PARAGUAY: HIJAZI CASE FACING LEGAL AND POLITICAL

C O N F I D E N T I A L ASUNCION 001278 SIPDIS SIPDIS NSC FOR SUE CRONIN, S/CT FOR ARNOLD SIERRA E.O. 12958: DECL: 12/28/2026 TAGS: PTER PREL PGOV KCRM ECON PA SUBJECT: PARAGUAY: HIJAZI CASE FACING LEGAL AND POLITICAL HURDLES REF: ASUNCION 697 Classified By: DCM Michael J. Fitzpatrick; Reasons 1.4(b),(d) ¶1. (C) SUMMARY. The criminal case against suspected terrorist financier/money launderer Kassem Hijazi is presently stalled, with political pressure being brought to bear on judicial players. An Appellate Court ruled Hijazi should stand trial on tax evasion charges and the trial has been tentatively scheduled for April 2007, but some key evidence will be excluded. Even before the case can go to trial, the Supreme Court will need to rule on a defense motion to dismiss charges on Constitutional grounds. Both the lead prosecutor on the case and the President of the Tribunal assigned to rule on it signaled concern about political interests weighing in on Hijazi's behalf. END SUMMARY. Set up for Failure? ¶2. (C) Judge Cesar Nider Centurion ruled in April 2006 the case against Kassem Hijazi, the owner of a pawn broker business in Ciudad del Este, should go to trial on tax evasion charges for his not paying taxes on $24 million. However, he also ruled that the prosecution could not use evidence of Hizazi's assets including money seized at the time of his arrest as well as information relating to his bank accounts to make its case. An Appellate Court decision in May 2006 confirmed Centurion's ruling. Lead prosecuting attorney Maria Graciela Vera told Pol Chief she would appeal the restriction placed on using this evidence, but was not hopeful about receiving a positive ruling. In the meantime, she intended to build the best case possible on the evidence remaining, which she described as significant. Nevertheless, she wondered allowed whether Centurion had not laid a trap -- providing the judiciary cover to argue it had allowed the case against Hijazi to go forward while denying the prosecution key evidence it needs to make the case. ¶3. (C) A defense motion introduced in October 2006 to throw out the tax evasion charges on constitutional grounds further complicates matters for the prosecution. The Supreme Court needs to rule on this motion before the case can go to trial. In the meantime, all original documents pertaining to the case reside in the Supreme Court; the three judge panel assigned to the case is disinclined to commence its review of the evidence until the Supreme Court makes its ruling. The Supreme Court will go remain out on recess through January, making February the earliest possible date for a decision. The longer it takes the Supreme Court the better become the prospects for a postponement of the current April trial date. The prosecution has until March 2008 to obtain a verdict in the case before the statute of limitations kicks in. ¶4. (C) The defense introduced a separate motion in November 2006 for the release of property and some $500,000 in funds embargoed at the outset of the case in March 2003 as a guarantee against a flight risk. Lead judge Ana Maria Arrellaga told Pol Chief she may have no option but to release the funds as the two-year limit on property embargoed has expired. Graciela Flores de Orella, another judge on the panel, signaled she and her colleague Carlos Bordon preferred to retain the embargo but was concerned Arrellaga had already made up her made to lift it. "COINCIDENCES" AND PRESSURES DON'T BODE WELL ============================================ ¶5. (C) Prosecutor Vera cited several "coincidences" that call into question the integrity of lead judge Arrellaga on this case: -- Arrellaga's name came up to head the three-judge panel in a lottery of judges that was reportedly rigged. As fate would have it, when the judges demanded another lottery to select judges randomly, her name came up again to head the current panel. -- Arrellaga resisted sharing evidence relating to the case with Vera when Vera originally took over the case in October. -- Arrellaga conveyed knowledge of the Defense's motion to seek release of embargoed funds to Vera before this information had been made public suggesting she had been in contact with the defense. ¶6. (C) Separately, Arrellaga's five-year term as a judge has expired and Bordon's is to expire in six months. Both must compete with other judges for reappointment to another five year term. Judicial appointments are made by panel controlled by political interests. Arrellaga herself told POL Chief she wanted to deliver an honest ruling on the Hijazi case but that very powerful individuals -- she specifically named heavyweight (and thuggish) Colorado power broker Senator Juan Carlos Galaverna -- had linked her winning own reappointment to the bench to her delivering a decision favorable to Hijazi. COMMENT ======= ¶7. (C) COMMENT: The Supreme Court needs to rule on the defense's motion to throw out the case before it can go to trial in April. Appointment of a lead judge who admits to coming under pressure to deliver a decision favorable to the defendant and whose integrity has been called into question by the prosecutor does not bode well for an objective decision. The current prosecutor gives every indication she appreciates the importance of this case and is working hard to secure a conviction. Unfortunately, the prior judge's decision to throw out key prosecution evidence against Hijazi has merely increased the odds that this case is set up for failure. END COMMENT. CASON