PARAGUAY: CERTIFICATION REPORT

UNCLAS SECTION 01 OF 03 ASUNCION 000839 SIPDIS STATE FOR WHA/BSC TREASURY FOR OSIA MAUREEN WAFER TREASURY FOR OTA WARFIELD, VAN KOCH, MILLAR E.O. 12958: N/A TAGS: PGOV SNAR KCRM PA SUBJECT: PARAGUAY: CERTIFICATION REPORT REF: A. STATE 94578 ¶B. 2004 STATE 245258 ¶1. Below find Post's submission on host government cooperation on counternarcotics efforts based on the benchmarks identified in reftel B. Counternarcotics -------------- ¶2. The USG asked the GOP to keep pressure on major drug trafficking organizations by arresting and prosecuting their key members and seizing their assets. -- In November 2004, SENAD and DEA conducted a joint operation resulting in the capture of Brazilian national Ivan Carlos Mendes Mesquita, one of the region's most notorious drug traffickers. Mesquita was the head of the Mesquita Drug Trafficking Organization operating in Paraguay and Brazil and has FARC connections. The operation took place at Mesquita's ranch in the Chaco and resulted in the arrest of Mesquita and seven members of his drug trafficking organization and the seizure of 262 kilograms of cocaine, Paraguay's largest in recent history. Mendes Mesquita's plane was also seized. On June 27, 2005 Mendes Mesquita was handed over to U.S. custody marking the successful conclusion to the six-month legal process and the first time Paraguay has extradited a fugitive of this significance to the United States. -- In January 2005, SENAD agents arrested Brazilian narcotrafficking fugitive Nilton Cesar Atunez, associated with the Beira Mar drug trafficking organization, as well as two of his associates and seized 103 kilograms of cocaine. Vehicles belonging to Atunez were also seized. -- Additionally, Paraguay has successfully expelled or secured extradition orders for five more Brazilian traffickers who had been living in Paraguay for a number of years as fugitives. -- The Mendes Mesquita case and others involving Brazilians demonstrate unprecedented cooperation between GOP and Brazilian intelligence authorities. U.S. espoused professionalizatin of SENAD and support of senior GOP officials for CD operations led to this dramatic improvement. ¶3. The USG asked the GOP to sharpen the investigative and operational capability of the Chaco Mobile Enforcement Team (CMET). -- CMET will participate in Operacion Seis Fronteras over the next two months as part of an effort to strengthen its investigative and operational capabilities in the Chaco region. -- The members of the CMET recently participated in precursor and highway interdiction courses in Bolivia. -- Andean funds will enable Paraguay to expand its barracks in Mariscal Estigarribia, the base from which it conducts operations in the Chaco. ¶4. The USG asked the GOP to provide adequate funding for its counter narcotics programs. -- While most Paraguayan ministries suffered a 10 percent cut in 2005 funding, the Paraguayan Congress approved funding for its drug programs in 2005 at 2004 levels. Given the political and economic environment, this is a noteworthy achievement and reflects the GOP commitment to its drug programs. -- Recently, Paraguay's President agreed to seek Congressional support for supplemental funding to hire 50 additional agents. ¶5. The USG asked the GOP to increase the SENAD UIDF staff from 8 to 20. -- SENAD plans to assign 10 of the 50 new agents noted above to work with the SENAD UIDF raising its staff levels to 18 -- a number we consider adequate. Official Corruption -------------- ¶6. We asked the GOP to take active measures to rid the ranks of law enforcement, prosecutors and judges of personnel suspected of having links to narcotics and other illegal activities. -- In response to U.S. appeals, Paraguay's President decided to desist from seeking the promotion of Police Commissioner Aristides Cabral who was implicated in protecting major drug traffickers. -- In June, Paraguay successfully prosecuted and convicted a customs official on charges of illicit enrichment. He was sentenced to three years and was levied a heavy fine. All assets acquired with the illicit funds will be seized. In 2004, Paraguay adopted the legislation that makes illicit enrichment a crime. This case represents the first time a customs official has been convicted on a charge of illicit enrichment. -- In recent weeks Paraguayan law enforcement officials have arrested police officials, military officials, and a fiscal implicated in trafficking marijuana. ¶7. We asked the GOP to combat corruption in the Customs service and Tax Authority and increase information sharing among concerned agencies. -- Post's REA has worked closely with the Director of Customs as well as with the tax authority to adopt reforms that address concerns relating to corruption. Tax and customs revenue have increased dramatically over the last year. -- Both Customs and the Tax Authority have created investigative units with U.S. assistance. In late 2004, Paraguay's Commerce and Industry Ministry created a unit to investigate IPR violations with INL funds. In June 2005, Paraguay's Finance Ministry created an internal investigative unit with oversight over Customs and the Tax Authority. All of these units are being mentored by Post's REA. -- The USG will support creation of a Trade Transparency Module in the Customs Department that will facilitate more effective monitoring of imports and exports for irregularities. -- Information sharing among concerned agencies has improved but remains uneven. To date cooperation has occurred mostly on an individual basis as opposed to an institutional basis. Recently, however, prosecutors have conveyed their readiness to rely upon SEPRELAD to conduct field investigations. Legislative Measures -------------- ¶8. We asked the GOP to use authorities created in 2002 law to crack down on narcotics transportation networks. -- Paraguay's law enforcement community has effectively used the authorities created in the 2002 legislation, including informants and undercover operations, to investigate and prosecute aggressively narcotics transportation networks. ¶9. We asked the GOP to pass the anti-money laundering legislation before Congress. -- President Duarte introduced this draft law to Congress and supports its adoption. -- Key political leaders in Congress have conveyed support for the law but to date it has not yet been adopted. We have been in contact with the IO community (UNODC, CICTE) about bring more political pressure to bear upon Paraguay to move ahead on money laundering and counter terrorism legislation. We are hopeful recent leadership changes of key Congressional committees will create an opportunity for successful adoption later this year. ¶10. We asked the GOP to enact effective chemical control laws. -- Upon review of the current legislation of chemical control laws, we have concluded that they are adequate. Paraguay needs to take steps to improve implementation of existing laws. Money Laundering -------------- ¶11. We asked the GOP to conduct outreach activities to sensitize financial institutions about reporting requirements. -- Absent the adoption of the money laundering law, Post decided to delay outreach activities on reporting requirements out of concern it could generate confusion and opposition. Post, together with SEPRELAD, is poised to undertake these activities as soon as the law is adopted. ¶12. We asked the GOP to improve coordination and information sharing protocols between the SEPRELAD FAU, the SENAD UIDF and other financial entities that prevent compromise of law enforcement sensitive information. -- MOUs establishing the information sharing protocol between the SEPRELAD and the Public Ministry and between SEPRELAD and the SENAD UIDF have been signed. -- Post's REA and RLA sponsored a seminar to members of the above-named institutions on protecting information from third parties. -- Coordination among concerned agencies has improved but remains uneven, occurring mostly on an individual basis as opposed to an institutional basis. ¶13. We asked the GOP to refocus SEPRELAD into a more effective and efficient organization, providing it with greater independence and a new bureaucratic structure. -- In March 2005, FINCEN and Edgmont found SEPRELAD a fully functional FIU according to international standards. -- That same month, FINCEN signed an MOU with SEPRELAD establishing full cooperation between the GOP and USG regarding information exchange. ¶14. We asked the GOP to ensure SEPRELAD received adequate financial and human resources to operate as an effective and fully functioning FIU. -- As noted above FINCEN and Edgmont found SEPRELAD a fully functional FIU according to international standards. -- In 2003, SEPRELAD had approximately 5 employees; in 2005, it has approximately 30 and its budget has increased some tenfold. Post believes SEPRELAD is adequately funded and staffed. ¶15. We asked the GOP to ensure prosecutors cooperate more effectively with SENAD UIDF and SEPRELAD. -- Information sharing among concerned agencies has improved but remains uneven. To date cooperation has occurred mostly on an individual basis as opposed to an institutional basis. Recently, however, prosecutors have conveyed their readiness to rely upon SEPRELAD to conduct field investigations. KEANE