(Bloomberg) -- The US put further pressure on Paraguay’s ruling Colorado Party ahead of general elections by slapping financial sanctions on current Vice President Hugo Velazquez and party leader and former President Horacio Cartes for alleged corruption

“Today’s action impede Mr. Cartes and Mr. Velazquez from engaging in business with US companies or accessing US banks. These two people now are blocked from using the US financial system,” US Ambassador Marc Ostfield said in a televised press conference in Asuncion.

The sanctions, which come months after the Biden administration banned both politicians from entering the US, also apply to four Cartes-owned businesses: Tabacos USA, Bebidas USA, Dominicana Acquisition and meatpacker Frigorifico Chajha.

Ostfield also alleged both Velazquez and Cartes of having ties to Hezbollah, saying their representatives received bribes at private events organized by the terrorist organization.

Speaking in a telephone interview with ABC TV, Velazquez denied ties with Hezbollah and said he won’t resign from office based on “false” accusations.

Cartes attorney Pedro Ovelar said the “unilateral” decisions by the US violates his client’s constitutional rights and amount to political persecution. Cartes has hired a US law firm to help prove his innocence, he said.  

“We consider the accusations to be unjust and devoid of substance and evidence,” Ovelar said in a televised press conference. 

The sanctions are already starting to affect the ex-president’s sprawling business empire that includes tobacco, banking and meatpacking investments. Chile’s CCU said Thursday that it will seek to end its partnership with Cartes in bottler Bebidas del Paraguay. 

Cartes businesses will continue to operate normally in Paraguay, Ovelar said. 

King Pin 

Earlier this month, Cartes, one of Paraguay’s wealthiest businessmen who served as president from 2013 to 2018, took office as Colorado Party chairman. 

US-Blacklisted Leader Tightens Grip on Paraguay Ruling Party

The Colorado Party has governed the landlocked South American nation almost continuously since the end of the dictatorship of Alfredo Stroessner in 1989 with the exception of the 2008 elections when it lost to an alliance of conservatives and leftists led by former priest Fernando Lugo.

After winning December’s primary vote, Cartes-backed candidate Santiago Pena will face off against Efrain Alegre of the Concertacion coalition in the April 30 presidential elections.

“We will closely work with the person that the Paraguayan people elect to be their next president whoever that person is,” Ostfield said.

(Updates with Cartes attorney comments, financial fallout in sixth-ninth paragraphs)

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