COMBATING CORRUPTION IN HONDURAS

C O N F I D E N T I A L TEGUCIGALPA 002130 SIPDIS SIPDIS E.O. 12958: DECL: 11/08/2016 TAGS: PREL PGOV ECON CASC HO SUBJECT: COMBATING CORRUPTION IN HONDURAS Classified By: Political Counselor Alexander Margulies. Reason: 1.4(b/ d). -------------- SUMMARY -------------- ¶1. (C) An elite-run kleptocracy, endemic corruption and the concomitant sense of impunity enjoyed by high-level officials are major obstacles to achieving the USG's primary goals in Honduras of strengthening democracy, promoting economic growth, reducing poverty, preventing illegal immigration, combating narcotrafficking and protecting American citizens and their business interests. The Embassy is addressing this problem through public and private diplomacy, inviting the GOH, the business sector and civil society to join with us in confronting corruption; working with selected GOH officials to deal with specific cases of corruption/impunity; employing 212(f) visa revocations to sanction corrupt officials like former President Rafael Callejas, as well as to serve as a deterrent for others; using the media to shine light on suspected corrupt activities; and directing assistance programs to promote necessary legislative and institutional reforms. END SUMMARY. -------------- - CORRUPTION: A MAJOR OBSTACLE TO USG INTERESTS -------------- - ¶2. (C) Massive corruption is endemic to Honduran life. The country is a kleptocracy, in which a small economic elite thrives off inflated and jerry-rigged public contracts, government-supported monopolies/oligopolies, fraud rackets and guaranteed loans; controls the Congress and the judicial system by placing its agents in key positions; owns the major media organs; and enjoys relative impunity whether engaged in corrupt activities, criminal conduct or abuse of authority. This kleptocracy and the culture of corruption it cultivates threaten the USG's principal interests here of strengthening democracy and democratic institutions, promoting economic growth and poverty reduction through implementation of CAFTA, preventing illegal immigration, combating narcotrafficking and protecting American citizens and their business interests. The latest Transparency International Corruption Perception Index reflects this, listing Honduras in 121st place, ahead of only Ecuador, Venezuela and HAITI in the hemisphere. -------------- COMBATING CORRUPTION -------------- ¶3. (C) The Embassy has made confronting corruption a top priority, using public and private diplomacy to raise public consciousness on the need to combat; by encouraging the government, politicians, the private sector and civil society to work together to promote meaningful reforms; by exerting diplomatic pressure on egregious corruption cases; by employing 212(f) visa revocations to sanction corrupt officials like as former President Rafael Callejas; by using the media to shine light on suspected corrupt activities; and by directing assistance programs to promote necessary legislative and institutional reforms. -- IMMIGRATION REFORM: Corruption within the Honduran immigration service has facilitated the trafficking of tens of thousands of persons to the United States over the past two decades. In response to pressure from the Embassy, the response from the GOH has changed from one of denial, to lip service, to meaningful efforts. Most of the impetus for reform, however, rests with a few dedicated individuals. Following the arrest of the Immigration Director in mid-2005, the Embassy worked closely with the GOH, the International Organization for Migration and a commission formed by then-President Maduro to define areas for reform and develop an implementation plan. The new Zelaya Administration has not adopted the changes proposed by the Commission and has continued to view the Immigration Service as a patronage tool. This, coupled with the discovery of passport fraud led to the Embassy temporarily suspending visa interviews in June. In early 2006, a capable reform-minded Immigration Director took over. Working with the International Migration Organization, he has developed an organizational structure, written position descriptions, fired corrupt officials, worked with a private university to identify non-partisan new hires, and is seeking to reduce the possibilities for corruption by requiring payment for service to a bank. Inadequate funding remains an obstacle to implementation of these reforms, proposed legislation continues to be pending, and the Director has had to go on extended medical leave, which places a big question mark over the future of these reform efforts. We will continue to press the GOH to maintain forward momentum on cleaning up the Immigration Service. -- COVER-UP OF MURDER OF U.S. SOLDIER: The Ambassador and Emboffs have engaged with President Zelaya, other high-level GOH officials, Supreme Court Chief Justice Vilma Morales and Attorney General Leonidas Rosa Bautista regarding the murder of Sgt. Francisco Javier Morales, a Louisiana National Guard member who was murdered in 1999 in Trujillo while engaged in Hurricane Mitch assistance. The chief suspect in the case is now a member of the Presidential Guard, and at least five other members of the Guard, while deployed to Trujillo on official orders, engaged in suborning and threatening witnesses, prosecutors and judges involved in the case. While we have not/not received a positive response from the Presidency to our protests over the Presidential Guard's actions, both the Chief Justice and the Attorney General have been cooperative in transferring control over the case to a judge better insulated from pressure and in maintaining an aggressive prosecutorial stance. -- TRANSPARENCY LAW: President Zelaya's pledge to enact a transparency law was a centerpiece of his campaign. USAID provided technical assistance and funding to civil society organizations involved in development of a draft law, which was agreed to by the relevant congressional commission, the Executive Branch and civil society in August. When a completely different and much weaker bill was introduced by the congressional leadership to the plenum in August, the Ambassador contacted Congress President Roberto Micheletti to point out that trying to force through passage of a non-transparent transparency law was not/not the proper way to promote transparency in government. The Embassy, working with other embassies and the World Bank, recently reached an agreement with the congressional leadership on the text of a strong transparency law which should be voted on during the current session. -- CIVIL CODE REFORM: USAID provided technical assistance and funding for the development of a new Civil Procedure Code, which is designed to move civil proceedings from a written trial system to a more transparent accusatory oral trial system. This legislation is expected to be enacted by Congress before the end of the year. -- POLICE ORGANIC LAW: DEA provided technical assistance in the development of reforms to the Police Organic Law which will strengthen that institution's ability to deal with internal corruption through drug and polygraph testing, as well as to expand its enforcement capabilities through enhanced authorization to carry out wiretaps and engage in undercover operations. -- ELECTORAL REFORM: USAID provided technical assistance and funding to civil society organizations reviewing reform proposals by the Supreme Electoral Tribunal (TSE),the most significant of which would try to minimize electoral fraud by placing control over the selection, training and review of voting table officials with the TSE, rather than with the political parties as is currently the case. Emboffs are meeting with TSE officials and key legislators to encourage meaningful reforms to guarantee a strong independent TSE and free, fair and transparent elections. -- COMPETITION COMMISSION: Congress recently enacted legislation creating a Competition Commission, but the Executive Branch has yet to fully fund it. The Ambassador is publicly praising the GOH's creation of the Commission while encouraging the business sector to press the Government to provide it with sufficient resources to do its work. USAID and the World Bank provided technical assistance for the drafting of the Commission law. -- JUDICIAL REFORM: USAID has provided technical assistance to the national and regional Inter-Institutional Commissions on Judicial Reform. The National Commission has developed a set of reform proposals which it is preparing to brief to the donor community. -- MONEY LAUNDERING: ECON has worked with the Public Ministry on money laundering investigatory procedures, helping to streamline case identification and investigation processes, thereby reducing the caseload and raising the percentage of prosecutable cases reaching the trial stage. ECON has also helped strengthen the Public Ministry's unit responsible for seized assets, auditing its financial records, helping to draft operational manuals, and overseeing the first systematic distribution of funds to law enforcement agencies. Finally, when a jet was abandoned at the Tegucigalpa airport in mysterious circumstances, the Ambassador and ECON pressed for it to be handled in accordance with the law and sold at auction rather than appropriated by the President. The auction process is currently underway. -- ETHICAL BUSINESS PRACTICES: ECON and USDOC are providing technical assistance and funding through the USDOC Good Governance Initiative to two NGOs for a program aimed at training Chambers of Commerce and their member companies on drafting ethics codes and implementing an ethical culture into their businesses. At Post's urging, other organizations, such as the Honduran-American Chamber of Commerce and the Federation of Chambers of Commerce have committed themselves to working with their members on similar efforts. USAID also supported an analysis of the conciliation services provided by the Chambers of Commerce. -- INA 212(f): The revocation of ex-President Callejas' visa under Section 212(f) of the Immigration and Naturalization Act (INA) and denial of entry to former President Callejas sent shock waves through the Honduran political, economic and social elite, who were stunned to see one of their leading members sanctioned, humbled and disgraced by the USG. The reverberations of this action continue to be felt, with some members of the elite cautiously inquiring as to their own visa status; high-level officials in government institutions nervously approaching us to profess their dedication to reform and good government while seeking some sign of positive recognition in return; and some ambitious politicians soliciting our support as they try to advance their positions within their particular party by adopting the anti-corruption and reform banners. had a salutary effect on the political class. We believe that some of the enhanced cooperation we are getting from some GOH officials, particularly those connected with the judiciary, is due to their concern that we could similar action against them. Embassy sections continue to assemble files on prospective 212(f) targets, as we foresee similar 212(f) revocations will be called for in the future. -- GETTING HONDURANS INVOLVED: Following the revocation of ex-President Callejas' visa, the Ambassador and CONGEN repeatedly made the point that the key issue was rampant corruption, not a mere question of visa eligibility. The Ambassador followed up by focusing on the pernicious effects corruption has during a 10/5 speech to businessmen in the country's economic center of San Pedro Sula, calling on companies to adopt and follow ethical practices, and inviting the GOH, the private sector and civil society to work together and with the Embassy to combat corruption. Polcouns described the USG's anti-corruption foreign policy in a 10/13 presentation to the Honduran National Defense College. -------------- COMMENT -------------- ¶4. (C) Over the past year, post has developed a strategy to confront endemic corruption in Honduras, encouraging transformational changes that will make democracy here better serve the needs of common citizens as well as U.S. national interests. We focused on the broken immigration system, stimulating reform by temporarily suspending visa interview appointments, announcing a review of previously issued visas, issuing public statements, establishing a joint task force, featuring corruption in Ambassadorial speeches, and ultimately recommending the revocation of one of the most prominent, and corrupt politicians in the country - former President Callejas. All of this has worked in parallel with USAID efforts to reform the civil code; Millennium Challenge Account implementation of new business practices; DEA drafting of counter-narcotics police law; and donor nation insistence on transparency and judicial reform. We aim to focus government, media, and public attention, not on visa revocations, but on the broader issue of corruption that prevents progress in promoting economic growth and reducing poverty. Changing the mind set here will be a long and difficult endeavor led primarily by Hondurans. But, advances have been made and we see many additional opportunities for change as we continue to press for legislative action and honest implementation of reforms. END COMMENT. FORD