U.S. slaps sanctions on Paraguay's VP and former president, citing corruption

© Reuters. FILE PHOTO: Horacio Cartes, former president of Paraguay and pre-candidate for the presidency of the National Republican Association (ANR), talks with the media after votin in his party's primary election at a poll station in Asuncion, Paraguay, December

By Kylie Madry and Brendan O'Boyle

(Reuters) -The U.S. Treasury on Thursday imposed sanctions on Paraguay's former President Horacio Cartes and current Vice President Hugo Velazquez, citing "rampant corruption that undermines democratic institutions."

The Treasury's Office of Foreign Assets Control also blacklisted four entities owned or controlled by Cartes.

It accused Cartes of participating in corrupt activities before, during and after his term as president, alleging the basis of his career depended on "corrupt means for success," while it accused Velazquez of interfering with legal processes to "protect himself and criminal associates" from investigation.

Cartes previously denied wrongdoing in July, when the United States first made the accusations. He, Velazquez, and a spokesperson for their political party, the ruling Colorado Party, did not immediately respond to requests for comment on Thursday. On local radio, Velazquez called the accusations false.

The sanctions crank up pressure on the conservative Colorado party just three months before presidential elections, scheduled for April. Colorado candidate Santiago Pena is up against Efrain Alegre, a rival representing a center-left coalition.

The election is expected to be close, with issues at stake including Paraguay's recognition of Taiwan. Alegre is in favor of cutting ties in order to boost exports to China.

The Treasury on Thursday said Cartes joined the Colorado Party in 2009, providing financial aid and incentives to push members to eliminate a requirement that would have blocked him from running as the party's presidential candidate.

He also paid party members up to $10,000 each to support his candidacy ahead of the 2013 election, the Treasury said.

As president, Cartes made monthly cash payments to legislators of as much as $50,000 in exchange for their backing, the Treasury alleged.

In 2017, Cartes pledged $1 million to buy legislators' votes in an unsuccessful bid to pass a constitutional reform that would have allowed him to run for a second term, the Treasury said.

After leaving office, Cartes continued to bribe legislators, according to the Treasury.

The Treasury said both Cartes and Velazquez have ties to members of Lebanese armed group Hezbollah, branded a terrorist organization by Washington. It said Hezbollah has "regularly" held events to exchange favors and bribes in Paraguay, which has a large Lebanese community.

Velazquez told local radio that the allegations of ties to Hezbollah were an "invention."

The sanctions mean all property and interests in property of Cartes and Velazquez in the United States are blocked, the Treasury said.