HONDURAS: BIOGRAPHICAL INFORMATION: LEION "LEO"

S E C R E T SECTION 01 OF 02 TEGUCIGALPA 001921

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STATE FOR WHA/PPC, WHA/EPSC, INR/IAA, AND WHA/CEN
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E.O. 12958: DECL: 10/11/2036
TAGS: PINR TBIO ENRG PGOV HO
SUBJECT: HONDURAS: BIOGRAPHICAL INFORMATION: LEION "LEO"
STARKMAN MILLA


Classified By: Classified by Charge James Williard for reasons 1.5 (B,D
)


1. (S) Biographical Note: Leion Starkman Milla (DPOB 17
May 1968, San Pedro Sula, Honduras) served until recently as
Minister without portfolio for Investment Promotion and later
simultaneously as Director General of the parastatal electric
company ENEE. Starkman has been criticized for failing to
spur much new investment, though he claims over USD 2.5
billion in projects have been put into the pipeline during
his tenure. (Note: this claim is somewhat dubious,
considering that some of his projects, such as an ambitious
railroad to link Puerto Trujillo on the Atlantic with Puerto
San Lorenzo on the Pacific, exist only as vague notions. End
Note.) Anecdotal reports indicate Starkman is avariciously
corrupt, in one instance reportedly offering to facilitate an
investment in exchange for a 10 percent share of the deal.
Post contacts claim Starkman was also corruptly involved in a
March 2006 attempt to steer a USD 62 million contract to a
Spanish firm to consult on restructuring ENEE. Juan Bendeck,
former head of ENEE, privately tells Post that he (Bendeck)
was fired in part for opposing that contract. Bendeck
alleges Starkman was put in his place to shepherd the
contract through. If so, Starkman failed, as the project was
never signed, and ENEE was turned over to two separate
commissions -- one a management commission seeking to
restructure the company, the other a transparency commission
put in place to vet all procurement decisions. Amid a flurry
of attacks, Starkman resigned both his ENEE and Minister
positions on September 22. President Zelaya, however, has
yet to formally accept those resignations, and Starkman
traveled to Roatan on September 30 on GOH business relating
to electricity.


2. (S) Starkman's private business affairs are equally
tainted, as he is currently being sued by over six parties,
each of whom allege breach of contract, failure to pay, and
assorted other improprieties stemming from his personal
import/export firm REMSA. Starkman has owed U.S. firm
Wrigleys over USD 250,000 for two years. Post used its good
offices in April to negotiate a repayment schedule, which
REMSA promptly failed to meet. Pressed by Post, REMSA made a
series of payments, but has now fallen two months behind in
repayments again. Though Post has not spoken with other
claimants, their allegations against REMSA follow similar
outlines and therefore strike us as credible. Asked about
allegations that he violated his distribution agreement with
U.S. firm Hershey by re-exporting to other countries,
Starkman admitted his actions, but claimed that everyone in
the region did it, and that there was "tacit" approval from
Hershey to do so. Starkman alleges that the Hershey official
responsible for the policy was subsequently fired. Asked
about allegations that he violated another contract by
re-exporting Campbell's Soup products to other countries
including (possibly illegally) the U.S., Starkman claimed he
sold goods to clients in Honduras' free-zones and has no
knowledge of what they might have done with the goods
afterwards.


3. (S) Starkman's firm, REMSA, now focuses on importation
and distribution of liquor, including for Diageo (distributor
of Johnny Walker and Jose Cuervo, among other top-selling
brands). It is widely rumored (though unproven) that REMSA
colludes with corrupt customs officials in avoiding customs
duties on these liquor imports. One Post contact, so fed up
with the extent of this alleged corruption, passed us a
series of REMSA import documents. Post passed them to
DHS/CBP officials, who could find no "smoking gun" in the
paperwork.


4. (S) Starkman ceased actively managing his firm in 2005
when he worked as the finance manager for Mel Zelaya,s
presidential campaign in San Pedro (capital city of Cortes
Department, arguably the swing department that won Zelaya the
Presidency in the November 26, 2005 elections). He blames
inattention and mismanagement for declining sales and
payments arrears, and claims he will repay debtors and return
the firm to profitability in 6 to 12 months. In the meantime
numerous other importers continue to infringe his
distribution contracts. Starkman says he will act as "a

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gentleman" in allowing those other distributors to continue
for now, since REMSA cannot currently service market demand.
Were Starkman to enforce his rights, he says, the market
could not be fully served, sales volumes would drop, and he
would risk having his distribution contracts canceled.


5. (S) Starkman was educated in the United States and speaks
fluent English. As such, it is Post's view he is often
dispatched to "handle" the Americans. Post has on several
occasions caught him misrepresenting known facts (such as
concerning the details of secret meetings with the
Venezuelans over oil imports) and does not consider him a
trustworthy interlocutor. Taken with a large grain of salt,
however, some of his information can be quite revealing.

Williard
WILLIARD