Paraguay's new president Horacio Cartes was investigated by DEA for alleged money laundering

Paraguay's new President Horacio Cartes arrives for his swearing-in ceremony at Palacio de Lopez presidential palace in Asuncion, Paraguay, Aug. 15, 2013. AP

ASUNCION, Paraguay Multimillionaire Horacio Cartes declared a war on poverty Thursday as he assumed the presidency of Paraguay, one of the most unequal nations in South America and a place where his business dealings have made him a target of U.S. criminal probes.

Wearing Paraguay's red-white-and-blue presidential sash, the tobacco magnate said he intends "to win every battle in the war we're declaring today against poverty in Paraguay."

"I'm not in politics to make a career of it or become wealthier," said Cartes, 57, who promised to strengthen Paraguay's international ties and its commitment to human rights.

Cartes, whose term runs through August 2018, built a family fortune with two dozen companies that dominate industries from banking to tobacco to soft drinks to soccer, so much so that it will be difficult to make a move as president without generating complaints of conflicts of interest.

Cartes also is a political neophyte who never voted for president before running for the office, and often faced accusations that his wealth was fed by money laundering, cigarette smuggling and drug trafficking.

Paraguayan voters overlooked these allegations, focusing on hopes that the boyish-looking businessman from the dominant Colorado Party can help the country benefit more from soy profits that are boosting the economy at 10 percent a year.

Grupo Cartes includes two dozen companies employing 3,500 people. He won April's election with 46 percent support by promising to create many more jobs.

Organizers said his most important encounter wouldn't be with fellow presidents but with 150 invited foreign executives eager to improve the infrastructure of the country of 6.2 million people, where 39 percent live in poverty.

His elected predecessor, Fernando Lugo, also promised to combat poverty, and like Lugo, Cartes is a political outsider, having joined the Colorado Party only in 2009. Otherwise, the divorced tobacco magnate is nothing like the sandal-wearing former bishop, who was impeached by congress last year.

Smuggling, corruption and tax evasion are endemic in Paraguay, and analysts believe it's difficult for executives not to come in contact with criminals at some point. The corruption watchdog group Transparency International ranks Paraguay 150th worst out of 176 countries. The U.S. Congressional Research Service reported in 2010 that "corruption is a major impediment to consolidating democratic institutions" in Paraguay.

Accusations involving Cartes became widely reported after WikiLeaks published a 2010 U.S. State Department cable that labeled him the head of a drug trafficking and money laundering operation.

He denied this in his only news conference with foreign media during the campaign.

"I wouldn't want to be president if I had ties to drug traffickers," he said. "Go to the courts and check. There's nothing, not a single charge against me. For years I've been a public figure in football, but as soon as I get into politics these kinds of stories pop up, circulated by bad people."

Cartes and his top executives aren't listed by the U.S. Treasury's Office of Foreign Assets Control as people whose assets should be blocked. U.S. citizens are not prohibited from dealing with them.

Cartes did spend 60 days in jail in 1986 during a currency fraud investigation, after allegedly making millions of dollars on a central bank loan obtained at a preferential exchange rate and then moved through his money exchange business before buying farm equipment in the U.S. That case was eventually dropped.

The region's well-documented trade in contraband cigarettes, smuggled over borders and resold without paying taxes, also made his tobacco companies a target of congressional and criminal investigations in Brazil, and in Argentina nearly half the cigarettes seized by tax agents come from his companies, the weekly Perfil reported. Cartes said any smuggling is done by others, and dismissed the issue as "a customs problem."

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