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