Phantom cows and missing millions spark scandal in Uruguay

Yahoo

17-05-2025

STORY: An investment scheme involving hundreds of thousands of 'phantom cows' has collapsed into one of Uruguay's biggest ever financial scandals.
People have lost their life savings.
Three companies have gone bust and are being investigated for fraud.
The co-owner of one firm involved has died by suicide.
And the losses have reached some $350 million - sending shockwaves throughout the stable farming nation.
MENDEZ: 'These are common people who had their savings, who decided to trust this country and to buy cattle in a traceability system that provided them confidence in order to collaborate with the development of our country.'
:: Artigas, Uruguay
Sandra Palleiro is on the hunt for some cows.
In March of 2024, she sunk her life savings, more than $50,000, into a 'cow bond' scheme offered by a local investment firm called Conexión Ganadera.
'They staged a photograph with 60 cows and two workers, poor people. It was devastating, it was horrible, devastating.'
The idea was that the cattle would be reared and sold for profit by livestock farms.
Paillero was promised fixed 7-10% dollar returns in a program that appeared to adhere to agricultural ministry rules.
She was told she could track the cows via a state-backed online portal.
And she liked the idea of owning a tangible asset. It seemed a safe bet.
But here in this muddy field some 370 miles from Uruguay's capital Montevideo, tracking the 61 cattle she owns, at least on paper, is virtually impossible.
She's far from the only one.
Politicians, radio hosts, pensioners and priests are among some 6,000 people now attempting to recover their savings and their phantom cows, possibly up to 700,000 of them.
Livestock is at the heart of Uruguay's economy, a country home to some 3.4 million people, and 12 million cattle.
There are similar investment schemes throughout South America. Many are legitimate.
:: Montevideo, Uruguay
Martin Fablet, a local radio presenter, said he invested several times in Conexion Ganadera and other livestock schemes in the country over the past 12 years.
'They took your money to fatten an animal and if everything was carried out correctly, at the end of that period you'd have the money.'
Conexion Ganadera is one of the biggest firms now under investigation for fraud.
The first hint of the scandal at the company came in November 2024, when a Tesla Model 3 crashed at 130 miles per hour in the small city of Florida in central Uruguay.
Behind the wheel was Gustavo Basso, a co-owner of Conexion Ganadera.
A coroner concluded that he had taken his own life.
Weeks after the crash, investors started reporting late payments.
By January, the company confirmed it was short of nearly $250 million.
Investors scrambled to withdraw savings amid reports that the firms did not hold as many animals as they claimed.
Some filed suits for fraud. An investigation by Uruguay's Prosecutor's Office for Money Laundering Crimes is ongoing.
FABLET: 'I think I have the possibility of kind of recovering, but a lot of people won't be able to. There are a lot of elderly people involved, a lot of retirees. They will suffer.'
An inventory of Conexion Ganadera carried out by a bankruptcy trustee estimated that as few as 70-80 thousand cattle actually existed of the more than 800,000 the company claimed to manage.
Pablo Carrasco, the company's co-owner, denies fraud allegations.
Lawyers representing the company said they cannot comment on legal proceedings until testimony is given in court.
Now, victims want to know how authorities failed to spot the problems - despite the cattle registry.
The companies themselves were responsible for applying tags and adding information to the national database.
Three lawyers for victims said it was possible the government-issued tags were never attached to the animals because the cattle were never purchased.
Two other lawyers alleged cows owned by investors were sold off illegally, without their consent.
Pedro Mendez represents some of the victims.
'We realized that there was a difference between what was invested and what was bought. Right now, we are reviewing what was recorded in the system and what was actually real, and we know there is a difference. In the system, some of our clients had 75 animals but today they have none.'
Uruguay's national cattle registry said it would not comment on the cases.
The livestock ministry did not respond to Reuters questions about whether the registry system failed.
Back in Artigas, drone footage shows around 80 cattle - compared to what should be several hundred belonging to Palleiro and her fellow investors.
'I helped build two groups of emotional support because some people were about to commit suicide and some had psychiatric problems, or who were on medications, or who could simply not handle it anymore.'
Palleiro says she's angry at the way so many hard-working Uruguayans are being hurt.
'That money was my retirement. I'm fighting for my savings and for the retirement I earned through my effort.'