HOW EX-PARAMILITARIES FINANCED THEMSELVES THROUGH

C O N F I D E N T I A L BOGOTA 004798 SIPDIS SIPDIS E.O. 12958: DECL: 07/05/2017 TAGS: PTER PGOV PREL ECON CO SUBJECT: HOW EX-PARAMILITARIES FINANCED THEMSELVES THROUGH CORRUPTION OF LOCAL GOVERNMENTS REF: A. BOGOTA 3618 ¶B. BOGOTA 2464 Classified By: Political Counselor John S. Creamer. Reason: 1.4 (b,d) -------------- Summary -------------- ¶1. (C) Colombia's decentralization in the 1990s made local governments a tempting target for paramilitary infiltration. The paramilitary demobilization, confessions through the Justice and Peace process, and a renewed GOC security presence in former-para regions have exposed numerous cases of paramilitary looting of municipal finances, especially on Colombia's north coast. Local politicians were offered "silver or lead," a choice between being bought off with bribes or killed. Paramilitaries pocketed ten to twenty percent of all local government funds, and controlled much of the rest through shady government contracts. Education and health funds were a particularly lucrative source of funding. End Summary. -------------- Infiltrating Local Governments -------------- ¶2. (C) United Self-Defense Forces of Colombia (AUC) founder Carlos Castano publicly admitted that 70 percent of all paramilitary funds came from narcotrafficking. The rest came from plundering local government funds and from "vacunas," extortion levied on citizens and businesses (see septel on vacunas). By the mid-1990s, the AUC had a presence in over three-quarters of all departments and a third of all cities, especially on the country's north coast. Para infiltration was a major source of paramilitary financing and influence (ref A). The paramilitary demobilization, confessions under the Justice and Peace Law, and greater security in areas previously dominated by paras are enabling officials to expose corruption without fearing for their lives. -------------- An Unintended Consequence of Decentralization -------------- ¶3. (C) Under Colombia's 1991 Constitution, governors and mayors, previously appointed by the central government, became directly elected. Local authorities also received greater control over health, education and welfare spending with transfers from the national government to local governments tripling within a decade. Weak local governments with new power and money created opportunities for paramilitaries to increase political influence and to broaden funding sources according to Fabio Sanchez, director of the Center for Economic Development at the University of the Andes. Sanchez's research shows a strong link between the amounts of funds transferred to local governments and the levels of paramilitary activities in those areas. -------------- "Silver...or Lead?" -------------- ¶4. (C) Paramilitaries stole government funds for cash and influence. Gustavo Duncan, an expert on paramilitaries at the Foundation for Security and Democracy, estimates paramilitaries typically stole anywhere from 10-50 percent of total local government revenues in the worst areas of the North coast, putting five to ten per cent in their pockets and using the rest to buy off government officials and pay allies. Duncan notes that by stealing local resources, paramilitaries also crippled government's ability to deliver basic services and infrastructure. In some areas, this eroded government legitimacy and helped produce an illegal "narco-economy." ¶5. (C) Poloffs talked to six mayors from the department of Casanare who claim they were forced to sign a secret agreement to pay the "Martin Llanos" para block a percentage of public funds. Payments were made through "contracts" for services that were never provided. The mayors said prior to the 2002 elections, all mayoral candidates were forced to sign the agreement after their families were threatened. After the elections, and with a reinforced Police presence in their region for the first time in years, they felt safe enough to tell authorities, including President Uribe and the Prosecutor General's Office (Fiscalia),about the forced payments. The mayors, who claim they filed official reports seeking help and denouncing the threats, now face charges of having colluded with the paras. -------------- -------------- "Armed Clientelism" at the Municipal and Department Levels -------------- -------------- ¶6. (U) Soledad, a manufacturing center of over 300,000 located in the north coast department of Atlantico, is a case study of paramilitary infiltration and "armed clientelism" at the municipal level. Paramilitary Edgar Fierro Florez ("Don Antonio"),who worked for Rodrigo Tovar Pupo ("Jorge 40"), dominated Soledad's local government from the late 1990s to ¶2006. "Don Antonio" is estimated to have stolen over USD 4 million from the city's health and education funds, and diverted far more through corrupt contracts. ¶7. (C) Educational funds were a lucrative source of money and votes in Soledad. Alfredo Noya, Soledad's secretary of Education, set up a deal where 20 percent of all the city's educational funds were split between the AUC, the mayor, and local politicians. Juan Carlos Garzon, paramilitary analyst for the Organization of American States Mission (MAPP/OAS) in Colombia, explained educational funds were skimmed through the use of fake contracts to build schools, provide school lunches, and hire teachers. Garzon said controlling the education system also helped paramilitaries influence elections as families often turn to teachers for guidance on how to vote. Don Antonio ensured the election of Soledad's mayor--Rosa Stella Ibanez Alonso--an election that was later overturned for fraud. ¶8. (C) Sucre Department on the Atlantic coast was a major narcotrafficking corridor and paramilitary stronghold. Three Sucre national legislators and four departmental legislators, including the president and vice-president of the departmental assembly and the department's most powerful local politicians, were arrested for paramilitary links (ref B). Paramilitary leader Salvatore Mancuso testified that paras controlled the majority of all council members in Sucre's major cities. Duncan estimates that, in addition to drug money, paramilitaries pocketed ten to twenty percent of local revenues and controlled contracts worth another twenty to thirty percent. Opposition Polo Democratico Senator Gustavo Petro called Sucre a "typical case" of paramilitary infiltration. ¶9. (U) Paramilitaries also exploited the GOC's health system for the poor in their zones of influence, a huge cash cow at the municipal and department level. The GOC provides coverage for the poor through "Instituciones Prestadoras de Servicios" (IPS),health services companies contracted by local governments. The central government transfers funds to local governments for IPS coverage based on the number of poor in the area. Paramilitaries--and their either complicit or coerced local officials--easily milked the system. IPS would frequently use only 25 percent of funds received to provide services (rent offices, hire doctors, buy medicine, etc.) while stealing the rest. Drucker =======================CABLE ENDS============================