HONDURAS: WHO IS ADRIAN RECCA? BACKGROUND ON THE

C O N F I D E N T I A L SECTION 01 OF 02 TEGUCIGALPA 001101 SIPDIS SIPDIS STATE FOR EB/ESC, WHA/EPSC, WHA/PPC, AND WHA/CEN STATE FOR D, E, P, AND WHA TREASURY FOR JHOEK STATE PASS AID FOR LAC/CAM NSC FOR DAN FISK E.O. 12958: DECL: 06/15/2016 TAGS: EPET ENRG PREL PINR HO SUBJECT: HONDURAS: WHO IS ADRIAN RECCA? BACKGROUND ON THE MAN BEHIND HONDURAS' EFFORT TO GET INTO PETROCARIBE REF: TEGUCIGALPA 1026 AND PREVIOUS Classified By: CDA James Williard for reasons 1.5 (b, d) ¶1. (C) As reported in reftels, Honduras has made clear its intention to import Venezuelan oil on preferential financing terms. Precisely how such a plan would actually work remains a mystery. But it seems that each time Post inquires more deeply about some aspect of the proposal (financing, storage, contracting, distribution, et cetera),the name Adrian Recca comes up. Recca, reportedly a Franco-Argentine businessman, appears to be a key deal maker, and is known to have been present in discussions with the GOH, Honduran gasoline retailer DIPPSA, and private businessmen. Alternatively characterized as "extremely clever" and "full of it," Recca appears to be one of the driving forces behind this complicated deal. Post is also checking rumors that Recca may be wanted by Interpol. So, who is this guy? ¶2. (C) As Post began to unravel the shifting GOH plans to seek a PetroCaribe deal with Venezuela (reftels),Recca's name began to seem ubiquitous. Post has heard from several sources that Recca has traveled to Venezuela on more than one occasion to keep PDVSA interest in the Honduras project high, and to try to matchmake various deals. Recca called Congressman Arturo Corrales from PDVSA offices in Caracas, for example, to try to get him to give his endorsement of the plan to senior PDVSA officials. (Corrales claims he evaded the issue.) Similarly, Recca contacted DIPPSA owner Henry Arrevalo from Venezuela and attempted to get Arrevalo to tell PDVSA officials that DIPPSA might be for sale. According to Arrevalo, he told PDVSA that the company was not for sale, and that if it were, he would meet with them face to face, not through an intermediary like Recca. Arrevalo assesses that Recca is a big-talker and name dropper, but not really a player. Former DIPPSA owner Jose Lamas reached a similar conclusion, when he described him as "all talk." Corrales described Recca more poetically as "living in a big house that he doesn't own." ¶3. (C) As the owner of DIPPSA -- perhaps the keystone to any PDVSA/PetroCaribe plan (see reftels) -- Arrevalo has been contacted by Recca a number of times. At one point, Recca was attempting to broker a purchase of DIPPSA by a Salvadoran named Guillermo Borjas, Arrevalo said. But after meeting with Borjas, Arrevalo emerged unimpressed, judging that Borjas was not a serious bidder, and that Recca had oversold the deal. Borjas apparently felt some misgivings as well, since he subsequently walked away from the talks. According to a former GOH official, Recca has also plied Panama's BanIstmo and later a Venezuelan bank, seeking to have them provide financing for a DIPPSA purchase. All indications are that Recca is still actively working on that deal despite Arrevalo's dim view of him and Recca's own recent problems lining up financing. ¶4. (C) Apparently feeling the heat from USG interventions warning of the risks of GOH involvement in a political deal with Venezuela's Chavez, Recca and his partners now seek a way to make the deal appear "commercial" in nature. Both Corrales and Arevalo told us that a Honduran front corporation was being formed, which would be 49 percent owned by the GOH and, through that, attempt to qualify for the government-to-government financing under PetroCaribe. A former GOH official believes that Recca's frantic efforts to close a deal could be bearing fruit, and said that "(Venezuelan President Hugo) Chavez,s brother will arrive in Honduras June 20th to sign an agreement." He was unclear on what that deal would be. But he was confident that, given the deal,s size (the value of a month,s worth of Honduras's fuel requirements could be as high as USD 80 million) "some kind of deal will be made." ¶5. (C) Recca appears to be working closely with former Honduran President Rafael Leonardo Callejas. Whether Recca sold Callejas on the deal or is merely representing him is not clear. Post assesses that Recca -- widely credited with TEGUCIGALP 00001101 002 OF 002 business savvy and creativity -- likely helped formulate the deal and recruited Callejas as a rainmaker. (Callejas, a lifelong politician, is known for his greed and corruption, not for his business acumen.) The tie to Callejas most probably arose via Recca's father-in-law, Bernardo Casanova. Casanova was Callejas' campaign finance manager both times he ran for President, and currently lives on the same street as Callejas. Casanova's first wife is now married to former President Ricardo Maduro's brother, Osmond. ¶6. (SBU) Casanova also has very strong ties to the Zelaya family. Both the Zelaya and Casanova families are in the forestry and lumber business. Casanova was close to President Jose Manuel "Mel" Zelaya's father. When Zelaya's father was imprisoned for several years on charges of complicity in a politically motivated massacre on the family ranch in Olancho in the mid-1970s, Casanova provided both financial and emotional support to Mel and his brothers, a kindness Mel reportedly never forgot. Casanova subsequently served as Mel's campaign finance manager. ¶7. (C) The PetroCaribe project is not the only fuels-related deal Recca is trying to put together. According to a former senior GOH official who worked closely with Recca, he stands ready to take advantage of a switch to natural gas fuel proposed by the GOH for some sectors of the country. Recca reportedly owns a company called VETEC (Verificacion Tecnico) that is set-up to take advantage of a potential switch to LPG (natural gas) fuel for municipal transportation. Given the highly technical and potentially dangerous technology involved, any project involving LPG fueled vehicles must be subject to annual inspections for safety. VETEC would seek to provide those services. However, trouble seems to dog that deal as well, as Recca's reported partner, the son of a former Vice President Vicente Williams, apparently has not yet signed the necessary documents and contracts for incorporation. Moreover, one person told us that representatives of French natural gas supplier ELF -- with whom Recca had been seeking a supply contract -- suddenly broke off negotiations and returned to France. Meanwhile, Recca's principal competitor in the LPG-vehicle business, a Peruvian national, was shot 26 times while stopped at a red-light in northern Honduras last year. (Rumor has it he ran afoul of a Korean mafia with whom he was dealing for used cars. Post has no reason to believe the execution was linked in any way to Recca.) ¶8. (C) COMMENT: Recca appears to be the dealmaker, but certainly not the money or the political weight behind the drive to conclude a deal with Venezuela. As USG pressure against an outright PetroCaribe deal has mounted, Recca's role as a liaison with potential private sector front groups and financiers has become even more important. Over the last several weeks, Recca has clearly been looking for a way to persuade DIPPSA's Arrevalo to join the effort. Post remains concerned that pressure on Arrevalo could become unbearable, essentially forcing him to cooperate with a GOH/GOV import scheme. In the meantime, as discussed in reftels, elements within the GOH seek this deal for their own motives -- some are likely political (supporting a leftward shift in Honduran, and perhaps Nicaraguan, politics),and others fiscal (up to USD 400 million from a GOV financing scheme could buy the current government out of a lot of its problems in the short term.) Recca and Callejas, meanwhile, are likely in it just for profit. With a billion dollar contract at stake, Recca and the GOH are assembling a collection of strange bedfellows that Post judges could make a PetroCaribe-like deal inevitable. END COMMENT. Williard WILLIARD