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

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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