MercoPress. South Atlantic News Agency

Financial scandal in Uruguay: Conexión Ganadera and the model that ended up as a Ponzi scheme

Founded in 1999, Conexión Ganadera grew after the 2002 crisis, offering livestock investments as an alternative to traditional banking.

The collapse of Conexión Ganadera, one of Uruguay's leading cattle investment firms, has left hundreds of savers in suspense after it was revealed that its financial model operated as a Ponzi scheme. This was stated by accountant Ricardo Giovio, hired by the company to evaluate its situation.

“The way out to recover 100% of what was invested is not going to be,” warned Giovio in a streaming directed to investors. He explained that the company was paying a fixed income in a variable income sector, which ended up in an unsustainable structure. “All scams end the way all scams end,” he summarized.

The economic difficulties of the livestock sector in 2020 and 2023, added to the crisis of similar companies such as Grupo Larrarte and República Ganadera, accelerated the fall. According to Giovio, the company faces a deficit of up to US$230 million and lacks reliable documentation on its financial status.

Founded in 1999, Conexión Ganadera grew after the 2002 crisis, offering livestock investments as an alternative to traditional banking. Its model allowed small producers to access financing, while investors received fixed returns. Over time, the company became a leader in the sector, with returns at its peak reaching 11%.

However, experts warned that these rates were unsustainable. In November, the collapse of other similar firms accelerated their collapse, exposing solvency problems that compromised thousands of savers.

The year 2022 was the last year in which Conexión Ganadera submitted its financial statements to the National Internal Audit Office, Leonardo Costa, a lawyer specialized in financial law, told El País, who represents around 300 savers. One reason for not filing may be that revenues have fallen below US$ 3,800,000 per year.

At the same time, it is not an activity regulated by the Central Bank. Pablo Carrasco, a partner of the company, stated that discussions are underway to hire a company to do an audit. Accountant Giovio described the company as “inauditable”.

The accountant urged declaring the company's judicial insolvency to protect its assets and suggested a private agreement among the savers as the best option to recover the investment within seven or eight years. “If there is a private agreement, the possibilities of a criminal trial disappear,” he explained.

In the meantime, several complaints for swindling have been filed with the courts. Lawyer Ignacio Durán, representing more than 100 investors, requested the seizure of assets and the prohibition to leave the country for Pablo Carrasco, the only active partner after Gustavo Basso's death last November.

The case is still developing, with investors, lawyers and authorities looking for a way out of a crisis that shook the country's livestock and financial sector.