Since the days of the Spanish conquests, the children of the Andes have been terrified by tales of strangers who kill South American Indians on lonely roads, sucking out their fat to make lotions and potions for sale in the West.

Now the figure of the "Pishtaco" has jumped from myth into reality, after Peruvian police revealed the arrests of a gang who have been killing for human fat, allegedly for sale to the European cosmetics industry.

Police in Lima, the capital, said that three suspects had confessed to killing five people, luring their victims into the Peruvian jungle with promises of work before cutting off their heads and limbs to collect fat. But the gang may have been engaged in the gruesome practice for decades, police suspect. At least 60 people, mostly farmers and indigenous Peruvians, have gone missing in the area this year alone.

At least six other suspects remain at large, including the gang’s alleged leader, Hilario Cudeña, 56. One of those arrested, Elmer Segundo Castillejos, said that Cudeña had been murdering for fat for more than 30 years. The lead prosecutor, Jorge Sans Quiroz, said that two Italian citizens were suspected of conspiring to sell the fat "to be commercialised in European laboratories", although no sales have yet been confirmed.

Two of the suspects were arrested in Lima carrying a bottle of liquid human fat, which they told police was worth $15,000 a liter, said Colonel Jorge Mejía, the head of Peru’s anti-kidnapping police. One had claimed that their gang was not the only one in the trade, he said.

Police showed reporters in Lima two bottles of amber fluid and the picture of a rotting head of a 27-year-old male victim. Castillejos, 29, had led officers to the head, dumped in a coca-growing valley in the Huánuco region, after his arrest last month, Mejía said.

Castillejos told police how the gang had removed the victims’ heads, arms, legs and organs before suspending the torsos and warming them, causing fat to drip into tubs.

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