GOOD TALKERS, BUT MADURO ADMINISTRATION NOT

S E C R E T SECTION 01 OF 05 TEGUCIGALPA 002844 SIPDIS STATE FOR WHA, WHA/CEN, AND WHA/PPC STATE FOR INL, INL/LP, INR/B, AND INR/AN/IAA, STATE PASS AID FOR LAC/CEN AND DCHA/DG/ROL E.O. 12958: DECL: 12/04/2013 TAGS: PGOV KJUS KCRM ECON EFIN PHUM PINR HO SUBJECT: GOOD TALKERS, BUT MADURO ADMINISTRATION NOT SERIOUSLY COMMITTED TO FIGHTING CORRUPTION REF: A. USDAO TEGUCIGALPA IIR 68410026 03 ¶B. TEGUCIGALPA 1615 ¶C. TEGUCIGALPA 2514 ¶D. STATE 312936 ¶E. STATE 319281 (ALL NOTAL) Classified By: Ambassador Larry L. Palmer; reasons 1.5(B) and (D). ¶1. (S) SUMMARY: In office for almost two years, President Ricardo Maduro's administration talks a lot about fighting corruption, particularly when addressing interested U.S. audiences. Upon close examination, however, one sees little demonstrable progress in breaking corruption's pervasive grip on almost all aspects of daily life in Honduras. Moreover, there appears to be very little genuine interest in addressing corruption's root causes or the venality of many Government of Honduras (GOH) officials. Honduras ranked 106 out of 133 countries in a recent survey by Transparency International, an NGO that tracks international corruption issues. Only Ecuador, Haiti, and Paraguay scored lower in the Western Hemisphere. Maduro's inability to effectively attack corruption has fueled anti-government sentiment among a general population disillusioned with the president's lackluster leadership and undelivered reform program. Discontent with Maduro and his administration continues to grow, providing fodder for protesters and many others yearning for a leader with the ability to effect real change in the fight against corruption. END SUMMARY -------------- -------------- President Committed Rhetorically, But Not Pushing the Issue -------------- -------------- ¶2. (S) Candidate Maduro promised the people of Honduras that fighting corruption would be a top priority of his administration, but since taking office almost two years ago, he has done little to reduce corruption's pervasive hold on Honduran society. Maduro speaks eloquently about corruption's grip on daily life in Honduras and its detrimental effects on the Honduran economy, particularly to U.S. and European audiences (ref D). Rhetoric aside, however, the President seems unwilling or unable to make the politically tough decisions necessary to effect a paradigm shift in Honduras. ¶3. (S) When pressed on the issue, Maduro squarely places the blame for his administration's inability to effectively confront corruption on the shoulders of Attorney General (AG) Roy Medina, who (according to Maduro) is politically motivated and simply refuses to prosecute high level corruption cases. Maduro cites limited resources as another major impediment to combating corruption, but the GOH's parsimonious funding of anti-corruption efforts clearly reflects the priority his administration is itself willing to put forth. ¶4. (C) Other aspects of Maduro's anti-corruption strategy which require congressional action, particularly electoral reform, have either run out of steam or have been hijacked by others for their particular political purposes. Although Maduro's Nationalist Party (NP) does not control a majority in Congress, the president's inability to muster support for needed reforms (even within his own party) has begun to reflect poorly on his leadership ability and bodes ill for any significant improvements in the near future. ¶5. (C) Maduro and his Minister of the Presidency Luis Cosenza recently highlighted to visiting Secretary Powell Congress's recent passage of a constitutional amendment to eliminate immunity for all legislative, judicial, and government officials (still pending ratification) and the selection of an independent Supreme Court as the most significant advances in ending a culture of impunity that permits corruption in Honduras. Cosenza noted how the new Criminal Procedures Code is streamlining the administration of justice. However, they both acknowledge that a major figure needs to be jailed to make a statement, and change the perception of corruption and impunity in the country (ref D). ¶6. (C) Cosenza has noted that the GOH has also instituted a number of other measures to combat corruption including: the selection of an independent auditing firm to audit executive branch procurements; the closure of certain businesses for tax evasion; and an effort to get Congress to enact a law that requires transparency in the budget process. The GOH also highlights the transfer of public procurement projects to the United Nations Development Program (UNDP),although Post notes that the UNDP in Honduras has itself been accused of questionable practices, particularly in the awarding of Hondutel procurement contracts to select European firms. -------------- --- Attorney General Irrelevant, Maladroit, or Worse -------------- --- ¶7. (S) A hold-over from the previous Flores administration, in March, 2004, Roy Medina will complete his congressionally appointed five-year term as AG. While eligible to be nominated to serve a second term, he is not considered a possible candidate. Medina entered the Public Ministry (PM) amid high-hopes that the GOH would be able to begin an effective campaign to combat corruption by prosecuting high-profile corrupt individuals. This has not happened. Rather, Medina's tenure with the PM has been a major disappointment, characterized by obfuscation, excuses, and allegations of corruption within the PM itself. Worse, since Maduro's election, Medina has used his prosecutorial discretion to foil efforts by Maduro to pursue cases against bankers who looted their own banks and the national treasury. ¶8. (S) Clearly, Medina does not have the fortitude or prosecutorial zeal to pursue high-level corruption cases. Whether through intimidation, ineptness, lack of resources, lagging political will, or worse, Medina appears to have no intention of pursuing allegations of corruption against prominent individuals, regardless of the evidence presented. Maduro, at one time, entertained ideas of seeking Medina's ouster, but decided against directly confronting a Liberal Party appointee, particularly as it would lead to a confrontation with Congress. Maduro's strategy now appears to let Medina's time run out, then seek an individual who will purportedly more aggressively seek to combat crime in Honduras. ¶9. (C) Embassy confronted Medina in June (ref B) concerning the disappointing results and allegations of corruption within the PM. At that time, Medina promised Ambassador that the PM would begin to move forward on the more than 160 money laundering cases languishing in its files. Medina also promised action on other high level cases, although he noted that faulty police work and ineffective judges were hampering his efforts to bring cases to trial. While there was some improvement in the short term, paralysis has once again gripped the PM. The one exception was PM action against congressman Avila Panchame on narco-corruption charges, although this appears to have been in direct response to Embassy pressure. ¶10. (S) In an orchestrated effort to deflect continued criticism and avoid a cut-off in USG assistance, Medina did shuffle a number of high level officials within the PM, moving Special Prosecutor for Organized Crime Mario Chinchilla and prosecutor Rafael Soto to the Environmental Crimes Unit. (Chinchilla was replaced by Doris Aguilar.) Both Chinchilla and Soto were tainted by accusations of corruption and possible ties to narcotraffickers, although the PM has shown no interest in pursuing these allegations. Also, Soto continues to interfere in drug cases, even though he has been reassigned. While Aguilar appears to be well intentioned, these moves have not resulted in any greater exuberance at the PM to prosecute meaningful cases. There have been, however, several prosecutions against low-level police officers. ¶11. (S) While inaction at the PM is itself a serious concern, corruption within the judiciary and police also hamper efforts to improve the administration of justice and rule of law within Honduras. Although both Supreme Court President Vilma Morales and Public Security Minister Oscar Alvarez remain committed anti-corruption watch-dogs, the influence of drug money, threats from narcotrafficking organizations, and a general climate of impunity continues to vitiate any significant improvements. -------------- -- Judiciary Improving, But Still A Long Way To Go -------------- -- ¶12. (C) Vilma Morales has been very outspoken on corruption issues and is working to increase judicial independence in an effort to, among other things, bolster anti-corruption efforts. Morales has gone as far as to challenge the public to come forward with the names of corrupt judges, whom she has promised to investigate. While many newly appointed trial judges are performing admirably, the vast majority of magistrates continue to exhibit old tendencies, namely dismissing cases for arbitrary reasons, or simply refusing to bring them to trial. Morales has dismissed some judges, but Liberals charge that some of these dismissals were politically motivated. Inexplicably, she also chose to publicly criticize the Embassy for failing to coordinate with her regarding a corrupt judge who was recently excluded from a U.S.-sponsored money laundering training class. She claimed to be unaware of U.S. concerns, despite the fact that the Embassy had notified her in advance and that she herself had expressed concern about this judge's actions and had also hinted about an investigation of her own. To date, there has been no Supreme Court follow-though on this. -------------- -------------- GOH Anti-Corruption Efforts Underfunded and Inadequate -------------- -------------- ¶13. (U) In an effort to provide greater transparency and more effectively combat corruption, with the help of international donors, the GOH created the National Anti-Corruption Council (NAC) and the Supreme Court of Accounts (Tribunal Superior De Cuentas - TSC). To date, neither institution has lived up to its potential. ¶14. (SBU) The NAC was conceived under the Flores administration and continued by Maduro. The NAC's charge was to develop a national anti-corruption strategy and then help the GOH implement that strategy. The NAC is composed of 14 prominent individuals representing Honduran civil society, and 14 senior GOH officials; heading the NAC is Roman Catholic Cardinal Oscar Rodriguez. While the NAC was able to develop a national strategy, its implementation has fallen short. Lassitude among the NAC's members, insufficient funds, and lack of attention from the GOH have all contributed to the NAC's poor showing. Its most significant contribution has been to call public attention to corrupt practices. Most of its credibility emanates from the moral authority of Cardinal Rodriguez. ¶15. (C) In an October 21 meeting with PolCouns, NAC Executive Director German Espinal confided that the GOH was not committed to the NAC's mission. Espinal outlined the limited extent of GOH financial support for the NAC: one phone line. The NAC's small staff, and all other resources, are provided by international donors. If the international community withdrew funding from the NAC, it would probably disappear. ¶16. (SBU) The TSC was intended to function as a national hybrid general accounting and public ethics office. It was created in January, 2002, and its organic law was approved by Congress on January 20, 2003. The TSC placed the Comptroller General of the Republic, the Directorate of Administrative Probity (Ethics office),and the Office of State Assets under one roof. However, since its inception (to Post's knowledge),the TSC has yet to report a single accounting discrepancy or to recommend corruption charges against any individual. In essence, the TSC has had no visible impact on the fight against corruption in Honduras. ¶17. (C) Espinal alluded to dysfunctionality at the TSC during the October 21 meeting with PolCouns. According to Espinal, the TSC employs close to 600 people (most of them lawyers) who really contribute nothing to the TSC's ability to effectively function as a public auditor. Rather, the TSC seems to have become a jobs program for contacts of senior GOH officials in need of employment. Still, the Maduro team trumpets the creation of the TSC as one of its major accomplishments in its fight against corruption. -------------- -------------- One Bright Spot - Reduced Corruption in the Armed Forces -------------- -------------- ¶18. (C) The reduction of corruption within the Honduran Armed Forces (HOAF) is one of the few success stories in an otherwise cloudy horizon. Once a bastion of corruption, the HOAF is now no more corrupt than other GOH entities. Firmly under civilian control, and with the introduction of transparency in the budgetary process, the Generals and those that serve them, have been reduced to low-level graft. The HOAF, particularly the Navy and Air Force, are also now much more inclined to effectively participate in drug interdiction efforts. The HOAF leadership is more inclined to discipline corrupt officers, even at the highest levels. In fact, recent rumors suggest that Col. Caceres, commander of the Honduran Air Force, and his deputy, Col. Cervantes, will soon be removed for the alleged misuse of funds. Also, at least two naval officers suspected of involvement in narcotics trafficking have been removed from their positions. ¶19. (C) Problems continue with the undercapitalized military pension fund "Instituto Prevision Militaria" (IPM),as a result of an extraordinary theft by former Commander in Chief General Hung Pacheco before his retirement (ref A). It remains unclear if General Pacheco will ever face criminal charges for the heist. Grumbling can also be heard from some senior and mid-level officers upset with rumors that Chief of the Joint Staff General Isaias Barahona intends to raise the mandatory retirement age from 30 to 35 years of active military service. The disgruntled officers claim Barahona is really raising the retirement age so that he can continue in his present position. Barahona has stated that the IPM needs this five-year retirement hiatus to recover and recapitalize to be able to support the next round of senior retirements. -------------- Don't Look to Congress for Any Help -------------- ¶20. (S) Congress continues to resist any meaningful reform that would lead to the reduction of corruption within Honduras. The institution itself is riddled with tainted politicians who view their positions heavily through the lens of personal wealth creation. This year alone, three members of Congress have been arrested on drug trafficking charges, and many others continue to be involved in a wide range of other illicit activities. -------------- Designada Genuine, But Lacks Support -------------- ¶21. (S) Honduran Vice President Armida de Lopez Contreras (one of three presidential designates in the current Honduran constitutional leadership structure) appears genuinely committed to anti-corruption efforts but lacks any type of following within the GOH. She has publicly clashed with other senior GOH officials over inaction on fighting corruption (ref C) which has contributed to her political isolation. While wanting to do the right thing, Contreras' lack of a political following renders her unable to force movement on anti-corruption efforts. -------------- Lack of Resources Serious Impediment -------------- ¶22. (SBU) While the GOH, without doubt, could do a better job of fighting corruption, a lack of resources continues to seriously impede effective measures to address the issue. Post notes the technical assistance provided to Honduras by USAID (ref E) and its positive case-by-case results. However, the lack of U.S. assistance to fund more effective work by national legal institutions is a short-coming. Other international donors are providing some limited anti-corruption assistance; but more international aid, with U.S. leadership, is essential to realize the necessary enforcement effort in this crucial area. Still, these types of programs (and others funded by the international community) need to be matched by a similar commitment on the part of the GOH for them to be effective and have a lasting impact. -------------- -------------- Population Losing Confidence In Maduro to Fight Corruption -------------- -------------- ¶23. (S) Comment: Public support for the Maduro administration has decreased in recent months. Apart from serious economic concerns, the general population has doubts that Maduro is serious about tackling corruption in Honduras. This lack of confidence is turning into a general disillusionment with the Maduro administration. There is a growing sense that the President will not deliver his reform agenda, with anti-corruption being a major short-coming. It is not lost on Honduran political observers, and protest leaders, that known corrupt individuals continue to ply their trade with complete impunity. On a positive note, no evidence exists linking Maduro, or most of his ministers, to personal involvement in corrupt activity. However, Maduro and his cabinet, while aware of the corruption problem and the need to address it more effectively, are dangerously out of touch on this issue, appearing to believe that anti-corruption rhetoric alone is enough to win the people's trust. Maduro's inaction on fighting corruption could contribute to increasingly fertile ground for a strong, left-leaning populist leader, inclined to seriously challenge the status quo in Honduras. End Comment. Palmer