THE BLOG
09/25/2014 10:01 am ET Updated Nov 25, 2014

Was North Carolina Used as an Ecuadorean Money-Laundering Hub?

What happens when an Argentine businessman and Ecuador's central bank chief bank select Newton, population 13,000, just outside Hickory, North Carolina, for their financial transactions?

Certainly not business as usual. And why is that?

The story begins in December 2011 when Argentine businessman Gaston Duzac touched down in Ecuador to collect a highly irregular $800,000 loan from a local state-owned bank called Cofiec. The stated intent of this credit line was to create a so-called "mobile payment" system.

At the time, an Ecuador public trust called Fideicomiso AGD managed hundreds of firms seized by the Ecuadorean government, including the Cofiec Bank. This public trust was presided by Pedro Delgado, who was also Ecuador's central bank chief and cousin to President Rafael Correa.

The existence of the irregular credit came to light in Ecuador by mid-2012, spurring a swirl of controversy in Quito.

Not least of which was the controversial discovery that Iran made suspicious cash deposits in the Cofiec Bank, at a time when the West heavily sanctioned the Islamic Republic. Moreover, several internal memorandums were uncovered by Ecuador's press that indicated an intent to sell Cofiec to a major Iranian banking establishment. These developments, led many to speculate that Ecuador had become a hub for Iran to launder its sanctioned funds and evade international scrutiny.

Delgado, Duzac and Cofiec were featured on the front pages of daily Ecuadorean newspapers for months. Yet, this exposure did not stop the schemes, but rather motivated President Correa to further dictatorial-like powers over the media and judiciary in order to protect his cousin and associates.

The added exposure did, however, reveal another minor detail -- that Pedro Delgado falsified his degree in economics year's prior. It was this revelation that forced Delgado to resign as president of the Central Bank on December 20, 2012. That same day, Delgado packed his bags and grabbed his diplomatic passport, which the government had mysteriously decided not to cancel, and traveled to Miami to attend his son's wedding. Delgado's hasty exit was permitted with the promise of his return to Ecuador to surrender to the authorities for ongoing investigations into the Cofiec case.

Two years later, Delgado never returned to Ecuador and is still in Miami, while Duzac is back in Argentina and the so-called "mobile payment system" was never established. Most importantly, the aforementioned $800k loan is missing and unaccounted for.

Why does Correa continue to protect Cofiec?

Because any serious legal inquiry would trail the money from the Cofiec bank back to the government, and perhaps even back to Iran? By following the money trail, the Ecuadorian judiciary would realize that the $800k granted to Duzac was transferred through two wires from Cofiec on December 27, 2011. The first used an intermediary in New York to land in a Swiss bank account, a common destination for laundered funds. The other landed in the People's Bank in Newton, North Carolina, under the auspices of a business account belonging to a company called "Serfinsa." Serfinsa is one of the many companies seized by the Ecuadorean public trust Fideicomiso AGD back in 2008.

Who would of thought that the long arm of Correa's corruption would reach the outskirts of Hickory, North Carolina. Perhaps this is why on October 30, 2012, in the midst of the Cofiec corruption scandal, President Correa took a mysterious trip to Kannapolis, North Carolina, a little over an hour from Hickory.

In the next few days an Ecuadorian Supreme Court Judge will decide if he calls to trial. While no one expects the real perpetrators of this crime will be condemned, some new declarations have already shed additional light to this ongoing saga. For instance, Pedro Delgado's brother-in-law, Francisco Endara Clavijo, the only Ecuadorean imprisoned due to the Cofiec corruption, recently suggested that the missing $800k was used to buy his brother-in-law's home in North Miami Beach.

While corruption within Fideicomiso AGD continues to reign in Ecuador, the Delgado/Duzac/Cofiec case remains a mystery, as the culprits enjoy $800k cash along with other unknown stolen sums of which will soon be made public. It is time for local, state and federal U.S. authorities to connect the dots on Ecuador's corruption schemes that has spilled over into American jurisdiction.

Ezequiel Vázquez-Ger is a political analyst and director of the Center for Investigative Journalism in the Americas (CIJA) based in Washington, DC.