PARAGUAY'S 2005 FIRST QUARTER INL REPORT

UNCLAS SECTION 01 OF 03 ASUNCION 000503

SIPDIS

STATE FOR INL ABBY SMITH
STATE FOR WHA/BSC AND EB/IFD/OIA
NSC FOR KIM BREIER
SOUTHCOM FOR POLAD DAN JOHNSON

E.O. 12958: N/A
TAGS: SNAR PA KCRM
SUBJECT: PARAGUAY'S 2005 FIRST QUARTER INL REPORT



1. Summary
- Quarterly activities
- Program discussion
- Quarterly SENAD statistics


2. Quarterly Activities

Counternarcotics
--------------

In January, SENAD agents arrested Brazilian narcotrafficking
fugitive Nilton Cesar Antunez, associated with the Beira Mar
drug trafficking organization, as well as two of his
associates and seized 103 kilograms of cocaine. Until the
time of his arrest, Antunez reportedly had been involved in
plotting an assassination attempt on the Governor of Amambay
Department, Roberto Acevedo, and three other unnamed
individuals. In response to these threats, DEA and SENAD
worked closely with the Brazilian Federal Police, to provide
timely information on Antunez's movements. Authorities
located and arrested Antunez on January 16.

The extradition case against Brazilian narcotrafficking
kingpin Mendes-Mesquita is still ongoing and is proceeding
according to Post's expectations. The judge signed the
extradition order on April 1, and the case is currently in
the appeals process. On the same day, Paraguay extradited
three other Brazilian narcotraffickers to Brazil.

Reports in the first quarter of 2005 indicate that Brazil's
new shootdown policy, passed in October 2004, is starting to
make an impact on narcotraffickers' strategy, forcing them to
land their planes in Paraguay's Chaco region and smuggle
their narcotics across the border to Brazil. After just two
months of the law's passage, the number of irregular flights
over Brazil's air space has dropped by half, according to
Brazilian authorities.

On February 24, Paraguayan daily newspaper, La Nacion,
published an OpEd from the Ambassador describing the United
States' National Drug Control Strategy. The article was
published to raise awareness in Paraguay that the USG focuses
a significant amount of its anti-narcotics budget on
prevention and treatment, not only interdiction.

In March, INL Program Officer Abby Smith visited post. Ms.
Smith, accompanied by PolCouns and INL assistant, met with
representatives from SENAD, SEPRELAD (Paraguay's anti-money
laundering secretariat),the Ministry of Women, and the
Ministry of Industry and Commerce. POL Chief, PolOff, and
DEA Director also accompanied Ms. Smith to Pedro Juan
Caballero to meet with Amambay Governor Acevedo as well as
local judges and prosecutors on drug trafficking in the
region and to visit the site for construction of the new
SENAD office with funds from the Andean Initiative account.
The trip was well-covered by local radio and national press.
Approximately a dozen individuals gathered outside of the
Governor's offices to protest the visit, charging the U.S.
with seeking to exploit the region's aquifer. (Note: a
recurring a "anti-imperalist theme is the claim that the U.S.
plans to establish a base for intervention and to steal
Paraguay's water. End Note).

On March 12, convicted Brazilian drug trafficker Fabricio
Silveira Machado escaped from Asuncion's Tacumbu prison,
where he was serving a 25-year sentence for homicide and
assault with a deadly weapon. The day before his escape,
March 11, a Paraguayan judge signed an extradition order to
send Machado to Brazil. Press reports indicate Machado bribed
prison guards with payments of $3,200 for his release.
Authorities located one prison guard and discovered Machado's
bribe money in his possession.

Seized assets from Brazilian drug trafficker Claudair Lopes
de Faria were sold on March 22 in a public auction in which
his home furnishings, real estate, and an airplane grossed
1.1 billion Guaranis (USD 171,000). Since Lopes was arrested
based on drug charges in Brazil and not Paraguay, the usual
70/30 split of seized assets between SENAD and the Ministerio
Publico does not apply. Instead, the revenue will be split
30/30/30/10 among SENAD, the Ministerio Publico, the Poder
Judicial and an as-yet undetermined non-profit organization.
SENAD's attorneys will be asking the judge to reconsider this
distribution, however. Lopes de Faria was arrested by
Paraguayan authorities in June 2003 and expelled to Brazil
where he was sentenced to 480 years in prison for narcotics
trafficking.


Intellectual Property Rights
--------------
On February 17, operatives from the Unidad Tecnica
Especializada (UTE) conducted a raid on several premises
located in a popular shopping district, Mercado 4, in
Asuncion. Over 300,000 forged holograms and more than 20,000
pirated videos, CDs and DVDs were seized.


Trafficking in Persons
--------------

In February, a teenage female prostitution ring was
dismantled in Lambare (a suburb of Asuncion). Three women
were charged with forcing minors into prostitution. The
brothels were posing as employment agencies and preying on
young girls coming from the interior of Asuncion to look for
employment.

INL funds are being used to renovate an existing office to
establish a support center for victims of trafficking to be
run by the Ministry of Women. A vendor was selected at the
end of March and worked is planned to begin in April.



3. Program Discussion:

a. Demand Reduction

This quarter, the SENAD demand reduction team has conducted 5
formal training sessions training 103 people and 481
informative sessions reaching over 15,000 students.
Activities will continue in the Central Department (where
Asuncion is located) throughout the second quarter.

b. Narcotics Detection Canine Program

No canine-related seizures were made this quarter.

c. Eradication Operations

From January 11 to 18, SENAD agents destroyed 223 hectares of
marijuana during an operation in the Department of Amambay.

From January 31 to February 9, SENAD conducted an eradication
operation in the Department of Amambay with Brazil as part of
the ongoing Alianza (Alliance) eradication efforts. Agents
destroyed 221 hectares (663,000 kilos) of marijuana.

From February 22 to March 1, SENAD conducted an operation in
Canindeyu, where drug traffickers forced out of Amambay
(Pedro Juan Caballero) have relocated. Agents destroyed 216
hectares of marijuana and seized an additional 4,670 kilos of
cut marijuana and destroyed 29 workers' campsites.

In March, SENAD conducted an operation in San Pedro
eradicating 63 hectares of marijuana. This eradication took
place in connection with the GOP's deployment of the police
and military to San Pedro ostensibly for the purpose of
tracking down the kidnappers of Cecilia Cubas and instilling
a greater sense of public security in the region.


d. Law Enforcement


1. Counter Narcotics

In addition to the 103 kilos of cocaine seized during the
arrest of Brazilian narcotrafficking fugitive Nilton Cesar
Antunez mentioned above, there was a seizure of 1 kilo of
cocaine from a Bolivian in Pedro Juan Caballero who was
considered by SENAD to be an important "mule" in that area.


2. Money Laundering and Financial Crime

Hijazi case - The tax evasion case against Kasem Hijazi,
owner of Telefax, an illegal casa de cambio in Ciudad del
Este was presented for accusation on February 8. A trial
date has not been set. Prosecutors immediately began
planning an investigation of authorized casas de cambio
through which Hijazi moved money to the U.S. and supposedly
on to the Middle East. In response to Embassy prodding,
prosecutors provided copies of the materials used to indict
Hijazi to the financial investigative unit (FIU) SEPRELAD UAF
for entry into the FIU database in preparation for further
investigations.



3. Rule of Law/Judicial Reform

In March, Post's Resident Legal Advisor organized a visit to
Puerto Rico for five lead prosecutors from units that
prosecute sophisticated or complex economic criminal
violations and five judges representing most of the differing
strata and functions of the criminal court in Paraguay to
observe US judicial proceedings. This visit, as part of a
series of training efforts, has yielded a unified view among
participants regarding Code modifications needed to build
effective cases. Formal changes in the Code will require
careful appeals to key legislators to adopt the proper
legislation.


4. Training

In March, INL sponsored a training course conducted by ATF
officials from Embassy Bogota on firearms identification.



5. Miscellaneous Issues


Quarterly SENAD statistics

1st 2nd 3rd 4th


Cocaine 105.9kg
Seized (kg)

Marijuana 25,601kg
Seized (kg)

Marijuana 761 hectares
Crops
Destroyed

Arrests 17
(total)

- Cocaine 10

- Marijuana 0
(cultivation)

- Marijuana 6

- Counterfeit 0
Currency

- Int'l Trafficking 1
Firearms

- Trafficking 0
Narcotics

- Illegal Entry 0

- Money Laundering 0

- Result of 0
Investigation
KEANE