AMBASSADOR URGES GREATER ANTI-CORRUPTION EFFORTS;

C O N F I D E N T I A L SECTION 01 OF 03 TEGUCIGALPA 002434

SIPDIS

STATE FOR WHA, WHA/CEN, AND WHA/PPC, AND DS
STATE FOR INL, INL/LP, INR/C, INR/AN/IAA, AND EB
STATE PASS AID FOR LAC/CEN AND DCHA/DG/ROL

E.O. 12958: DECL: 10/29/2014
TAGS: PGOV KCOR KJUS KCRM ECON PHUM PINR EAID HO
SUBJECT: AMBASSADOR URGES GREATER ANTI-CORRUPTION EFFORTS;
MADURO ASSERTS PROGRESS EXCEPT ON "POLITICAL CORRUPTION"

REF: A. LINDWALL-PALMER E-MAIL 10/25/04


B. TEGUCIGALPA 2356

C. TEGUCIGALPA 2123

D. TEGUCIGALPA 1690

E. TEGUCIGALPA 729

F. TEGUCIGALPA 400

Classified By: Ambassador Larry L. Palmer;
reasons 1.4 (b) and (d).


1. (C) SUMMARY: On October 27, Ambassador and DCM raised U.S.
concerns with President Maduro about perceptions that
Honduras is backsliding on anti-corruption efforts, its
potential impact on MCC eligibility, and the recent decision
by the Public Ministry (PM) to dismiss corruption cases
against leading political figures. Maduro, visibly agitated,
stated Honduras had made many significant strides in the
fight against corruption but was not getting the credit it
deserves. Maduro claimed his administration was committed to
fighting corruption and reiterated comments he made to the
Secretary during their October 21 meeting stating he fears a

SIPDIS
regional conspiracy to destabilize governments by prosecuting
ex-presidents and attacking/destroying the political class.
Maduro did concede, however, that Honduras needed to do a
better job in addressing what he termed "political
corruption." Post believes that President Maduro and his
inner circle, for a myriad of reasons, lack both the
political will and leadership skills necessary to tackle
high-level corruption in Honduras. Maduro should confront
the issue head-on by calling for a high-level review of the
PM's recent decisions and of alleged corrupt sitting judges.
END SUMMARY.

-------------- --------------
President Claims Honduras Making Strides Against Corruption
-------------- --------------


2. (C) On October 27, Ambassador and DCM met with President
Maduro, Minister of the Presidency Luis Cosenza, and Minister
of Government and Justice Jorge Ramon Hernandez Alcerro
regarding perceptions that Honduras is backsliding on
anti-corruption efforts and the recent crises at the Public
Ministry (PM) (ref B). Maduro, visibly agitated, stated that
Honduras had made many significant strides in the fight
against corruption but was not getting the credit it
deserves. He listed as examples the recent passage of
legislation stripping immunity from senior government
officials, allowing the UNDP to oversee public procurement
projects, and increased success on clamping down on tax
fraud. (COMMENT: It is ironic that Maduro cites the UNDP
procurement process as an anti-corruption success. The
Government of Honduras' (GOH) recourse to UNDP management for
its bid solicitations is fundamentally an admission that the
GOH cannot control corruption in its own ranks. While the
GOH does deserve credit for removing immunities, the
implementing legislation allowing the GOH to prosecute
formerly immune officials has not yet been drafted. Also,
while the GOH has done a better job of collecting taxes from
small businesses and ordinary private citizens, there have
been no large-scale convictions although recent reports
suggest that tax fraud - involving large businesses and
benefiting both major political parties - continues on a
massive scale. END COMMENT.)


3. (C) Maduro did admit to Ambassador that Honduras still
needed to do a better job of fighting what he termed
"political corruption", acknowledging Honduras' poor record
in successfully prosecuting high-level individuals on
corruption charges. Maduro claimed his administration was
doing all it could, but that other "independent" GOH
entities, such as the judiciary, the PM, and the Supreme
Court of Accounts (Tribunal Superior de Cuentas - TSC) could
do a better job, although he believed the incumbent Attorney
General was doing a much better job than his predecessor.
(COMMENT: Power in Honduras remains extremely concentrated
in a few powerful political figures. For some time, GOH
officials have blamed inaction on uncooperative independent
agencies. However, Post believes that if the President was
determined to tackle high-level corruption these agencies
could be "persuaded" to move cases forward. END COMMENT)


4. (C) Maduro also noted that his administration was in the
process of seeking a USD one million World Bank loan to hire
more qualified people to make the TSC (the government agency
tasked with auditing public accounts) more effective. The
TSC currently employees over 600 people, many of whom have no

SIPDIS
knowledge of standard accounting or public procurement
practices. In two years of existence, the TSC has yet to
uncover a single meaningful case of corruption. It is also
of some concern that the GOH is seeking World Bank support
for what should be a key budgeted recurring expenditure. If
it is ever to be effective, the TSC must, among other things,
have a secure and predictable budget.

--------------
Whither Honduras' Anti-Corruption Commission?
--------------


5. (C) Ambassador raised U.S. concerns over the ongoing
demise of Honduras' independent National Anti-Corruption
Council (CNA) and rumors that the GOH was considering placing
a reformed CNA under the control of the PM. Maduro
vehemently denied the GOH ever considered putting the CNA
under the PM and queried Ambassador on who was spreading such
rumors. Minister of the Presidency Cosenza told Ambassador
that he knew Roman Catholic Cardinal Oscar Andres Rodriguez
was considering stepping down as Chairman of the CNA, but
claimed that this was related to the Cardinal's concerns over
a dispute regarding the GOH's recognition of several
homosexual rights NGOs, not with corruption. Cosenza also
claimed that German Espinal, ex-executive director of the
CNA, was unanimously dismissed by the CNA's board because of
his poor leadership. Cosenza's explanation regarding the
reasons for Cardinal Rodriguez's possible resignation from
the CNA contradicts statements made to PolCouns by the
Cardinal's executive assistant, who stated that the Cardinal
was aware of corruption in Honduras and would not continue to
participate in the moribund CNA. Cosenza went on to say that
the administration has a plan for a reformed CNA that would
keep the entity independent.

--------------
Callejas Vindicated of Political Charges??
--------------


6. (C) Cosenza informed Ambassador that the politically
motivated charges against ex-president Rafael Leonardo
Callejas (1990-94) of the National Party and his associates
were legitimately dismissed by the PM after several
tribunals, including the Honduran Supreme Court, ruled to
dismiss charges. The Supreme Court voted over a year ago,
8-7, along strict party lines, with the Nationalists in the
majority. Also, Maduro claimed no prior knowledge of the
PM's decision, stating that, just like Attorney General
Ovidio Navarro, he felt the need to recuse himself because of
his past involvement as head of the Honduran Central Bank
during the Callejas administration. This statement by Maduro
directly contradicts reports that Navarro met with Maduro and
President of the Supreme Court Vilma Morales to discuss his
proposed dismissal of these cases. While Cosenza felt the PM
no longer had any reason to pursue corruption charges against
Callejas, he did acknowledge that the PM's timing was poor.
(COMMENT: Maduro, like many figures in the National Party,
owes his political allegiance to Callejas. It is clear that
Callejas enjoys a patron/client relationship with many
National Party figures who have a vested interest in
protecting him. It is widely believed in and outside of
Honduras that Callejas was one of the most corrupt Honduran
presidents since the re-establishment of democracy. END
COMMENT).

--------------
Maduro Sees Regional Conspiracy
--------------


7. (C) Recalling comments he made to the Secretary during
their October 21 meeting, Maduro told Ambassador he believed
there was a region-wide conspiracy to destabilize the
governments of Central America by prosecuting ex-presidents
on corruption issues. Maduro was not specific about who the
organizers of this conspiracy are. In Honduras, fewer than
500 members of the Popular Block and other popular
organizations and labor groups have demonstrated in support
of the dismissed fiscales and against corruption. He told
Ambassador that this movement intended to replace the ruling
classes and, if successful, could throw the region into
turmoil.

--------------
MCC Eligibility
--------------


8. (C) Ambassador reminded Maduro both of the necessity for
Honduras to continue making meaningful progress on the
anti-corruption front, noting Transparency International (TI)
had given Honduras a poor score on its latest survey and that
public perception is growing that Honduras is backsliding on
corruption issues. While granting that Honduras had made
some progress on structural issues, Ambassador reminded
Maduro that even when overwhelming corruption evidence is
presented (as in the case of Deputy Attorney General Yuri
Melara and a list of 16 judges that the Minister of Public
Security provided to the Supreme Court President),the GOH
has found reasons not to act. Ambassador emphasized that the
GOH must do a better job of fighting high-level corruption.
Minister Cosenza told Ambassador that the Maduro
administration was well aware of the MCC eligibility criteria
and felt that on more measurable issues, Honduras was doing
fine. He added that it would be a shame if Honduras were not
selected to receive funds based on distorted misperceptions
that Honduras was not doing enough to fight corruption.
Cosenza did note, however, that the GOH was open to the MCC
requiring certain anti-corruption benchmarks be met to
receive MCA funding, saying he had discussed this with two
MCC Vice Presidents during recent meetings in Washington.

--------------
A Clear Lack of Leadership at the Top
--------------


9. (C) COMMENT: While the GOH remains rhetorically committed
to fighting corruption, at the highest levels the political
will and required leadership to address high-level corruption
in Honduras falls short of what is needed. Maduro was
visibly put-off by the Ambassador's suggestion that Honduras
needed to do more on the anti-corruption front. Apart from
the fact that Honduras could be found ineligible to receive
future MCA funds based on its undistinguished anti-corruption
record, Maduro appears more preoccupied with maintaining the
political status quo. Post also notes that Maduro's strawman
of a conspiracy to threaten the political stability of
Honduras and other Central American countries has been a
constant throughout his administration whenever Maduro is
facing political controversy. While this alleged conspiracy
has been attributed to many (public teachers unions, the
leftist Popular Block currently protesting the PM
controversy, the Cubans, etc.),the GOH has never presented
concrete evidence to support its claims. Post believes
Maduro should confront the issue head-on by calling for a
high-level review of the PM's recent decisions and of alleged
corrupt sitting judges. END COMMENT.
Palmer