Sunday, August 31, 2008

Death in Peru: The Pandora's Box is opening

Ever wondered what a Peruvian drug baron looks like?

In this post on Friday, I told you about the very strange goings on in the La Libertad region of Peru, with district mayors accused of murdering a gov't employee because he wouldn't join in with the drug money scam operating in the locality.

Well, it looks like this story might blow the lid off one of the long-standing truths so far held unaccounted in Peru. The Sanchez-Paredes family have long been "suspected" of being narcos, and I put the word suspected in inverted commas because only someone with no idea of all things Peru and mining thinks they're innocent. The scam has been going on for years, and the Peruvian fiscals have always been on their tail without actually doing anything concrete. The reason is that the kickbacks go very high up in the Peruvian justice and gov't system, and nobody wants the S-P family to go under and start talking. I mean NOBODY.

The Sanchez-Paredes own two mines in the La Libertad region, namely Comarsa and San Simon, and these mines have been an integral part of the drug running operation. It's a long story, and if you're proficient in Spanish just Google the names already provided and find out as much as you want about the whole thing (much ink has been spilled), but basically the operation is suspected as running as follows:

1) The mine provides legitimate cover to import the necessary chemicals for cocaine production.

The cocaine makes its way to the USA via Mexico

3) The unlaundered dollars return to Brazil, where they're exchanged for gold bullion mined by artisan 'garimpeiro' miners.

The gold is smuggled into Peru via the highly perforated border with Brazil, where it is thrown onto the heap leaches at San Simon and Comarsa.

The mine then "produces" the gold bought in Brazil and the drug money is laundered, spun-dry and clean as a whistle. (It's widely understood by the Peru mining scene that the ore grades and throughput tonnage at the two mines are not enough to produce the quantity of gold that they do).

But it seems like there's a big development about to take place in the Huamachuco murder case that might just change everything. Tonight Peruvian investigativeTV show "El Cuarto Poder" (The Fourth Power) is going to show a video of a town hall meeting featuring the mayor of Sangorán, Santos Ruíz Guerra (the man accused of the original murder) telling the meeting that there will be no more mining concessions authorised in the San Simón sector, the decision being by popular demand.

The finger is being pointed even more directly at the Sanchez-Paredes family now, and threatens to spread the scandal into a nationwide affair. And as a bit of a gossip exclusive, your ear-to-the-ground Otto can reveal that all this comes at a time when the Sanchez family is looking to float the San Simon mine in a public offering in the USA (names can be provided, but not on blog). To be frank, I think the last thing they need right now is exposure to SarbOx rules.