Ecuadorean presidential candidate Guillermo Lasso personally profited from the worst economic crisis in the country — which he also helped create — raking in millions of dollars by profiteering on financial collapse and camouflaged the new wealth in offshore companies in tax havens, according to an investigation by Argentina’s Pagina 12.

According to the investigation, Andean Investments Ltd., a company created by Lasso and located in the Cayman Islands, went from having US$1 million in 1999, the year of the banking crisis, to having US$31 million in 2000 as a result of speculation on government bonds.The jump in Lasso’s offshore assets in the immediate aftermath of the financial collapse show that the right-wing politician pocketed a fortune at the expense of millions of Ecuadoreans who lost all their savings, had to leave the country to find work, fell sick or even committed suicide, as audits on the 1999 banking crisis show.

“A beneficiary of that usury (lending at unreasonably high interest rates), Lasso was an internal vulture against the same Ecuadoreans to whom now he is asking for their vote,” wrote Cynthia Garcia for Pagina 12.

Lasso was one of the bankers that co-signed a law in 1998 that made the Ecuadorean state responsible for private bank debt, which in turn led to the 1999 banking crisis, called the “Bank Holiday” in Ecuador. On March 8, 1999, Ecuadorean banks shut down, and what was intended to be a 24-hour freeze lasted for five days, sending Ecuadoreans into a frenzy as they were unable to access their savings.

The only option to retrieve money was through deposit certificate given by the banks that proved the person had a specific amount of money but couldn’t take it out of the bank. Bankers speculated on the economic crisis and bought up these certificates at 40 to 50 percent of the real value.

Then, the government — prioritizing keeping private financial institutions afloat over protecting the savings of Ecuadoreans — later bought back the certificates at 100 percent of their value to bail out the banks. Lasso’s bank, Banco de Guayaquil was one of the major holders of debt bonds.

According to Pagina 12’s investigation, the Cayman Islands-based offshore Andean Investment, in which Lasso holds 58 percent of the shares, owns Corporacion Multi BG, which in turn owns Banco de Guayaquil, where Lasso is the majority shareholder, detailing a complex network that helped hide his increased wealth after the financial crisis.

According to the investigation, Banco de Guayaquil has US$4 billion in capital, which was gained due to Lasso’s connection to at least 49 companies in offshore tax havens.

Some of these companies were created as early as 1978, and the scandal has prompted Ecuador’s left wing to label Lasso one of the country’s biggest tax evaders.

Lasso, governor of Guayas and vice president of the Association of Banks at the time of the Bank Holiday, became Mahuad’s super minister of finance later the same year.

After the initial Bank Holiday, the government of then-President Jamil Mahuad announced a year-long freeze on deposits to checking accounts with more US$500 or more than 2 million Ecuadorean sucres and to savings accounts with more than 5 million. The plan was supposed to help rescue the banks, but ultimately 16 banks shut down in relation to the crisis.

Ahead of the crisis in January 1999, the sucre’s value was at 7,000 to the U.S. dollar. But by the beginning of 2000, it had skyrocketed to nearly 30,000 to the U.S. dollar, pushing the government to dollarize Ecuador’s economy in January 2000 to “avoid hyperinflation.” Inflation had already hit 60 percent and losses as a result of the crisis amounted to US$8.6 billion.

In addition pushing the country to abandon its currency, the major crisis spiked unemployment to over 14 percent while millions were plunged into poverty and another 2 million Ecuadoreans were driven to leave the country.

IMAGE: Guillermo Lasso was the president of one of the biggest banks and had a hand in the policies that led to the 1999 crisis in Ecuador. | Photo: Reuters

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