(Adds detail from company spokesman)
By Julia Love
MEXICO CITY, July 17 (Reuters) - Mexican billionaire Carlos Slim's America Movil said on Monday it was auditing its Guatemalan unit after an investigation in the country raised questions about payments made by a former executive at the telecoms company.
Guatemalan police on Friday arrested 17 people on suspicion of involvement in a corruption racket allegedly directed by the country's former communications minister, Alejandro Sinibaldi, who has been on the run since June 2016.
During the probe by a United Nations-backed anti-corruption body in Guatemala known as the CICIG, investigators found evidence of payments from Telecomunicaciones de Guatemala S.A. (Telgua), a subsidiary of America Movil, in Sinibaldi's account.
A spokesman for America Movil said the company was auditing Telgua to discover why the payments were made.
"Guatemalan law permits these contributions," the spokesman said over the phone. "What we are trying to find out is why these contributions were made without observing the norms and requirements that Guatemalan law establishes."
Interviews with a former Telgua executive revealed that the payments were intended to secure the company favorable treatment in a dispute with Tigo, a local rival, CICIG said.
The former Telgua executive took responsibility for the payments, and the company did not benefit from them, the America Movil spokesman said. "The commercial dispute between Telgua and Tigo was resolved through a private agreement ... without any intervention from the Guatemalan government."
A spokeswoman for Tigo did not immediately respond to a request for comment.
Sinibaldi served under former President Otto Perez, who fell from power in 2015 following a CICIG-led investigation into his alleged involvement in a lucrative corruption racket.
Sinibaldi created a series of shell companies to launder money he collected in bribes to authorized state building companies, and some of that money also was intended to finance Perez Molina's right-wing Patriot Party, the CICIG said. (Reporting by Julia Love; Editing by Richard Chang and Jonathan Oatis)