GOVERNMENT COMPLETES FARC FINANCE STUDY

C O N F I D E N T I A L SECTION 01 OF 03 BOGOTA 009136 SIPDIS GENEVA PLEASE PASS TO DELAURENTIS E.O. 12958: DECL: 09/09/2014 TAGS: EFIN PTER ETTC PREL SNAR FARC SUBJECT: GOVERNMENT COMPLETES FARC FINANCE STUDY Classified By: Charge d'Affaires Milton K. Drucker for reaons 1.4 (b) and (d) -------------- Summary -------------- ¶1. (C) The GOC recently completed an unprecedented interagency analysis of FARC finances. The study concluded that FARC profits in 2003 were between 1.35 and 3.25 trillion pesos (approximately USD 520 million to 1.25 billion) in ¶2003. According to the study, the FARC spent about 40 percent of its earnings on precursor chemicals and 35 percent on terrorist attacks. Almost half of the FARC's income was from drug trafficking and approximately 40 percent from extortion. However, the GOC study's methodology was flawed and its conclusions were based on incomplete, sometimes questionable data. Now that the Government has formed an interagency team to study terrorist finances, future studies will be more reliable as analysts build expertise and acquire better information. The GOC has asked the Embassy for input on the study's reliability and how to improve its methodology. -------------- -------------- A First-Time, Comprehensive Look at FARC Finances -------------- -------------- ¶2. (C) On May 13, 2004, the GOC completed an unprecedented interagency analysis of the finances of the Revolutionary Armed Forces of Colombia (FARC) in 2003 (sent to WHA/AND and SOUTHCOM). Under the auspices of the Colombian military's (COLMIL) Joint Intelligence Unit (JIC),the GOC's Financial Intelligence Unit (UIAF) formed an interagency team of analysts who used input from Police, Army, Air Force, and Naval Intelligence, the Department of Administrative Security (DAS, a rough equivalent to the FBI),the Technical Investigative Unit (CTI) of the Prosecutor General's Office ("Fiscalia"),and the Interagency Committee Against Subversive Finances. On August 31, the JIC presented its findings to Emboffs. ¶3. (C) Based on 25,000 data entries from a variety of sources, the study concluded that in 2003 the FARC: Earned: between 2.1 and 3.8 trillion pesos (approximately USD 810 million to 1.45 billion) Spent: between 550 and 790 billion pesos (approximately USD 210 million to 300 million) Profited: between 1.35 and 3.25 trillion pesos (approximately USD 520 million to 1.25 billion, as calculated from earnings and expenses) Breakdown of Expenses: Precursor Chemicals: 304 billion pesos (38.6%) Terrorist Actions: 280 billion pesos (35.5%) Armaments: 41.3 billion pesos (5.23%) Bribes and Infiltration: 34.1 billion pesos (4.32%) Food: 32.2 billion pesos (4.07%) Losses from Seized Weapons: 20.1 billion pesos (2.54%) Administrative Costs: 14.4 billion pesos (1.82%) Gasoline for Drug Labs: 12.5 billion pesos (1.59%) Losses from Deserters: 10.9 billion pesos (1.38%) Communications: 8.3 billion pesos (1.05%) Assistance to Imprisoned Guerrillas: 7.1 billion pesos (0.90%) Training: 5.1 billion pesos (0.65%) Explosives: 4.3 billion pesos (0.54%) Gasoline not for Drug Labs: 3.4 billion pesos (0.43%) Expense Accounts: 2.5 billion pesos (0.32%) Food for Hostages: 2.4 billion pesos (0.30%) Support to Guerrilla Family Members: 1.8 billion pesos (0.22%) Transportation: 1.5 billion pesos (0.19%) Health Care: 1.5 billion pesos (0.18%) Political Outreach: 803 million pesos (0.10%) International Front: 477 million pesos (0.06%) Radio Stations: 431 million pesos (0.05%) Losses from Seized Logistical Products: 186 million pesos (0.02%) Web Pages: 20.2 million pesos (0%) Miscellaneous Supplies: Negligible Intelligence: Negligible Breakdown of Earnings: Coca Cultivation and Sales: 1.73 trillion pesos (45.5%) Extortion: 1.57 trillion pesos (41.3%) Kidnapping: 256 billion pesos (6.75%) Investments: 115 billion pesos (3.04%) Cattle Theft: 52.7 billion pesos (1.39%) Hydrocarbon Theft: 42 billion pesos (1.11%) Taxing Coca Labs: 20.3 billion pesos (0.53%) Charge for Use of Illegal Airstrips: 7.2 billion pesos (0.19%) Bank Robberies/Embezzling: 2.8 billion pesos (0.07%) Middleman for HCL Labs: 2.6 billion pesos (0.07) Middleman for Coca Leaf Transportation: 953 million pesos (0.03%) Middleman for Base Labs: 886 million pesos (0.02%) Middleman for Coca Cultivation: 542 million pesos (0.01%) Discarded Military Equipment: 152 million pesos (0%) Support from Sympathizers: Negligible Extorting Border Security: Negligible Contraband: Negligible ¶4. (C) To put such profits in context, the study notes that "Almacenes Exito," a Colombian chain of discount superstores, had sales of 3.15 trillion pesos (approximately 1.2 billion USD) in 2003, which falls near the high end of the FARC's estimated 2003 earnings. Exito's 19,303 employees are organized in a national structure that can be compared in size and complexity to the FARC's drug trafficking/extortion industry. -------------- Key Assumptions -------------- ¶5. (C) The GOC analysts assumed that in 2003 the FARC had between 14,576 and 16,672 members and 136 units (blocs, fronts, mobile columns, and urban militia networks). They also assumed there were 68,365 hectares of coca and 1,342 hectares of poppy in the country. (The GOC uses UN numbers, which are consistently lower than USG estimates of illicit cultivation.) -------------- Methodology: A Work in Progress -------------- ¶6. (C) The study was a useful first-time effort and demonstrated the GOC's ability to conduct a comprehensive interagency study. However, the study has several weaknesses that call into question the reliability of its conclusions: -- Limited Information: The analysts acknowledged that their conclusions were based on rough estimates and incomplete data. For example, when estimating earnings from drug trafficking, they averaged disparate data on drug prices, suspected FARC drug production, and production costs from several different agencies and tried to determine the most likely range. The 25,000 data entries are a relatively small number given the FARC's size and complexity. -- Lack of Information Sharing: The analysts lamented that many intelligence agencies were reluctant to share information or skewed information for political reasons. -- Technological Limitations: The analysts' computer software limited the sophistication and depth of the analysis. ¶7. (C) By forming an interagency team of analysts devoted to terrorist finances, the GOC has developed an important tool to identify key vulnerabilities of illegal armed groups. As the analysts develop expertise and acquire more detailed and reliable information, subsequent studies should be more useful. They are planning a follow-on analysis of 2004 FARC finances and studies on paramilitary and National Liberation Army (ELN) finances. The GOC has asked for Embassy feedback on the study's conclusions and how to improve future analyses. DRUCKER