surprise – in particular, his plans to grant a one-off injection of close to Q1.7 billion ($219 million) to a group of regional political boards infamous for corruption.       

The boards, known as the departmental councils for urban and rural development (Consejos Departamentales de Desarrollo Urbano y Rural – Codede), represent the government’s main channel for investing in health, sanitation, education, and infrastructure in each of Guatemala’s 22 departments. But the councils’ ample budgets have long provided a vehicle for prominent regional politicians – particularly governors, congressional representatives, and mayors – to abuse the system by embezzling funds or diverting projects towards political allies. Congressional officials will commonly trade their votes for access to these resources, as their political survival hinges on their ability to secure public works projects for their respective districts.

This is a case study taken from an in-depth InSight Crime investigation into Guatemalan President Bernardo Arévalo’s stumbling anti-corruption agenda. Download the full report or explore additional case studies here.

The Arévalo administration appears to be leveraging this appetite for government funds in the hope of sustaining support in Congress, where the president’s party – the Seed Movement (Movimiento Semilla) – holds just 23 out of 160 seats. The party has also been suspended – and may soon face cancellation – over alleged registration flaws, preventing its members from sitting on the congressional boards and commissions that steer the legislative agenda.

Multiple sources consulted by InSight Crime – including Finance Minister Menkos and congressional officials privy to budget talks – said the proposed distribution of Codede funds responded to political negotiations with various congressional blocs, rather than the specific infrastructural and socioeconomic needs of a given district.

“It’s a political negotiation,” Menkos told InSight Crime. “We discussed the possibility of congressional officials telling us where to start implementing Codede projects in response to their territorial interests.” 

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This type of bartering is a risky game, as it requires the government to pump additional public funds into financing mechanisms that are already difficult to scrutinize. The Codede enjoy a high degree of autonomy and, to further complicate matters, the executive’s limited means of overseeing project implementation are often compromised.

This includes departmental governors, appointed by the president, who head the development councils and can refuse to release funds to suspect projects. In practice, however, generations of governors have abused this power to secure kickbacks in exchange for unfreezing Codede funds.

“If you don’t give [governors] money under the table, they won’t transfer funds,” said Sebastián Siero, head of Guatemala’s national association of mayors (Asociación Nacional de Municipalidades – ANAM). Arévalo has attempted to disrupt this practice by appointing a new crop of governors, ostensibly without strong ties to congressional officials. But it remains unclear whether the reshuffle will succeed in rooting out entrenched patterns of political patronage. 

The executive also relies on its central planning authority – the General Secretariat for Planning and Programming (Secretaría General de Planificación y Programación – Segeplan) –  to supervise projects funded via the Codedes. But Segeplan lacks the required capacity to oversee the implementation of Codede projects under the current national budget, according to a government source. It would, the source said, be overwhelmed by the task of dealing with an extra $219 million in funding for new projects.

“We would lose control,” the official said. “You’re creating even more opportunities for [state officials] to steal.”

Corruption within the executive branch also poses problems. In some cases, construction companies must pay a string of commissions to executive actors – including delegates from Segeplan and the ministries of environment, health, and education – to secure payments for state-funded public works projects, the same government source told InSight Crime. In some cases, these delegates own the companies that receive state contracts.

The difficulty of supervising the implementation of Codede funds means the government’s budget proposal, if approved, could “pour gasoline on a system that is already corrupt,” according to the same source.

Menkos’ efforts to negotiate with lawmakers across the boards – he told InSight Crime that around 120 Congress representatives were open to talks – also risks channeling local development funds to establishment parties with little interest in Semilla’s political agenda.

SEE ALSO: GameChangers 2023: Guatemala Election Upset Sparks Establishment Meltdown

Six of the ten municipalities granted the highest allocation of funds, for instance, are governed by mayors from the Vamos and Valor parties. Factions of these parties supported attempts to overturn the 2023 election results and have often opposed Semilla in Congress. The departments that elected the highest number of Vamos congressional representatives also received a disproportionately high amount of Codede funds, according to an investigation by La Hora

In addition, municipalities with long-standing ties to the drug trade – such as Morales in the department of Izabal, and Ipala in Chiquimula – received a higher allocation than some entire departments. Morales was long the home of one of Guatemala’s most notorious drug clans, while Ipala is controlled by relatives of a mayor-turned-congressman previously investigated for links to the drug trade.

Despite the significant increase in proposed Codede funding, the government initially struggled to win support for its plans. Negotiations appeared to have stalled until a sizable faction of lawmakers spanning 14 parties helped Semilla reach the two-thirds majority threshold needed to approve the budget increase during a vote held on August 13.* (Days later, lawmakers again backed the proposal after the Constitutional Court overturned the initial vote.) 

The victory in Congress marked a significant turn of fortune for the Arévalo administration, following a series of humbling defeats, and it appears to have laid the foundation for a period of more consistent support for Semilla’s ambitions in Congress, where the government has neither proposed a legislative package specifically designed to combat corruption, nor managed to pass individual anti-graft reforms of note. But it also served as a reminder that Semilla has little to offer potential allies aside from state resources, suggesting the party may be unable to sustain congressional support without fueling a well-established system of trade-offs that has previously favored corruption at the local level.

*The final budget allocation increase to the Codedes approved by Congress totaled Q1.88 billion ($242 million).