MONEY LAUNDERING CHARGES AGAINST SALVADORAN

C O N F I D E N T I A L SAN SALVADOR 002371

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E.O. 12958: DECL: 10 YEARS
TAGS: SNAR EFIN PGOV PINS KCRM ES
SUBJECT: MONEY LAUNDERING CHARGES AGAINST SALVADORAN
CONGRESSMAN/ARREST OF MAYORS MAY FOLLOW


Classified By: DCM Michael A. Butler for reasons 1.4(b) & (d)


1. (C) On September 25, the financial crimes division of the
Salvadoran National Police (DAN) arrested the wife and
mother-in-law of (substitute) Congressman Roberto Silva
Pereira of the National Conciliation Party on charges of
bribery and money laundering. A local bank manager implicated
in the laundering scheme was also arrested. The police may
later add charges of narcotics trafficking and tax evasion
against all. As a congressman, Silva enjoys immunity from
prosecution and has not been detained, although the Attorney
General is preparing to present a strong package of evidence
to the leadership of the National Assembly. Leaders in the
Assembly have told emboffs that they will begin reviewing
evidence against Silva at their September 28 plenary session.


2. (C) Leaders of all political parties have stated publicly
that Silva will be considered innocent until proven
otherwise, but that they will lift his immunity if the
charges against him are substantiated. The National Assembly
will have a maximum 60 day period to investigate Silva and
decide whether to lift his immunity. Attorney General Saffie
and National Police Director Rodrigo Avila assured Polcouns
that evidence against Silva is irrefutable, and that Saffie
will proceed against Silva once his immunity is lifted.
Christian Democratic Party President Rodolfo Parker (protect)
told Polcouns late September 25 that there are at least four
mayors, two each from the ruling ARENA party and the PCN
implicated in the money laundering scheme, and that they are
to be arrested as well. Saffie (protect) assured Polcouns
that those arrests will take place in the next 7-10 days.


3. (C) The bank manager, Oscar Mauricio Contreras of Banco
Hipotecario, received remittances from the U.S. on behalf of
a construction company and furniture exporter owned by the
Silva family. After taking his cut, Contreras structured the
transfers of the remittances to Silva's company accounts
disguised as legitimate business transactions. Silva's wife
and mother-in-law would then withdraw cash from those
accounts to be paid to third or fourth parties. These
withdrawals eventually became kickbacks paid to city hall
officials in exchange for construction contracts in at least
fourteen municipalities.


4. (C) Silva, a thirty-one year old former semi-professional
soccer player, won a Congressional seat in the La Union
department last March. Since that time, he has purchased a
Porsche, Maserati, two luxurious beachfront properties, a San
Salvador mansion, and a yacht. Still, he might have gone
undetected a while longer in his eastern hometown of La Union
if his wife had not wired US$40,000 from a bank in Houston to
Contreras in Banco Hipotecario and listed it as a remittance.
Ironically, a sharp-eyed regulator at Banco Hipotecario
spotted the ruse and filed a Suspicious Activities Report
with the Fiscalia. Neither Post nor local police agencies
indicate possessing conclusive evidence linking Silva to
narcotics trafficking. Despite that, he fits the profile.
He is from La Union, the same department which has a vast
Pacific coastline, including the Gulf of Fonseca, and which
produced former Congressman Eliu Martinez, who was deported
to the U.S. in 2004 on drug trafficking charges.


5. (C) Comment: High-ranking GOES officials had earlier
expressed concern that the PCN would try to turn Silva's
arrest into a political circus, claiming that the arrest was
intended to weaken the PCN. The initial public reaction from
PCN congressmen and party leadership appears to indicate that
Silva has become somewhat radioactive, and that his own party
may keep him at arms length. The fact that indictments are
coming against two ARENA mayors is likely to help Saca and
the ARENA party leadership fend off charges that Silva's
arrest is politically motivated.
Barclay