The Venezuelan link to El Salvador’s pandemic food aid fraud
In the chaotic first week of the Covid pandemic, El Salvador paid an offshore company US$27 million to provide milk powder for its hungry citizens –– but the shell firm overcharged and under-delivered, pocketing $7 million, a government audit found.
The 2021 audit –– which probed the entire food distribution program, involving several firms and products –– revealed little about the company tapped to deliver milk powder.
Now, reporting by OCCRP and the Salvadorian investigative journalism outlet El Faro has shed light on the opaque company.
Aroum Group Inc is registered in the British Virgin Islands, where regulations provide corporate anonymity. But the company’s website reveals the identity of one person involved with the firm.
The man who set up Aroum Group’s website was a Venezuelan named Wiomar Castillo, who described himself on LinkedIn as the firm’s “international trade manager.”
Castillo’s role, if any, in securing the contract for Aroum Group is unclear. He is from the same Venezuelan city as Tomás Hernández, an advisor to El Salvador’s president, but it is not known if they are personally acquainted.
However, Hernández and Castillo’s daughter have been interacting on social media for more than a decade. In a photo she posted to her charity’s Instagram account, for example, Hernández wears a T-shirt with the organization’s logo, while he has posted messages on both her personal and philanthropic accounts.
Hernández is reportedly part of a clique of Venezuelans close to El Salvador’s authoritarian president, Nayib Bukele. One of Hernández’ jobs was to oversee the pandemic food emergency response, and he would have likely played a key role in handing the lucrative powdered milk contract to Aroum Group.
Neither Castillo nor Hernández responded to requests for comment.
Ross Delston, an American lawyer and anti-money laundering expert, said the powdered milk deal violated basic principles of due diligence, which should be carried out as a measure against corruption.
“Due diligence is an alien term when it comes to state contracts that are given to people who are known by and close to senior government officials,” he said.
The fact that El Salvador contracted a company registered in the BVI also raises suspicions, Delston added.
“It would be difficult to imagine how the government could reasonably understand who they were doing business with,” he said.
The president’s office did not respond to an emailed request for comment, and did not answer a phone call.
Although it was registered in the BVI, Aroum Group’s customs declarations listed its address at a business tower in Panama City. Edevisa, the law firm that shares the address, told El Faro the company has never been a client of theirs.
Overseas Management Company Trust, another law firm that handled Aroum Group’s corporate registration, declined to comment, citing internal confidentiality policies.
The nationalities of Castillo and Hernández were not the only links reporters found between El Salvador and Venezuela, where a similar scheme saw state funds stolen via overvalued contracts for food, prompting U.S. sanctions in 2019.
Mexican financial authorities investigated a company called Ilas Mexico S.A. de C.V. in connection to the Venezuela scheme, although the outcome of the probe was never made public. That same Mexican company supplied Aroum Group with the milk powder for El Salvador.
Despite Mexico and El Salvador being closer geographically and sharing land transport routes, Aroum Group sent its shipment through Panama, where it had set up a bank account to receive the government paycheck.
When El Salvador’s government audited the purchase, it found that Aroum Group had over valued the $27-million-contract by $5.3 million. In addition to pocketing that money, Aroum Group appears to have made another $1.7 million by failing to deliver the entire amount of milk powder it had promised.
Castillo has since erased the LinkedIn profile where he publicized his role at Aroum Group, while the company has changed its name on paper to SM Intertrade Inc.
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