Morales's silver bullet

Carlos Luis Morales Benítez was born on June 12, 1965. He was goalkeeper for Barcelona and for the national team at the 1990 World Cup in Italy, then a sports presenter on television and then a politician: he went through the Roldosista party, through Jimmy Jairalá's Centro Democrático and through the alliance with the Social Christian Party (PSC) that took him to the Guayas provincial government in May 2019. In his first interview with La Posta as prefect-elect he promised that the people of Guayas would know where every last cent went and that he would never allow anyone to call him a thief. The pandemic found him there. Between March and May 2020 his provincial government signed some fifteen emergency contracts worth more than five million dollars. Two became notorious: 70,000 N95 masks at 6.71 dollars each, when they cost three or less on the market and there were public purchases at 2.40, and 5,000 rapid covid tests at 23.16 dollars, when the Guayaquil city government had bought them at 11.

The Attorney General's Office had raided the provincial government on May 27, at the public procurement and finance offices, over alleged embezzlement. La Posta began on May 28, 2020, with the overpricing allegations: it interviewed the prefect and, separately, Alejandro Vanelli, of SaludMed, the company behind the Quito city government's PCR tests, the other scandal of the day. On May 31 it published a five-minute report, The threads of Morales's circle, on another contract: 90,000 dollars for a statistical covid projection awarded to Zerasamiz S.A. Its president, Hermelindo Velásquez Castro, lives in Chongón, a working-class area on the outskirts of Guayaquil, and told the camera that he knows nothing about companies: one day officials from the provincial government asked him to lend his signature.

The threads led to the family. The phone number Velásquez used to sign was the same as that of Cicerocorp, another provincial government contractor that he also chairs. Cicerocorp's books are kept by Miguel Ángel Calderón, the same accountant as Talleres Multimarcas Autostar, the company of Xavier Vélez Velásquez and his son Xavier Vélez Arcos, father and brother of Andrés Vélez Arcos, the prefect's stepson. Zerasamiz's shareholders include Mario Mantilla Cuello, owner of Global Company, whose accountant shares a registered phone number with Recreate y Comunicaciones, the company of Sandra Arcos, Morales's wife. Primicias described them as six shell companies with managers, shareholders, accountants and even the same phone number in common.

On June 1, the PSC turned its back on him: Jaime Nebot and Cynthia Viteri called for him to be investigated, and the party's assembly members signed a statement laying out three options: hand over those responsible, turn himself in or resign. On June 2, Morales publicly accused his wife's sons over the irregularities in the contract awards and said he would act no matter who fell; that day Vicente Taiano announced on Café La Posta that the party would seek his removal in the Provincial Council. In the early hours of June 3, an Attorney General's Office task force with 45 prosecutors carried out simultaneous raids and arrests in Quito and Guayaquil over pandemic corruption: in Guayaquil it arrested Abdalá Bucaram at his home in Kennedy Norte, over the Social Security hospitals, and raided the prefect's house on the road to Samborondón over alleged influence peddling and embezzlement in the purchase of supplies, tests and masks. That morning the police were looking for him; hours later he was arrested. His stepsons' whereabouts were unknown and his wife ended up a fugitive. On June 4, Morales was charged with influence peddling under Article 285 of the criminal code, which carries three to five years.

Morales defended himself on La Posta on May 28: there is no corruption here, he said; he bought in a collapsed market when six hundred people a day were dying in Guayas and he had 430 workers to protect; his was the cheapest offer among those that qualified, he said, and he removed Verónica Loaiza, director of Community Development, who signed the contract. The Guayas provincial government's annual budget was around 300 million dollars, 168 million of it committed to debts with contractors.

That June 4, La Posta published the silver bullet. The investigation had zeroed in on a contract between Morales and Bigmart, a company whose owner, Pedro Morán, was Sandra Arcos's accountant. Pulling on that thread, it turned out that Morán was also a former manager and former partner of Andrés Vélez Arcos, the stepson, in Cynthialand, an advisory and consulting firm now owned by Andrés and Xavier Vélez Arcos, with few clients: almost all of them provincial government contractors. The scheme, according to La Posta: the provincial government hires Renauta, Bigmart or Cynthialand for sports exhibitions, uniforms or field management; the companies linked to the stepsons get paid, fake a consulting job with Cynthialand to justify the payment, and Cynthialand transfers 75 percent to companies declared ghost companies by the Internal Revenue Service (SRI), which are used to withdraw the money in cash. La Posta said it clearly: it had not proven the prefect's direct involvement in the scheme, though it was hard to doubt that he knew.

And it did not start in 2019. La Posta traced those companies' public contracts: thirteen with the provincial government worth 1,783,000 dollars, concentrated between 2014 and 2016 and, in those years, all in the sports area; at least twelve were signed under the administration of Jimmy Jairalá, then Morales's ally in Centro Democrático. In those years Morales was an adviser to the provincial government, on the payroll of the Sports directorate, the office that signed them. In 2017, when he became a Guayaquil city councilor, the contracts with the provincial government stopped and city contracts worth just over 250,000 dollars appeared in 2017 and 2018. When he returned to the provincial government, the contractors returned too: shortly before the emergency, 150,000 dollars in the name of Pedro Morán. And like every white-collar story, it ended in Panama: an offshore company created in 2017 in the names of Andrés and Xavier Vélez Arcos and Sandra Arcos, which did not appear in the sworn declaration the law requires, the same law that prohibits officeholders from having ties to tax havens.

Morales was released under alternative measures with an electronic ankle monitor. On June 5 the PSC gathered its mayors with Cynthia Viteri and announced it would seek his removal: it needed 22 votes on the Provincial Council, had 15, and the process could take 30 to 40 days. On June 8 Jimmy Jairalá discussed the case on Café La Posta: no alarm went off during his administration, he said, because the companies were qualified, there were records and audits by Carlos Pólit's Comptroller General's Office, and the Guayaquil city government signed three more contracts with the same companies. On June 22, 2020, at age 55, Carlos Luis Morales died in Samborondón. According to La Posta, he suffered a massive heart attack and the autopsy found serious preexisting conditions; Primicias reported pneumonia associated with the coronavirus. The Attorney General's Office opened an investigation into his death. The Comptroller General's Office had established the alleged overpricing of the purchases in its report. He was the prefect of the province hardest hit by the pandemic, and he died eighteen days after the criminal investigation against him was opened. His removal never happened.

On August 20, 2020, La Posta showed a manila envelope sent by a lawyer named Alejandro Vélez, most likely Javier Alejandro Vélez Arcos, the stepson, and found in the false bottom of a drawer. Inside were documents that reached the prefect in the days when he was fighting to hold on to his post. La Posta called it Morales's crooked testament: a coded letter, two "king's funds," an internal one with the "queen" and an external one; 5,000 a month for "princes and princesses"; the operating expenses that "Bigote" (Mustache), meaning Nebot, would generate in the "regional war," meaning the removal effort. And two tables: a yellow one for 1.3 million and a red one for 2.6 million, with the kickback by type of contract: 5 to 10 percent on roads and paving, 10 to 15 on studies and oversight, 15 to 25 on consulting and training; suppliers who were asked for 7 or 8 percent; a list of 85 people to be hired with salaries of more than a thousand dollars. Morales had not declared any foreign accounts, but the envelope spoke of funds abroad. La Posta publicly offered the originals to the Attorney General's Office. By then the case continued against his circle: his wife a fugitive and his stepsons seeking bail, in proceedings that had gone dormant once the politician was dead. That show also featured the new prefect, Susana González: everything is more rotten than we imagined, she said; she let go of 200 people, found 99 million in debts owed by the state to the provincial government and called for audits of the two road concessions, extended to 2026 and 2029, which were taking 7 million a month.

Without Morales, the case fizzled out. On November 9, 2020, at the preliminary hearing, the prosecutor declined to charge Sandra Arcos and one of her sons; they were dismissed and acquitted in December. Five people were left out of the proceedings. On January 12, 2021, a judge sent five people to trial for influence peddling: Cecilia Honce, former director of Community Development; Nelson González, the provincial government's finance director; and contractors José Luis Vásconez, Ana Guacho and Mary Mendoza. Guacho had received more than 1.3 million for fumigation equipment and quaternary ammonium; Mendoza, 143,000 for protective equipment.

The trial opened on September 1, 2022, and lasted eighteen days. On September 20, 2022, judges Byron Andrade, Henry Morán and Richart Gaibor acquitted Honce, González, Guacho and Mendoza. Vásconez, the fifth, is a fugitive and could not be tried. A higher court upheld the four's acquittal. No one was convicted over the masks, the tests or the family's contracts. The six shell companies are still on the registry.

The story had an unexpected sequel. In January 2026, alias Marino, a leader of Los Lagartos, was killed in Isla Mocolí. His partner was Micaela Morales, the former prefect's daughter, and the soccer field had been booked by Andrés Vélez, the stepson from the silver bullet. That investigation is in the case file The narco-elite's accounts.