VISAS DONKEY: REQUEST FOR CORRUPTION 212(F) VISA

C O N F I D E N T I A L MANAGUA 000803 SIPDIS SIPDIS DEPARTMENT FOR INL/C/P, CA/VO/L/C, WHA/CEN, WHA/PPC E.O. 12958: DECL: 04/03/2036 TAGS: CVIS PREL PGOV KCOR KCRM EFIN NU SUBJECT: VISAS DONKEY: REQUEST FOR CORRUPTION 212(F) VISA INELIGIBILITY FINDINGS--ROBERTO ERASMO CEDENO MENDOZA AND AMINTA OROZCO REYES DE CEDENO REF: A. 04 STATE 45499 ¶B. 04 MANAGUA 2808 ¶C. 04 STATE 242524 ¶D. 05 MANAGUA 345 ¶E. 05 MANAGUA 259 ¶F. 05 MANAGUA 260 Classified By: AMBASSADOR PAUL TRIVELLI. REASONS 1.4 (B,D). ¶1. (C) SUMMARY AND ACTION REQUEST: Embassy is seeking a security advisory opinion under section 212 (f) of the Immigration and Nationality Act, proclamation 7750, suspending the entry into the United States by Roberto Erasmo Cedeno Borgen, born in Nicaragua on November 25, 1938 and by Aminta Orozco Reyes de Cedeno, born in Nicaragua on October 26, 1943. Roberto Erasmo Cedeno Borgen is the former Mayor of Managua and a close political and business associate of former President Arnoldo Aleman, who was convicted of corruption in December 2003 and sentenced to twenty years imprisonment for his crimes. ¶2. (C) Aminta Orozco Reyes de Cedeno is Cedeno's wife and a beneficiary of his participation in Aleman's corruption. Cedeno served as a town councilman and, later, as Deputy Mayor of Managua during Aleman's term as Mayor (1990-1996) and was subsequently elected as Mayor (1997-2001) in his own right with Aleman's support. Throughout his period in the municipal government of Managua (1990-2001),Cedeno committed numerous acts of official corruption, some in cooperation with Aleman and others on his own. These corrupt acts benefited Cedeno, his wife and family, Aleman, and other corrupt associates. ¶3. (C) While president, Arnoldo Aleman was the linchpin in several high-level corruption schemes that defrauded the Nicaraguan state of reportedly over USD 100 million. Cedeno participated in some of these corruption schemes and developed his own in the Managua mayor's office. Since he and Aleman left office in 2001-2002, Cedeno has returned to the private sector, but he remains an active supporter of Aleman in the Liberal Constitutional Party (PLC) and helps the ex-president to retain total control of the party. The massive corruption of which Cedeno was an integral part caused serious damage for U.S. national interests in the stability of democratic institutions in Nicaragua, U.S. foreign assistance goals, and the international economic activities of U.S. businesses. ¶4. (C) Along with other corrupt associates, Cedeno and Aleman continue to damage all of these national interests by working to free the corrupt ex-president, undermine the government of President Enrique Bolanos, and place all of the country's government institutions under their control. For all of these reasons, the Department has already found Arnoldo Aleman to be ineligible to enter the United States under INA 212 (f). Post recommends that the Department now issue a 212 (f) finding against Roberto Erasmo Cedeno Borgen, and his wife, Aminta Orozco Reyes de Cedeno, who has benefited from her husband's corrupt acts. The following provides information requested in reftel A, paragraph 16. END SUMMARY AND ACTION REQUEST. PROCLAMATION INCLUDES DEPENDENTS AND IMMIGRANTS -------------- -- ¶5. (U) Sections 1a through 1c of the presidential proclamation suspend the entry into the United States, as immigrants or nonimmigrants, of corrupt public officials and former public officials whose acts of corruption have had serious adverse effects on the national interests of the United States. Section 1(d) then goes on to suspend the entry of, "...spouses, children, and dependent household members of persons described in paragraphs (a),(b),and (c) above, who are beneficiaries of any articles of monetary value or other benefits obtained by such persons." ¶6. (U) Reftel A also contained a series of questions and answers on the proclamation as additional guidance for posts. The answer to question eight specifies that, "the proclamation specifically covers corrupt officials, those who corrupt them, and their dependents. The inclusion of dependents - those who benefit from corruption - is consistent with other provisions of visa law that target activities that generate illicit funding. For example, we also extend visa ineligibility to the dependents of controlled substance traffickers, to ensure that the traffickers and their family cannot benefit from ill-gotten gains by sending family members to the United States." ARNOLDO ALEMAN'S CORRUPTION ALREADY DOCUMENTED AND HIS VISA REVOKED - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - ¶7. (C) Arnoldo Aleman, who until January 10, 2002, served as Nicaragua's President, is currently serving a twenty year sentence for being the linchpin of several high level-corruption schemes to defraud the Nicaraguan government of reportedly over USD 100 million while he was President. The elaborate financial schemes orchestrated by Aleman involved the transfer of public funds from the accounts of various government agencies to the accounts of shell foreign corporations set up for the sole purpose of defrauding the GON. Aleman and several of his associates have been convicted of various corruption crimes against the state, including embezzlement, misappropriation of public funds, money laundering, and conspiracy to commit these crimes. Reftel B described Aleman's corruption activities in detail, as well as the mass of evidence against the ex-President. In reftel C, the Department issued a 212 (f) finding against Aleman. Prior to this decision, the Department had already revoked the visas of Aleman and three of his main co-conspirators under INA 212 (a)(2)(I). ROBERTO CEDENO'S PARTNERSHIP WITH ALEMAN AND HIS CORRUPTION IN THE MANAGUA MUNICIPAL GOVERNMENT - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ¶8. (C) Roberto Cedeno was a founding member of Aleman's PLC, and is a long-time friend and associate of the ex-president. When Aleman served as Mayor of Managua from 1990 to 1996, Cedeno was initially a member of the municipal council, but Aleman later appointed him to serve as his Deputy Mayor. Since Cedeno proved a loyal instrument of Aleman's will and a partner in his corruption schemes, in 1996 Aleman nominated Cedeno to be his party's candidate for Mayor of Managua, even as Aleman himself ran for the presidency. Both were elected, and Cedeno became Mayor of Managua in January 1997, at the same time that Aleman was inaugurated as President of Nicaragua. ¶9. (C) When Cedeno first entered government service as a Managua city councilman in 1990, he signed a legal financial probity document stating that his personal assets totaled USD 5,000. However, when he signed another such document after being elected mayor in 1996, he claimed assets of USD 1.3 million. The discrepancy between the two documents provoked an uproar, with the Controller General's office (Contraloria) asking how Cedeno's assets could increase so dramatically in the space of six years when his only stated sources of income were his salaries as town councilman and Deputy Mayor. Cedeno claimed that he had possessed the larger total of assets all along, but had concealed them in 1990 for fear that the Sandinistas might return to power and steal them from him. While many Nicaraguans did conceal some of their assets in the early 1990s for this reason, it was clear that Cedeno owned nothing close to USD 1.3 million in assets in 1990, and he never offered a convincing explanation for the newfound wealth that he reported in 1996. However, with Cedeno enjoying the protection of Aleman, the Contraloria ultimately accepted his dubious argument and assigned Cedeno only "administrative" (rather than criminal) penalties for misrepresenting his net worth in his 1990 probity statement. ¶10. (C) While Deputy Mayor and Mayor of Managua, Cedeno participated in numerous schemes involving illegal sole-source contracts for city services. Many of these cases involved road construction, in which contracts were awarded to shell companies owned by Aleman and/or his cronies, which either carried out the construction themselves, doing a very poor job, or subcontracted to genuine construction companies, but skimming off large amounts of taxpayer money. Another of Aleman's cronies in the Managua municipal government involved in these schemes to steal money from the city budget was Victor Guerrero, whose visa was revoked under INA 212f in ¶2005. The cases that follow in paragraphs 9-11 were already reported in reftel D, but are repeated here for the convenience of the Department. ¶11. (C) In 1999 Cedeno and director of public works Victor Guerrero ignored laws requiring public solicitation of all government contracts and approved twenty-two different contracts with SOLECTRA Industrial Anonymous Society worth 2 million cordobas (USD 125,000) to provide the city with garbage containers. SOLECTRA was owned by Juan Solorzano Castillo, the brother of Pedro Solorzano, a prominent member of the Managua city council. Investigations by the media revealed that SOLECTRA was a dummy corporation whose only resource was a single warehouse where garbage containers were stored after they were purchased from the real manufacturer at a much lower price than that at which SOLECTRA sold the containers to the municipal government. Such a subcontracting arrangement was in direct violation of the contract that Cedeno signed with SOLECTRA. ¶12. (C) When the Contraloria sought to investigate the SOLECTRA case, Cedeno and Guerrero refused to provide it copies of relevant documentation. Such a refusal was illegal, but Cedeno and Guerrero were able to defy the Contraloria thanks to the support of Aleman. Even without their cooperation, the Contraloria went ahead with its investigation and concluded that Cedeno, Guerrero and the other conspirators should face criminal charges and be fined as much as 8 million cordobas (USD 500,000) for their actions. Then-Attorney General Julio Centeno Gomez (another Aleman crony whose visa was revoked under INA 212f in 2005), did his best to block any criminal charges by declaring that the state was not "offended" and had not suffered a loss due to Cedeno's actions, but the Contraloria brought criminal charges on its own. In 2000, a Managua judge ultimately found Cedeno guilty of fraud and misuse of public funds. However, Cedeno appealed the verdict as far as the Supreme Court in 2001, where Aleman's PLC magistrates negotiated a deal with their Sandinista counterparts whereby Cedeno's conviction was overturned. ¶13. (C) On another occasion in 1999, Cedeno and Guerrero used city equipment, workers, and construction materials to construct a private road for Aleman crony and then-Central Bank Director Noel Ramirez. At the time, Ramirez (whose visa was revoked under INA 212f in 2005) was using stolen GON funds to construct a huge 800,000 USD mansion in Managua and wanted new and improved roads constructed around it (reftel E). Even though these roads were (obviously) not in the city budget approved by the municipal council, Cedeno and Guerrero spent 10,000 USD of city funds to build them for Ramirez. Cedeno and Guerrero did this at a time when an estimated 70 percent of planned municipal projects were left undone because of budget shortfalls. On other occasions, (non-PLC) members of the Managua city council regularly accused Cedeno and Guerrero of renting out construction equipment belonging to the city government and pocketing the proceeds. ¶14. (C) Cedeno and Guerrero were also involved in another corruption and contract solicitation scandal in 2000, shortly before they left the Managua city government, when portions of the newly completed "suburbana" highway in the capital were washed away in mudslides, damaging and destroying the homes of nearby residents in the process. The city contract for the construction of the new highway had been given to the state-owned Rural Development Institute (IDR),which was led by Aleman-crony Eduardo Mena (whose visa was revoked under INA 212f in 2005) and served as one of the president's primary vehicles for the theft and laundering of GON funds (reftel F). Although the city of Managua paid over 6 million USD for the construction of the highway, the IDR did shoddy work and failed to construct the drains, gutters and ditches necessary to protect the new highway and nearby residences during Nicaragua's annual six-month long rainy season. As Mayor and Director of Public Works, Cedeno and Guerrero were ultimately responsible for inspecting the quality of the IDR's work, but they never brought any claims against it, even when the first rains it experienced produced massive damage and huge costs for the city. ¶15. (C) When Cedeno took office as Mayor in 1997 he persuaded the PLC and FSLN caucuses that dominated the city council to increase his salary by 150 percent, raising it to USD 10,000 per month, an astronomical figure for the second poorest country in the hemisphere, and, as the media noted, much more than the Mayor of Miami-Dade County made at the time. At the time Cedeno raised his salary, the municipal government was deep in financial arrears, and was seeking additional funds from the central government to cover basic municipal services. Cedeno arranged for the salary increase to take place when he was out of the country, so that he could claim that he had nothing to do with it, but the public outcry forced him and the city council (whose salaries were indexed to that of the mayor) to reverse the pay hikes. At the time, Aleman publicly defended Cedeno, claiming that sky-high government salaries were the "only way to avoid corruption." ¶16. (C) Thus thwarted in his effort to increase his salary in a nominally legal manner, Cedeno turned to illegal methods. He began secretly using the municipal budget to pay all of the electrical, water, gas, and telephone bills at his two Managua residences, one of which was owned by him and the other by his wife, Aminta Orozco. When word of this practice leaked to the media in 1999, and the daily newspaper El Nuevo Diario published copies of Cedeno's utility bills paid by the municipal government on his orders, Cedeno admitted everything. He tried to justify his use of taxpayer funds to pay his personal bills by claiming that "everyone does it" and complaining that his "low" monthly salary of USD 4,000 was simply insufficient to support his and his wife's lifestyles and their two residences. ¶17. (C) With a compliant city council and the support of Aleman, no official investigation of Cedeno's use of city funds to pay all his private phone and utility bills ever took place, and Cedeno continued to use city funds to pay for such bills through the end of his term. Because there was no formal investigation, the total amount of funds that Cedeno stole in this manner is unknown, but individual utility bills published by El Nuevo Diario in 1999 were as large as 14,000 cordobas (approximately USD 800 today, but much more at the time) for individual monthly phone bills at one of Cedeno's two residences. El Nuevo Diario also published copies of bloated municipal expense and "representation" accounts benefiting Cedeno and several of Aleman's closest associates, including Maria Haydee Osuna, Victor Guerrero, and Jose Marenco (all of whose visas were revoked under INA 212f in 2005). ¶18. (C) As Mayor, Cedeno also established a shell corporation (owned by the municipality) used to skim municipal funds for use by himself, Aleman, other corrupt associates, and PLC electoral campaigns. The Municipal Corporation of Managua Markets (COMMEMA) was nominally formed as a vehicle to funnel tax revenue raised from Managua merchants to invest in the infrastructure of the city's marketplaces. However, in reality, no such investment took place, and Cedeno instead used COMMEMA as a slush fund for personal and party purposes. Cedeno, Victor Guerrero, Maria Haydee Osuna and other corrupt associates of Aleman affiliated with the municipal government used COMMEMA to pay for bogus expense accounts and "representation" vouchers in the tens of thousands of dollars. COMMEMA also paid salaries to "ghost employees" and "advisors" of the city government who never worked a day for the city but were rewarded with fake jobs for their loyalty to Aleman. ¶19. (C) Cedeno also transferred COMMEMA taxpayer funds directly to the accounts of the PLC, where they were used to fund electoral campaigns, including the unsuccessful 2000 Managua mayoral candidacy of Aleman loyalist Wilfredo Navarro. During this campaign, Cedeno also illegally ordered the use of municipal offices, vehicles and workers to support Navarro, and COMMEMA funds paid the salaries of many of Navarro's full-time campaign workers. Although the total amount of COMMEMA funds that Cedeno stole or used for illegal purposes is unknown, in 1999 El Nuevo Diario published COMMEMA documents showing that at least 1.3 million cordobas (USD 80,000) "disappeared" from COMMEMA accounts in 1997-1998 alone. Other municipal documents published by the newspaper showed that millions of additional cordobas in city revenue were transferred to COMMEMA for similarly dubious purposes. Because of the protection of Aleman, no charges were ever brought against Cedeno in the COMMEMA case. ¶20. (C) Since Cedeno left office in 2001, numerous civil claims have been brought against him relating to alleged fraudulent purchase and sale of municipal land. In some of these cases, Cedeno is accused of having sold the same piece of municipal property to multiple buyers, while in others he is accused of fraudulently "selling" municipal properties to shell companies owned by himself and others. Although he has not held elected office since 2001, Cedeno remains a close friend of Arnoldo Aleman and an active supporter of Aleman within the PLC. In his capacity as a PLC convention member, Cedeno has served as one of Aleman's enforcers of loyalty in the party. Aleman uses the 750 voting members of the national PLC convention to provide a fig leaf of democracy in the party, but all the convention members, including Cedeno, owe their positions to Aleman and serve as nothing more than rubber stamps for Aleman's decisions. SERIOUS ADVERSE EFFECT ON U.S. NATIONAL INTEREST - - - - - - - - - - - - - - - - - - - - - - - - - ¶21. (C) The massive corruption of Arnoldo Aleman, Roberto Erasmo Cedeno Borgen and their other associates, specifically their theft of tens of millions of dollars from Nicaraguan institutions and their efforts to launder some of the money in U.S. banks, had serious adverse effects on those U.S. interests specified in the Presidential Proclamation as well as U.S. foreign policy priorities highlighted in the Embassy's Mission Program Plan (MPP). The Embassy has encouraged Nicaragua to prosecute officials for corruption and has provided financial and technical support in corruption cases, including that of Aleman himself. President Bolanos has made the imprisonment of Aleman, the recovery of stolen assets and a wider anti-corruption campaign the cornerstones of his presidency. Since his conviction, Aleman, who still enjoys vast political influence in the country, has worked incessantly through Cedeno and other corrupt associates in the PLC and other institutions to further undermine all of Nicaragua's democratic institutions, including the presidency, the National Assembly and the judiciary, all in an effort to have his conviction erased, regain the frozen assets they stole from the Nicaraguan state, and maintain political power. ¶22. (C) Stability of Democratic Institutions: The Embassy's top priority is strengthening and consolidating democracy through the development of transparent, accountable and professional governmental institutions, including the judiciary. Our MPP states that "... abuse of power, corruption and politicization of many state institutions, especially the judiciary, have impeded the consolidation of democracy and economic growth." A judicial system subject to political and corrupting influences undermines democracy and could lead to instability. The actions of Arnoldo Aleman, Cedeno and their associates have contributed directly to the widespread belief in Nicaragua that justice comes from political bosses and can be bought and sold. This attitude has undermined confidence in the system. In addition to working for Aleman's release from imprisonment, Aleman and Cedeno's actions have helped other corrupt figures, including Cedeno himself, to elude justice. Additionally, a judiciary free of corruption is necessary for improving the ability of the GON to investigate and prosecute those guilty of international criminal activities that can have a direct impact on United States homeland security, such as money laundering, human trafficking or terrorism. ¶23. (C) Foreign Assistance Goals: One of the top three USG foreign assistance goals in Nicaragua is strengthening democracy. The chief goals of USAID assistance in this area are battling corruption and effecting judicial reform. Aleman and Cedeno's actions have directly damaged progress in both of these areas. In December 2003, the USG froze USD 49 million of judicial assistance in response to endemic judicial corruption, highlighted by what appeared to be an imminent fraudulent "not guilty" verdict for Aleman, due to backroom dealing between Sandinista (FSLN) leader Daniel Ortega and the corrupt ex-president. Thanks to corrupt members of the PLC such as Cedeno, Aleman retains near total control of the party and its caucus in the National Assembly and uses this power to negotiate with Ortega. Without co-dependent cronies such as Cedeno in the PLC and the Assembly, Aleman would not be able to control the PLC caucus and use it to negotiate with Ortega and corrupt all the other institutions of the state that are under the Assembly's supervision, including the Controller General's Office, the judiciary, and the Supreme Electoral Council, among others. ¶24. (C) International Activity of U.S. Businesses: Corrupt Nicaraguan institutions hamper U.S. investment in Nicaragua and discourage U.S. exporters from establishing agent/distributor relationships. U.S. investors and business-people are reluctant to risk their resources in Nicaragua, knowing they could easily be subjected to the vagaries of a corrupt judiciary or the whims of politicians should they become involved in any commercial dispute, real or trumped up. By stealing over a hundred million dollars from the Nicaraguan state and subsequently trying to manipulate the presidency, judiciary, and the National Assembly behind the scenes in order to erase Aleman's conviction and keep their ill-gotten gains, Aleman, Cedeno and their associates have contributed directly to the erosion of confidence of the business community in all of Nicaragua's democratic institutions. ADDITIONAL INFORMATION REQUIRED FOR FINDING -------------- ¶25. (C) Roberto Erasmo Cedeno Borgen and Aminta Orozco Reyes de Cedeno have been informed of the fact that they may be covered by Presidential Proclamation number 7750, under section 212 (f) of the INA. ¶26. (C) Roberto Erasmo Cedeno Borgen and Aminta Orozco Reyes de Cedeno have been issued numerous B1/B2 visas over the years, but they do not presently possess valid visas. On March 29, 2006, Cedeno and Orozco applied for legal permanent residence status in the United States, based on an immigrant visa petition submitted by Orozco's sister. These applications for LPR status were refused under INA P212f in order to allow time for post to submit an advisory opinion request to the Department. ¶27. (C) Post recommends that the Department make a 212f ineligibility finding for Roberto Erasmo Cedeno Borgen and Aminta Orozco Reyes de Cedeno and that no (rpt no) further travel be allowed to the United States. TRIVELLI