FEAR AND LOATHING IN ECUADOR: NERVOUS APPLAUSE FOR

C O N F I D E N T I A L QUITO 002714 SIPDIS SIPDIS DEPT OF COMMERCE WASHDC TREASURY FOR SGOOCH E.O. 12958: DECL: 11/07/2016 TAGS: ECON PGOV KIPR CVIS PINR ETRD EINV EC SUBJECT: FEAR AND LOATHING IN ECUADOR: NERVOUS APPLAUSE FOR POWER-BROKER'S VISA REVOCATION REF: A. QUITO 1261 ¶B. QUITO 2352 ¶C. ANNA - BROWN 10/31/06 EMAILS Classified By: Deputy Chief of Mission Jefferson T. Brown for Reasons 1 .4(b) and (d) ¶1. (C) Summary: Substantial media attention given to the Department's approval of a 212(f) visa revocation for corruption of a prominent Ecuadorian politician, Xavier Neira, has elicited broad approval from opinion makers and the general populace. The impetus for the revocations, Neira,s corrupt practices in an IPR-related legal case against U.S.-based Pfizer Corporation, became public when Neira announced his (correct) assumption that his visa was withdrawn because of his involvement in the case. Members of the political and economic elite have reacted either by praising the USG, or by quietly moving ill-gotten gains out of U.S. accounts, or both. The impact of the visa revocation highlights both the seriousness of the corruption problem here and the effectiveness of applying U.S. visa law in fighting corruption. End summary. MEET THE "PFIZER SIX" -- -- -- -- -- -- -- -- ¶2. (C) In May of this year, Post submitted a request to the Department for a Security Advisory Opinion and finding of 212(f) visa ineligibilities for corruption for eight Ecuadorian subjects, six of whom were found to be ineligible by the Department. Post submitted the request on the basis of information about bribery and judicial manipulation in the context of an IPR enforcement case involving US pharmaceutical company Pfizer (reftel a). The subjects to whom the ineligibility was eventually applied included two Ecuadorian judges, three attorneys in a well-known Ecuadorian law firm, and a top former official with Ecuador's IPR oversight authority. ¶3. (C) The highest-profile subject to be found ineligible was Xavier Neira, a co-partner in the Neira Law Firm and a former presidential candidate for the Social Christian Party (PSC). Neira is a well-known political fixer and power-broker in Guayaquil, Ecuador's commercial capital. Widely hated and feared, we could have picked no more notoriously emblematic a figure of Ecuador's corrupt crony capitalism as practiced by a narrow band of entrenched elites. ELECTION SEASON SENSITIVITIES -- -- -- -- -- -- -- -- -- -- ¶4. (C) Department approval of Post's 212(f) request coincided perfectly with two important events: Ecuador's election season, and an impending decision in the Pfizer legal case, in which copycat company Acromax is claiming that IPR enforcement amounts to an unfair competitive practice. If the courts find against Pfizer, Ecuador,s generally good IPR law, and its already shaky enforcement of the law, could be seriously undermined. ¶5. (C) Following Washington's approval to revoke the visas, Post's strategy therefore was to notify the subjects of the revocations in a staggered fashion, starting first with the judges and regulatory official, who were not known to have any high-profile political affiliations. Post anticipated that should word of these revocations leak out, the news might have a salutary effect on the fairness of the imminent Pfizer court decision. Embassy contacts had informed Post that one of the three judges in the ongoing Pfizer case had been threatened by Neira with unspecified consequences if he found in favor of Pfizer. Pfizer lawyers had provided Post with background information to build the case, but we had not advised them of internal USG deliberations or of our decision to revoke the visas. However, when the story broke in the media, we understand that the Pfizer lawyers discerned the connection to their case, and communicated to the judges reviewing the case that the visa revocations should be seen as a strong signal that the judges should issue a decision based solely on the law, and that the U.S. Embassy is supportive of the fight against judicial tampering. ¶6. (C) Because marquee 212(f) subject Xavier Neira is strongly associated with the PSC, a contesting party in the elections, Post exercised utmost caution in proceeding with the Neira visa revocations and notifications. Post did not want to appear to be meddling in Ecuadorian electoral politics. The visas for the three members of the Neira Law Firm were revoked only after the first round of the presidential elections (which eliminated the PSC presidential candidate Cynthia Viteri and decided all congressional seats) was completed. Viteri thanked Guayaquil CG for waiting until after the first round. If the announcement had been made earlier, Viteri said that it would have "killed" the PSC. She added that she hoped other parties would be implicated in the next round of revocations -- and indeed, we are committed to making sure that will be the case. YOU MEAN THEY WON,T LET ME IN? -- -- -- -- -- -- -- -- -- -- ¶7. (C) The subjects' varied responses to notification that their visas had been revoked are telling and demonstrate the pervasiveness of the corruption problem in Ecuador. None of the subjects seemed surprised when they were notified by EmbOffs that their visas were being revoked. Certainly none proclaimed their innocence: -- Judge Armando Cervantes demanded to know who in the Ecuadorian government had issued a "denuncia" (denunciation) against him, in other words who had spilled the beans about one or more of his corrupt activities. -- Judge Angel Rubio was notified while he was in the Quito airport getting ready to board a plane to Miami with his family. He asked: "so they are not going to let me in?", and then thanked the Consul for the just-in-time notification. -- Dr. Luis Vera, former head of IEPI, Ecuador,s IPR enforcement body, called Embassy Consul and demanded to know the information the Embassy possessed against him and claimed we "had no right to call him corrupt". This was before Embassy Consul informed him that corruption was the basis for the revocation. He then said that he was going to "complain to the World Court" that his "human rights had been violated." -- Without prompting, Xavier Neira asked "this must be about the Pfizer case, right?" After his initial notification, he called the Embassy several times to ask whether the visas for his family members have also been pulled. Brother Jorge has placed similar calls. The Embassy suspects that the subjects may have intended to send their family members to the US to attend to ill-gotten gains that may be stashed there. Visas for Neira's immediate family members were revoked 214(b) (for flight risk),and visa lookouts have been placed for those family members not currently holding visas. MEDIA INTEREST, PUBLIC APPROVAL -- -- -- -- -- -- -- -- -- -- -- ¶8. (C) Embassy PAS anticipated the media onslaught that these high-profile revocations would provoke, and prepared by working with media contacts to gauge public reaction to another revocation case, for former Supreme Court Judge Alfonso Zambrano, whose son had recently been caught on film taking a bribe (reftel b). Although the technical basis for that revocation was for flight-risk and not for corruption, Embassy PAS allowed the media to connect the case to corruption by citing the general reasons for which the US Embassy might revoke a visa. One Ecuadorian television station then polled Ecuadorian public on whether or not they agreed with the Embassy's action: the approval percentage was in the high nineties. ¶9. (C) These earlier poll results have informed the way Embassy PAS is managing communications after the story of the "Pfizer revocations" broke in the Ecuadorian press on October ¶28. Calls from the media have been fast and frequent, and early polling by Ecuadorian station Teleamazonas showed support among Ecuadorians for the Embassy action in the high eighties and nineties. ¶10. (C) Xavier Neira himself initiated the media frenzy. His public response to the revocation -- that he was being targeted for his work on behalf of Pfizer copycat Acromax -- did succeed in temporarily changing the tenor of media coverage. The Embassy neither confirmed nor denied Neira,s claims, only emphasized that the revocation was not undertaken lightly and was based on months of serious Embassy investigation and a clearance process in Washington at the highest levels. On November 6, Acromax, an Argentine-owned company, entered the fray by taking out a full page advertisement in Ecuadorian daily El Comercio, claiming that the visa revocation and media coverage were an attempt to prejudice the outcome of the Pfizer-Acromax case and constituted an unjust interference into Ecuador's judicial system. ¶11. (C) The revocations have fueled wild media and private speculation on who "might be next". Rumors circulate of an "Embassy list" and the press has been fishing for information in conversation with Embassy officers and with the putative subjects themselves. LESSONS LEARNED -- -- -- -- -- -- ¶12. (C) One eventuality Post did not anticipate was a possible GOE request for the evidence we used against Neira and the others, either to enable local prosecution against them or to mount a defamation case against unknown subjects presumed by many Ecuadorians to have provided Post with the evidence against Neira. Although source documents used in the 212(f) case are protected, as are all consular documents, by diplomatic privilege, Post routinely requests the Department waive this privilege to aid Ecuadorian law enforcement agencies in prosecuting other criminal cases. Therefore an official request for evidence in the 212(f) case presents a communication challenge for the Embassy. Recent media polling results released on November 6 indicate that 87% of respondents believe that Ecuadorian prosecutors should investigate the alleged corruption by the 212(f) subjects, and 68% believe that the Embassy should hand over the information we used to justify the visa revocations. That gap indicates a deficit of trust among the Ecuadorian public about the way Ecuadorian prosecutors might choose to use or not use such information, but still puts us in a potential delicate position. To date, no such formal request from Ecuadorian prosecutors has arrived at the Embassy. ¶13. (C) We nearly went off-message when initial reaction to the revocations was linked entirely to the Pfizer case. Had the public understood our action to be simply about protecting the interests of U.S. multinational companies, we would have sacrificed much of the moral force and impact of our action. We worked hard privately to plant seeds of doubt about whether that was the true basis of our action, and the discussion broadened back as we wanted to one of a generalized campaign against corruption. ¶14. (C) Discussion in the media has also underlined a perceived contradiction in our "tough stance" on these cases and a lack of progress on unrelated, high-profile extradition cases for Ecuadorians now living in the U.S. who are alleged to have stolen millions. This has presented Post an opportunity to educate our interlocutors about the extradition process and highlight delays that have occurred on the Ecuadorian side of the extradition equation. NERVOUS APPLAUSE -- -- -- -- -- -- ¶15. (C) EmbOffs report that the response of political and commercial elites to the Neira revocation has been a mixture of glee and fear. Neira is widely loathed in Ecuadorian political circles, including within rival factions of the PSC. Rival PSC politico and current Guayaquil Mayor Jaime Nebot was reportedly overjoyed by the revocation, and EmbOffs report that even longtime PSC boss Leon Febres Cordero was "resigned" to his former protege's public fall from grace. (Comment: On November 5th, Ecuadorian media reported that Febres Cordero was pushing back on the PSC Ethics Committee's decision to expel Neira from the party,s ranks. End comment.) Several reformist politicians have told EmbOffs that what the Embassy is doing with visa revocations is "very important" and that the country "needs a push" to combat corruption. ¶16. (C) EmbOffs also report that the Neira revocation is the main topic of conversation in Ecuadorian social circles, and that for elite Ecuadorians the US visa is "as important as a driver,s license." Embassy contacts who also know Neira have told EmbOffs that Neira has been seriously depressed about the turn of events, and has said that "this is one of the most difficult things he has ever had to face." ¶17. (C) According to EmbOffs, Ecuadorian contacts believe that the Neira revocation signifies a major new initiative in US visa policy. It was widely assumed that the Embassy "looked the other way" on corruption, tolerating the presence of Ecuadorians with ill-gotten wealth in the U.S. for economic benefit. This perception has fueled palpable fear among elites, stirred by press speculation on future cases. Some Ecuadorian subjects have called the Embassy to ask if they were "on the list", while others are reportedly moving money out of US bank accounts. ¶18. (C) The fear has reached the highest echelons of Ecuadorian politics. On October 31, Ecuadorian Ambassador to the U.S. Luis Gallego requested a meeting with Andean Affairs Office Director Phil French to discuss, among other things, the Neira revocation. Gallegos also asked about the purported "blacklist". Post suspects this meeting might reflect concerns on the part of President Palacio that he may be a target for a future 212(f) ineligibility (reftel c). COMMENT -- -- -- ¶19. (C) We anticipated the intense response that the application of the 212(f) visa ineligibility to such high-profile subjects would generate. We are developing a response that balances our long-term objective of combating corruption, protecting US commercial interests, cooperating with Ecuadorian legal authorities, assuaging the fears of important Embassy contacts, maintaining political neutrality and retaining the broad support for Embassy actions among the Ecuadorian public, all in conformance with US visa law. We hope to build on the media momentum, fear and public interest in the case by pursuing other 212(f) cases in short order and, recognizing the burden of responsible review at the Washington level for hundreds of cases worldwide, encourage the Department to devote more staff resources to speedy processing of this essential new tool of U.S. foreign policy. JEWELL