PARAGUAY: FY-2007 CERTIFICATION REPORT

UNCLAS ASUNCION 000578

SIPDIS

SIPDIS

STATE FOR WHA/BSC
TREASURY FOR OSIA MAUREEN WAFER
TREASURY FOR OTA WARFIELD, VAN KOCH, MILLAR

E.O. 12958: N/A
TAGS: SNAR PGOV KCRM PA
SUBJECT: PARAGUAY: FY-2007 CERTIFICATION REPORT

REF: A. STATE 78495


B. 2005 STATE 219200


1. Below find Post's submission on host government
cooperation on counternarcotics efforts based on the
Benchmarks identified in reftel B.

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


2. The United State Government (USG) asked the Government of
Paraguay (GOP) to continue to keep pressure on major
international drug organizations by arresting and prosecuting
their key members and seizing their assets.

-- In 2005, the National Anti-Drug Secretariat (SENAD)
through its Major Violator Unit (MVU),assisted by DEA and
INL, carried out successful operations to disrupt cocaine
trafficking networks, increasing the amount of cocaine seized
over the last year and assisting and coordinating with
international law enforcement agencies in the war on drugs.

--In July 2005, SENAD captured Brazilian national, Luis
Alberto Da Cunha, alias Barba, who was on Brazil's ten Most
Wanted List. In cooperation with the Brazilian national
Police, SENAD seized weapons, cars, cellular telephones and
false documents. Da Cunha was one of the largest drug
traffickers in the country and is connected to Ivan Mendes
Mesquita.

-- Paraguay carried out joint counternarcotics operations
with countries in the region and beyond including the U.S.
and Europe during the course of the year. Paraguayan and
Chilean law enforcement officials, with the assistance of
Bolivian authorities, conducted joint operations to capture
members of an international drug ring as part of a controlled
delivery. Law enforcement officials in Santiago, Chile
apprehended 13 suspects and seized two (2) tons of marijuana
SENAD arrested 11 drug traffickers in Paraguay, seizing a
total of 708 Kilograms (KG) of Marijuana. This operation
began in Santiago in June 2005, when authorities learned of
the truck hauling the drugs. The operation demonstrated
excellent cooperation and strengthened intelligence sharing
among Paraguay, Bolivia and Chile.

-- In December 2005, SENAD seized 257 kilograms of cocaine,
apprehended seven members of a drug trafficking organization
-- six Ecuadorian nationals and one Colombian national -- and
confiscated the equivalent of $34,000 in Euros, U.S. dollars
and guaranes. This shipment of drugs had been destined for
Spain. SENAD conducted this operation in close collaboration
with DEA and Spanish police officials.

-- In June 2005, drawing upon technical and financial
assistance provided by U.S. Military Information Support
Teams (MIST),SENAD began a public relations campaign
appealing to the public for information related to drug
traffickers operating in Paraguay. This program has consisted
of radio spots airing on local stations as well as the
posting of large billboards with the photos of the "Most
Wanted" drug traffickers SENAD seeks to apprehend. The
program has generated much publicity and helpful leads,
putting traffickers on alert and on the defensive.


3. The USG asked the GOP to continue to provide adequate
funding for its counter narcotics programs.

-- While most Paraguayan ministries suffered substantial cut
in their funding, the Paraguayan Congress has continued to
fund Paraguay's counter-drug program at steady levels.
Given the political and economic environment, this is a
noteworthy achievement.

--In May 2006, Minister Hugo C. Ibarra Director of SENAD met
with President Nicanor Duarte Frutos, who pledged to support
SENAD's request to hire 50 new officers.

Demand Reduction
--------------


4. The USG asked the GOP to expand their Demand Reduction
Program to outside the Central Department.

-- As the GOP currently lacks the resources to expand the
program to areas outside the Central Department, USG funding
for this program remains critical. The last report shows that
from September 2004 to September 2005 the drug awareness
program reached a total of 44,710 students and formal
training was provided to 1,068 schoolteachers. A total of 219
public educational institutions were approached under this
program. It's Office of Demand Reduction does a significant
amount of outreach work, primarily in schools. SENAD has the
principal coordinating role under the "National Program
Against Drug Abuse" and works with the Ministries of Health
and Education and several NGOs.

Asset Seizure
--------------


5. The USG requested GOP expand on its seizure of assets from
the prior year.

-- In 2005, SENAD seized 43 weapons, 46 vehicles, and five
planes. It received $37,000 based on the sale of a seized
twin engine aircraft exceeding the $14,500 it received in
2004 based on the sale of seized assets.

Control of Precursor / Essential chemicals
--------------


6. The USG asked the GOP to step up efforts to track exports
of pseudo ephedrine to North America, Central America and
South America.

-- Paraguay regulates the import of ephedrine but lacks any
legal authority to punish violators significantly. Often
offenders are charged with related crimes such as tax evasion
in order to press charges that carry significant penalties.
There is no pending legislation regarding pseudo ephedrine.
Paraguay needs to take steps to improve implementation of
existing laws.

-- The USG sponsored the Major Violators Unit (MVU),DEA's
host nation counterpart in Paraguay, to conduct routine
investigations into the import of pseudo ephedrine into
Paraguay and the export of pseudo ephedrine from Paraguay.

-- In March of 2006, the MVU seized 500 kilograms of
ephedrine, labeled as soy protein at the Silvio Pettirossi
International airport and arrested Alicia Carolina Fernandez
Vazquez, a Paraguayan citizen, attempting to take possession
of the ephedrine which was addressed to a Paraguayan shell
company called L.D.M. exports. Fernandez Vazquez had a
Paraguayan passport with U.S. visa number 20011098290002.
The USG sponsored investigation revealed the source of the
ephedrine to be Krebs International, out of Punjagunta,
India. The investigation also revealed that the ephedrine
was to be shipped by container to Toronto, Canada to the
defendant's husband, Olari Mehrdad, a Canadian citizen born
in Tehran, Iran. Additionally, a check of customs records
for L.D.M. exports revealed that more than 10 tons of a
substance labeled as soy protein had been exported to Canada
in November 2005 from Paraguay. Fernandez Vazquez remains in
jail pending charges.

Official Corruption
--------------


7. We have asked the GOP to take corrective measures to
address concerns about corruption including prosecuting key
cases.

-- In April 2006, the U.S. polygraphed thirty-five
investigators and prosecutors from Customs and the Tax Office
investigative units and the Attorney General's office. Only
three of the thirty-five tested as being deceptive on
questions relating to taking bribes for handling cases.

-- On April 20, 2006, former federal prosecutor and vice
Minister of the Interior Carlos Calcena was convicted for
theft of funds (approx. $350,000.00),an undetermined amount
of Brazilian Reals and five kilograms of gold seized from
Brazilian drug trafficker Jamie Amato in 2000.

-- On a negative note, Aristides Cabral, a corrupt police
official with ties to drug traffickers, was named the Chief
of Police of the city of Villa Hayes the capital of the
Department of Presidente Hayes, located in Northwestern
Paraguay which forms part of a corridor for illegal flights
and ground transport of drugs crossing Paraguay. The Senate
voted down the GOP bid to promote Cabral.

-- In 2005, Paraguay's Attorney General created a Corruption
United manned by two prosecutors who have opened a number of
high profile corruption cases.
-- In November 2005, the USG sponsored a four week course to
train investigators and other officials from the law
enforcement community including prosecutors and judges in the
investigation of complex economic crimes. In the course of
the training class, Paraguayan officials arrested a Customs
representative involved in attempting to bribe an IPR
investigator.

-- The GOP supports the creation of a Trade Transparency Unit
(TTU) to monitor trade transactions for import and export
irregularities. This unit is expected to be fully
operational by the end of 2006.

-- In 2005, information sharing among agencies has improved
significantly. According to the head of Unidad Tecnica
Especializada (UTE) information sharing among GOP agencies
has played a key role in the interdiction of many important
cases. Cooperation is now occurring more on an
inter-institutional scale as opposed to an individual basis.

-- In the course of 2005, Paraguay created investigative
units in the Finance Ministry, Customs, and the Tax Office.

Money Laundering
--------------


8. The USG requested the GOP to enact a working money
laundering (ML) law and create an ML investigation
infrastructure.

-- While Paraguay's Congress has not yet enacted the AML law,
Minister of Industry and Commerce Raul Vera has teamed with
the President of the Advertisers Chamber Carlos Jorge
Biedermann to head up efforts to gain its adoption.

-- GOP approved a series of rules and regulations for the
banking industry to cooperate with the Anti-Money Laundering
Secretariat (SEPRELAD) on reporting suspicious activity.

SIPDIS

-- After long resistance got the GOP has adopted and
implemented the Task Force concept; SEPRELAD has shared
information with Attorney General's office on over 80 cases.

-- The Attorney General's Office continued to prepare a key
money laundering case, being processed as tax evasion,
against a major target, several currency exchange houses, and
upwards of 40 other individuals.



9. The USG asked the GOP to enact a working counter terrorism
(CT) law and create an investigation infrastructure.

-- While the law has not been introduced to Congress, a key
Congressman has assumed ownership of this bill and is working
with us on a plan for gaining its adoption.


10. The USG requested the GOP to enact a working criminal
procedure code that would enable real investigation and
prosecution of ML, CT and other complex economic and
organized crimes.

-- The GOP formed a legislative sub-commission and has been
working on reforms to the procedure code for the last year
and half. We have gained the support of key members on the
Commission to adopt new reform measures but it remains to be
seen if they will be able to overcome stiff resistance.


11. The USG asked the GOP to create and empower a true
long-term training center for prosecutors and other officials
working in the Attorney Generals Office.

-- The GOP has rented a new site and selected key staff for a
new training center that is slowly starting to function.

CASON