Identifier
Created
Classification
Origin
05TEGUCIGALPA866
2005-04-23 00:24:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Tegucigalpa
Cable title:  

2005 EXPROPRIATION REPORT: HONDURAS

Tags:  EINV EFIN PGOV KIDE KSPR HO 
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UNCLAS SECTION 01 OF 06 TEGUCIGALPA 000866 

SIPDIS

SENSITIVE

FOR L/CID, WHA/EPSC, WHA/CEN
FOR EB/IFD/OIA (JROSELLI)

E.O. 12958: N/A
TAGS: EINV EFIN PGOV KIDE KSPR HO
SUBJECT: 2005 EXPROPRIATION REPORT: HONDURAS

REF: Dunn/Roselli telcon of April 6

UNCLAS SECTION 01 OF 06 TEGUCIGALPA 000866

SIPDIS

SENSITIVE

FOR L/CID, WHA/EPSC, WHA/CEN
FOR EB/IFD/OIA (JROSELLI)

E.O. 12958: N/A
TAGS: EINV EFIN PGOV KIDE KSPR HO
SUBJECT: 2005 EXPROPRIATION REPORT: HONDURAS

REF: Dunn/Roselli telcon of April 6


1. (U)
HONDURAS


The United States Government (USG) is aware of thirteen (13)
claims of United States businesses or nationals that may be
outstanding against the Government of Honduras (GOH). The USG is
also aware of numerous other investment disputes involving U.S.
investors, the majority of which have arisen out of inadequate
titling procedures and involve private Honduran citizens.


2. (U) Eight of the claims described below involve the Honduran
National Agrarian Institute (INA) and land invasion by squatters.
Land invasions are common for both Honduran and foreign
landowners. According to the National Agrarian Reform Law, idle
land fit for farming can be expropriated and awarded to the
landless poor. Generally, an INA expropriation case begins after
squatters target and invade unprotected property. The squatters
then file for the land with the INA under the Agrarian Reform
Law. In most cases, pursuing the subsequent legal avenues have
proven to be costly, time consuming, and have rarely led to
positive results. The U.S. Embassy is actively engaged in
dialogue with the INA and claimants to encourage resolution of
outstanding disputes. Most cases reported below require further
legal action in Honduran courts by the claimants or decisions by
the court.


3. (SBU) Claimant A

Claimant A's family land, known as Jerico, was taken over
by the Mayor of Trujillo in 1985. That same year, the
Municipality began titling and selling off parcels of Claimant
A's land. By 1991, Claimant A had won every court case up
through the Supreme Court level, thereby declaring Claimant A's
family as the legal owners of Jerico lands. Claimant A requested
that the public registrar's office inscribe the court's rulings
and correct the situation in the public registry, having falsely
registered the illegal titles. To date, the Municipality of
Trujillo has not returned the parceled sections of land to
Claimant A's family. In May 2002, after Embassy advocacy, the
public registrar informed the Embassy that Claimant A's lands

were officially inscribed in the registry. Legally, that office
can no longer register titles issued by the Municipality for
Jerico lands. Claimant A alleges that the Municipality continues
to title and sell Jerico lands under a different name (Capiro).

In April 2003, the Embassy informed Claimant A of the GOH's
temporary arbitration procedure (Decreto No. 349-2002) that
allowed the government and claimants to jointly submit disputes
for arbitration as an alternative to continued legal proceedings.
Claimant A informed the Embassy the family was interested in
entering into arbitration with the Municipality but did not have
the agreement of the Municipality. The Municipality instead
proposed to draft a private settlement with Claimant A's family.

In early 2004, Claimant A and the Municipality signed an
agreement to resolve the conflict. Claimant A agreed to not
pursue additional legal action and respect the rights of those
third parties who purchased land from the Municipality, if the
Municipality would return the remainder of the land. The
Municipality agreed to not sell any more of Claimant A's land and
register and return the remainder of Claimant A's land. Despite
this agreement, Post has been informed that the Municipality
continued selling Claimant A's land.

In March of 2005, the representative of Claimant A informed the
Embassy that they will take advantage of Decree No. 82-2004 (New
Property Law, which created the Property Institute) and through
this entity they will try to resolve this dispute.


4. (SBU) Claimant B

Claimant B inherited 2,417 acres of land from his father.
Claimant B's dispute started in 1963 when peasant groups squatted
on his father's land. Allegedly in 1975, INA signed a letter of
intent to purchase the land but never did. In 1984, when small
farmers began squatting on Claimant B's land near Nacaome, Valle
Department, Claimant B again offered to sell the land to INA.
Claimant B reported he has documents showing that the INA
intended to initiate expropriation proceedings in 1989, though it
is not entirely clear that this process was ever actually
started. Claimant B reports that in 1992, INA responded it was
no longer interested in purchasing the land. INA decided not to
follow through with the expropriation order but instead suggested
that Claimant B sue to have the squatters removed. Claimant B
could remove the liens in civil-court procedures and get a court
order to remove the squatters. Due to Claimant B's ill health,
legal proceedings were never initiated.

In June 2002, Claimant B's son reported that a court case is
still an option. In April 2003, the Embassy informed Claimant B
of the GOH's temporary arbitration procedure (Decreto No. 349-
2002) that allowed the government and claimants to jointly submit
disputes for arbitration as an alternative to continued legal
proceedings. Claimant B indicated he will not pursue arbitration
due to reservations about the arbitration procedure. The Embassy
considers this case inactive at this time, pending further action
by Claimant B.


5. (SBU) Claimant C

In 1990, Claimant C's land in Cofradia, Cortes Department, was
invaded by a group of squatters. In 1992, the INA issued a
certification of occupation (title) to the squatters. Claimant C
reports difficulty in discussing the case with GOH officials, who
claim not to have taken action against the land. In 1995, INA
realized this land is classified as urban and, therefore, claimed
to have no authority to resolve the dispute. The agency said it
can neither give the land to the squatters nor evict them. In
1996, the INA also reported that others have claims to the land
in addition to the squatters and Claimant C. In December 1998,
INA issued a resolution denying a petition presented by Claimant
C to annul the title (formerly issued by INA) held by the
campesino squatters. Claimant C has not contested the granting
of this title in court.

At various times in recent years, the Embassy has assisted
Claimant C in communicating with INA concerning his claim. In
June 2002, Claimant C reported that he may seek to evict the
squatters in court. In April 2003, the Embassy informed Claimant
C of the GOH's temporary arbitration procedure (Decreto No. 349-
2002) that allowed the government and claimants to jointly submit
disputes for arbitration as an alternative to continued legal
proceedings. The Embassy did not receive a response from
Claimant C concerning arbitration before the time to file
expired. To date the Embassy has not received any information
from Claimant C and considers this case inactive at this time,
pending further action by the claimant.


6. (SBU) Claimant D

Claimants D are a U.S. citizen brother and sister with 42
hectares of property near Balfate, Atlantida Department.
Claimants D report squatter problems beginning in 1974 when the
INA reportedly placed squatters "temporarily" on their land.
Despite repeated promises from GOH officials, no action has been
taken to evict these squatters. A group of squatters, who
arrived more recently and who repeatedly threatened the owners,
was removed by Honduran authorities at the request of the
Embassy, which has worked extensively on Claimants' behalf.
According to INA attorneys, INA began proceedings in 1974 to
expropriate much of the land belonging to Claimants D.

In late 1995, INA officials told the Embassy that it was planning
to formally expropriate a portion of the property, not including
valuable beachfront, and compensate Claimants D. In 1997, GOH
officials confirmed this remained their intention. One of the
Claimants visited the Embassy and reiterated opposition to the
expropriation. While in the past Claimants D had reportedly
contracted with a lawyer to prosecute their claim, the Embassy
has no current knowledge regarding the status of Claimants D's
legal actions. The most recent information received by the
Embassy confirms that INA is in the final stages of expropriating
the property. In April 2003, the Embassy informed Claimants D of
the GOH's temporary arbitration procedure (Decreto No. 349-2002)
that allowed the government and claimants to jointly submit
disputes for arbitration as an alternative to continued legal
proceedings. Claimants D decided against pursuing arbitration,
citing reservations about the procedure. Claimants D have not
requested Embassy assistance since 1996. The Embassy considers
this case inactive at this time, pending further action by the
claimant.


7. (SBU) Claimant E

Claimant E contacted the Department of State in July 1996,
alleging that his property, which he had leased from INA and then
developed into a large banana plantation, had been invaded by
squatters in 1975 with the encouragement of GOH officials.
Claimant E explained that he had previously filed a lawsuit in
Honduran courts and lost. Claimant E has exhausted all
administrative and legal avenues of recourse, culminating in an
unfavorable Supreme Court ruling. Over the years, the Embassy
has helped arrange meetings between Claimant E and the President
of the Supreme Court, the Vice-President of the country, and the
INA Director.
Current Honduran government officials maintain that while
Honduran law requires the payment of compensation for
improvements made on leased land that is expropriated under
Honduras' land reform laws, the Honduran Supreme Court decision
against compensation for Claimant E makes such a settlement
impossible. In 2002, the Embassy met with several high-level
representatives in the Honduran government to push for
consideration of possible forms of resolution of this and similar
cases. GOH officials, however, repeatedly state that since this
case has been decided at the Supreme Court level, there is
nothing more that can be done for Claimant E, and they consider
this case closed.

In May of 2004, Claimant E came back to Honduras and visited
INA's offices to confirm whether the GOH was going to compensate
him. They informed Claimant E that he was not going to be able
to receive compensation. The Department of State has reviewed
information and evidence provided by Claimant E pertaining to
this claim and Claimant E's efforts to resolve it and agreed in
March 2005 to undertake a U.S. Government espousal action based
upon a denial of justice claim.


8. (SBU) Claimant F

In 1991, a squatter group invaded Claimant F's property
near Guaimaca, Francisco Morazan Department. INA issued the
squatters a "certificate of occupation" for the land in 1992.
The INA subsequently revoked the certificate when Claimant F
contested it, but the squatter group remained. Claimant F later
offered to give the group a portion of the property to resolve
the dispute. The squatters declined the offer and did not allow
anyone to enter the land. They threatened violence against
people seeking to evict them and several times threatened to kill
Claimant F.

Claimant F contacted the Embassy in February 1998 to ask for
assistance in resolving the case. In April 1998, Claimant F,
Embassy officers, and Claimant F's attorney met with the INA's
attorney several times to discuss the case. The INA agreed to
work with Claimant F to persuade the squatters to accept Claimant
F's prior offer to avoid a court battle.

Working closely with the Embassy, the INA accepted Claimant F's
offer to donate 176 hectares of agricultural land to the INA to
give to the campesino squatters in return for INA's help in
evicting the squatters from the rest of his land. In May 2001,
Claimant F filed a criminal suit against the squatters, who were
summarily evicted from the property. However, a few of the
original squatters reinvaded the land several weeks later.
Claimant F indicated that the offer to donate substitute land was
conditioned on certain actions by the INA and that the offer had
expired.

In January 2003, INA expropriated 176 hectares of Claimant F's
land and granted him 80,020.36 lempiras in compensation (USD
4,644.25 - roughly USD 10 per acre). Claimant F's appeal to the
National Agrarian Council, for an overturning of the INA's
resolution to expropriate his land, was denied. In April 2003,
the Embassy informed Claimant F of the GOH's temporary
arbitration procedure (Decreto No. 349-2002) that allowed the
government and claimants to jointly submit disputes for
arbitration as an alternative to continued legal proceedings.
Claimant F decided not to pursue arbitration.

Claimant F died in a car accident in early 2005. Soon after his
death, the land was invaded again. Claimant F's brother
communicated his interest to come to Honduras and try to resolve
this problem. Claimant F's brother has not had any contact with
the Embassy since.


9. (SBU) Claimant G

Claimant G purchased land in Comayagua, Comayagua Department, in

1993. A group of campesino squatters subsequently invaded the
land and allegedly received INA support. Claimant G won a
complaint before the INA and paid the squatters for improvements
they made on the land in anticipation of their removal. However,
the INA ignored its own ruling, gave title to the squatters, and
moved to annul Claimant G's title. On June 30, 1998, a court
ruled against Claimant G and ordered revocation of the title.
Subsequently, INA accepted the court's ruling and
annulled Claimant G's title. In May 2000, Claimant G filed a
legal procedure asking for the Supreme Court to review the case.
The Embassy understands that this case is still pending. In
April 2003, the Embassy informed Claimant G of the GOH's
temporary arbitration procedure (Decreto No. 349-2002) that
allowed the government and claimants to jointly submit disputes
for arbitration as an alternative to continued legal proceedings.
Claimant G filed for arbitration, but the request was denied by
the Attorney General's office, citing lack of evidence. The
Embassy considers this case inactive at this time, pending
further action by the claimant.


10. (SBU) Claimant H
Claimant H owned a fishing boat registered in Florida. When the
boat arrived in Roatan, Bay Islands, Honduras, in 1987, the
Honduran Navy allegedly seized it without justification (the
claim that there was no justification for the seizure remains
unsubstantiated). After years of litigation to recover the boat,
Claimant H was notified in 1996 that the Navy had sold the boat
in 1989 by executive decree. However, the decree was not
published in the official La Gaceta until 1996. Claimant H
appealed through the Honduran court system up to the Supreme
Court, losing each time on procedural grounds. The Embassy is
not aware of any recent developments in this case and considers
this case inactive and recommends closure.


11. (SBU) Claimant I

Claimant I owns land near El Progreso, Yoro Department. The land
suffered from squatter invasions for more than 30 years. In 1969,
Claimant I's now-deceased husband signed an agreement with INA,
donating some land to distribute to squatters in return for INA's
promise to protect the rest of the land from further invasions.
Notwithstanding the 1969 agreement, the INA expropriated an
additional parcel of land in 1987 that had been occupied by a
separate group of squatters. The new group of squatters
subsequently illegally sold the land to a third party not
eligible to buy it under the land reform law.

In 1999, INA confirmed that the property belongs to Claimant I
and in 2000 issued an eviction order to evict the third-party
occupants. The police refused to recognize INA's eviction order.
In 2001, the local court rejected Claimant I's request for an
eviction, and in June 2002, the Appeals court again ruled against
Claimant I. Claimant I informed the Embassy in late 2001 that
her attorney had received death threats regarding the case and
that the attorney's property had been damaged. The Embassy
routinely raises this case with Honduran court and government
officials and will continue to assist Claimant I's efforts to
recover the land. In April 2003, the Embassy informed Claimant I
of the GOH's temporary arbitration procedure (Decreto No. 349-
2002) that allowed the government and claimants to jointly submit
disputes for arbitration as an alternative to continued legal
proceedings. Claimant I responded she is not interested in
pursuing arbitration, nor does Claimant I wish to consider
pursuing legal action in Honduran courts. Claimant I indicated
the possibility of filing for espousal with the USG.


12. (SBU) Claimant J

Since 1927, Claimant J's Honduran wife's family has owned
the title to 44 hectares of urban land in Trujillo, Colon
Department. Beginning in the mid 1990s, the land was invaded by
squatters. Over the years, Claimant J's family won a total of
seven eviction judgments, only to see the land invaded anew after
each eviction. In 1999, Claimant J requested from the
Municipality of Trujillo permission to divide the property into
lots for development. The permission was never granted. In
2000, the property was invaded for the eighth time. In late
2000, before the court ruled on the eviction, the Municipality
began expropriation proceedings, effectively freezing the
eviction procedure.

Claimant J suspects that the squatters invaded the land with the
tacit approval of local political leaders. In a May 2001 meeting
with an Embassy officer, the Mayor of Trujillo admitted that the
Municipality was expropriating the land but contradicted himself
on the justification for the expropriation. Legal documents and
correspondence show that Claimant J has not been offered
compensation. While the Municipality has finished its
administrative procedure to expropriate the property, the case is
still pending resolution in court. In a May 2002 meeting with
the Ambassador, municipal officials admitted that the previous
municipal administration may have made a mistake in expropriating
Claimant J's property. The officials stated that the
Municipality of Trujillo would respect the decision of the court.
Embassy officers consistently urge Honduran court and government
officials to reach a fair resolution of this case. Embassy staff
has stayed in touch with local law enforcement officials when the
situation appears to have potential for violence.

In April 2003, the Embassy informed Claimant J of the GOH's
temporary arbitration procedure (Decreto No. 349-2002) that
allowed the government and claimants to jointly submit disputes
for arbitration as an alternative to continued legal proceedings.
Claimant J showed some interest concerning arbitration but did
not file a request with the Attorney General's office. He said
he would rather wait for the court ruling. Since then, the
Claimant has not contacted the Embassy with additional
information.


13. (SBU) Claimant K

Claimant K owned 41 hectares of property on Utila, Bay
Islands, to be used to develop a tourism project. Claimant K
estimates the value of the property at approximately USD 2.9
million. In 1999, the Ministry of Public Works announced the
public tender to build a new airport in Utila on Claimant K's
land and subsequently expropriated Claimant K's property without
paying compensation. Claimant K requested compensation from the
Ministry of Public Works in late 2001. Embassy officials urged
the Ministry on four occasions in 2002 and 2003 to effect prompt
and effective compensation. Ministry officials solicited the
court in Utila to confirm the legal background regarding the
expropriated property. The court has not yet issued its opinion.
In June 2002, Ministry officials said that Claimant K's case will
be submitted to an inter-agency commission for a determination of
the value of the land. In a January 2003 meeting with Embassy
officials, Presidential legal advisors were informed of Claimant
K's case. The advisors said that they would address the issue of
compensating Claimant K with the Minister of Public Works. At
the beginning of 2004, this claim was still pending resolution
from the Ministry of Public Works. The Embassy did not receive
any confirmation that this was done.

In April 2003, the Embassy informed Claimant K of the GOH's
temporary arbitration procedure (Decreto No. 349-2002) that
allowed the government and claimants to jointly submit disputes
for arbitration as an alternative to continued legal proceedings.
In early 2004, Claimant K's attorneys informed the Embassy that
this case was in its final stages. They are waiting on a final
evaluation to calculate the economic compensation to be awarded.
On March 2005, Claimant K's attorney informed the Embassy that
the claim has not been resolved yet.


14. (SBU) Claimant L

Claimant L owns land on the southeastern edge of Honduras
in territory that was Nicaraguan until the two governments moved
the border in 1960. In 1976, Claimant L's father (then owner)
filed to register his land with the corresponding land registry
office in Honduras but never received any reply. In 2003, when
Claimant L inherited the property, she discovered the INA had
parceled off and sold almost half of the 3,460 acres of land. In
April 2003, the Embassy informed Claimant L of the GOH's
temporary arbitration procedure (Decreto No. 349-2002) that
allowed the government and claimants to jointly submit disputes
for arbitration as an alternative to continued legal proceedings.
On April 10, 2003, Claimant L filed an administrative proceeding
with the INA and filed for arbitration. In April 2004, Claimant
L's attorney informed the Embassy that the local registrar's
office had refused to register the property. Responding to
Embassy inquiries, the Supreme Court indicated that the report
from the registrar's office stated they were unable to register
the land due to a third party registry dating back to 1912,
raising additional questions requiring further investigation by
Claimant L's attorneys. In March 2005, Claimant L's appeal to
the Property Institute was denied. Claimant L's attorneys have
indicated they intend to present other legal filings against this
resolution.


15. (SBU) Claimant M

In 1995, the Municipality of La Ceiba issued a title for
land owned by Claimant M to a local Honduran family. This family
in turn sold the land to a third-party family with political
influence. Claimant M's attorney filed a lawsuit to cancel said
transaction, without success. Only after continued Embassy
advocacy was the case finally sent to the Attorney General's
office in early 2002. In May 2002, the Attorney General sent the
case back to the Municipality of La Ceiba for final resolution,
having issued his opinion in favor of Claimant M. On March 28,
2003, the Municipality voted to cancel the title originally
issued to the local Honduran family. In April 2003, the Embassy
informed Claimant M of the GOH's temporary arbitration procedure
(Decreto No. 349-2002) that allowed the government and claimants
to jointly submit disputes for arbitration as an alternative to
continued legal proceedings, but Claimant M decided not to apply.
In May 2003, the Honduran party appealed the March decision to
cancel the title. In October 2003, the Interior Ministry upheld
the ruling in favor of Claimant M. To date, however, the
municipality has failed to actually revoke the title. At the end
of 2004, M's lawyer presented the case before the Supreme Court.
To date, this case has not been resolved by the Court.


16. (SBU) Key to Claimants' Identities:
Claimant A: Eduardo Valenzuela, U.S. citizen, waiver received
Claimant B: Gustavo Valle, U.S. citizen, limited waiver
Claimant C: Carlos Madrid, U.S. citizen, waiver received
Claimant D: Lily Jones Bourne and Edward Purcell Jones, U.S.
citizens, no waiver
Claimant E: Alfred McDaniel, U.S. citizen, waiver received
Claimant F: Mark Latty, U.S. citizen, no waiver
Claimant G: Antonia Fajardo de Hubert, U.S. citizen, waiver
received
Claimant H: Anthony Fish Company, U.S. company, no waiver
Claimant I: Norma Bogran, U.S. citizen, no waiver
Claimant J: Jaime Castano, U.S. citizen, no waiver
Claimant K: James Harley Crockett, U.S. citizen, no waiver
Claimant L: Maria Cecilia Cerna, U.S. citizen, waiver received
Claimant M: Yolanda Guite, U.S. citizen, no waiver

PIERCE