Illegal Liquor Big Business in Honduras

The illegal production of liquor and spirits has become a lucrative business for a small group of entrepreneurs who have extended their activities to several cities in Honduras.

More than a hundred brands appear on store shelves despite being processed in clandestine factories that do not appear in the records of the Ministry of Finance (MOF) and the Executive Directorate of Revenue (DEI) – the entities responsible for monitoring the alcohol industry. Many of these alcoholic beverages are processed alcohol for industrial use, which is then mixed with water and glycerin before being packaged into bottles of one liter and less. The national production of liqueurs and spirits is 14 million liters per year, according to records of the Central Bank of Honduras (BCH), but an estimated 5.5 million liters are produced by illegal distilleries.

This accusation was published by El Heraldo newspaper in February, and so far, the DEI is the only public institution which has begun an official investigation into the matter.

The DEI search has intensified in recent months, to find the whereabouts of these dozens of illegal distilleries operating in the country. Samma Doblado, head of the Fraud Unit of the DEI, said the official investigations in the northwest resulted in the dismantling of Reedy Industries Corporation in El Progreso, Yoro, which was running an illegal operation. The company was raided, and authorities seized more than 35,000 liters of drinking alcohol and machinery for packaging the product. Among the equipment seized, they found a machine to produce plastic bottles and another for labeling.

Reedy Industries Corporation has public papers for the company dedicated to the production of alcoholic beverages, mineral water and other beverages, as well as bottling; however, the anti-fraud unit detected they did not have proper authorization from the Sefin and DEI. The company started operations on February 18, 2009. The owners are listed as Yeddula Prasada Reedy and Chavva Roja Reedy, both from India, and owners of 98% of the shares. The remaining 2% of the shares are owned by Rommel Jesher Vásquez Durán, the legal representative.

Roja Reedy and Vásquez Durán were captured at the time of the raid, and their cases are pending in the courts in Progreso. Since August of last year, they began importing from India and Brazil, equipment and machinery, as well as other raw materials for the production of drinking alcohol.

The brands marketed were Soccer, Diez and Old Pirate, with the main markets being the departments of Comayagua, La Paz, Cortes, Santa Barbara and Olancho. The illegal business had a team capable of supplying 20% of the national consumption of alcoholic beverages. Other findings in the raid: Reedy Industries Corporation had no books, no fiscal officer, was not authorized by the Ministry of Finance, nor recorded in the DEI. The company did not comply with the payment of 15% Sales Tax.

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