LIMA, Peru (AP) — The United States issued sanctions against Paraguay’s former President Horacio Cartes Jara and current Vice President Hugo Velázquez Moreno on Thursday, unveiling explosive accusations that they participated in widespread schemes of corruption and have ties to members of a terrorist organization.

Cartes and Velázquez have been involved “in systemic corruption that has undermined democratic institutions in Paraguay” and have ties to members of Hezbollah, which the United States designates as a terrorist organization, the Treasury Department said.

As a result, “these two people are now blocked from using the United States financial system,” Marc Ostfield, US ambassador in Paraguay, said at a news conference.

Both Cartes and Velázquez were included on a US corruption list last year, but now the accusations against them have been expanded. Treasury also issued sanctions against four companies owned or controlled by Cartes: Tabacos USA, Bebidas USA, Dominicana Acquisition and Frigorifico Chajha.

Velázquez said he was “surprised” by the allegations against him and “categorically” rejected the claims, adding that he was unaware of the details and has asked the United States for more information.

“I absolutely don’t have ties to Hezbollah … or any other terrorist group,” the vice president told a local radio station Thursday. He added that he had no plans to resign.

“I was elected by the Paraguayan people,” he said.

Cartes, who was president in 2013-2018, “did not immediately comment, but he rejected U.S. claims of corruption last year. “I deny and reject the content of the allegations,” Cartes wrote on Twitter in July 2022, and said he was “committed to offering all the support and primary-source information that the authorities need to clarify” anything.

The United States has long said the porous tri-border region that connects Argentina, Brazil and Paraguay is a hub for terrorism financing through money laundering of illicit activity. The U.S. has identified what it has described as members of the Hezbollah group who use front companies in the region to finance terror activities in the Middle East.

The State Department has said that corruption in Paraguay often prevents convictions in money-laundering and terrorism financing cases.

Cartes, described by the U.S. as “one of the wealthiest individuals in Paraguay,” has “engaged in a concerted pattern of corruption, including widespread bribery of government officials and legislators,” the State Department said Thursday.

The sanctions rocked Paraguay’s political world, with opposition lawmakers demanding the launch of investigations into Cartes, Velázquez and all lawmakers who may have received bribes.

In his quest to become president, Cartes repeatedly doled out cash to officials, a pattern that continued during his presidency and after he stepped down, according to U.S. officials.

They say that inititially, after Cartes joined the Colorado Party in 2009, he bribed officials to persuade them to eliminate the party’s requirement that someone had to be affiliated for 10 years before running as its presidential nominee. He then proceeded to pay some members of the party as much as $10,000 to support his candidacy, Treasury said.

While president, Cartes made monthly payments of anywhere from $5,000 to $50,000 to a group of “loyal legislators” in order to make sure he kept control over Congress, the U.S. said. Those payments continued after he left office to make sure lawmakers voted in his interest, Treasury said.

Overall, the former president, who still leads the Colorado Party, has “leveraged his illicitly acquired wealth and influence to expand his political and economic power over Paraguayan institutions,” the State Depatment said.

The accusations against Velázquez were less detailed, with Treasury saying only that the vice president “has also engaged in corrupt practices to interfere with legal processes and protect himself and criminal associates from criminal investigations,” including by bribing and threatening officials to make sure his illicit activity wasn’t exposed.

The United States also alleges that “representatives of both Cartes and Velázquez have collected bribes” at private events held by Hezbollah in Paraguay.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.