HOW COLOMBIA'S ILLEGAL ARMED GROUPS FINANCED

C O N F I D E N T I A L BOGOTA 005488

SIPDIS

SIPDIS

E.O. 12958: DECL: 07/27/2017
TAGS: PTER PGOV PREL ECON SOCI CO
SUBJECT: HOW COLOMBIA'S ILLEGAL ARMED GROUPS FINANCED
THEMSELVES THROUGH EXTORTION

REF: A. BOGOTA 4798

B. BOGOTA 2995

Classified By: Political Counselor John S. Creamer.
Reason: 1.4 (b,d)


1. (C) The FARC, ELN and former AUC partially financed
their criminal activities through "vacunas," extortion
payments levied on businesses and households. Some large
companies paid millions of dollars for "protection," while
individual households might pay USD two to five per month.
Armed groups called vacunas "taxes," and used them to assert
their authority. In areas where the GOC lacked a state
presence, ex-paras sometimes provided limited services in
return for "vacuna" payments to build community acceptance.
End Summary

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"Vaccination" Statistics
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2. (C) Prior to demobilization, Colombia's paramilitaries
partially financed operations through "vacunas" (literally
"vaccinations"),extortion payments levied on businesses and
individual households. United Self-Defense Forces of
Colombia (AUC) founder Carlos Castano publicly admitted that
while 70 percent of all paramilitary funds came from
narcotrafficking, the rest came from vacunas and plundering
local government funds (ref A). German Enciso, head of a
national anti-extortion task force in the office of the
Attorney General (Fiscalia),estimates that vacunas
represented 15-20 percent of all ex-para revenues, about half
from companies and half from individuals.


3. (C) Vacunas are also a source of revenue for the
Revolutionary Armed Forces of Colombia (FARC) and the
National Liberation Army (ELN). Since 1998, the GOC
registered 1,396 cases of extortion by the FARC, 872 by the
AUC, and 319 by the ELN. The number of cases peaked for all
three groups in 2002. Though AUC and ELN cases have declined
steadily since then, the number of FARC extortions has stayed
high at 150-200 a year. Enciso said the cases represent a
fraction of the actual number of extortions, since businesses
are reluctant to admit having made payments due to fear of
prosecution.

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Big Companies as Targets
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4. (U) Large companies paid large vacunas to the AUC --
often allegedly for "protection." A typical and widely
publicized case was the acknowledgment by Chiquita Brands
International that it paid a total of USD 1.7 million to the
AUC between 1997 and 2004 for "protection" of its workers (an
act for which it was fined USD 25 million in the U.S.)
Mancuso said the payments were based on a 1997 agreement by
Chiquita to pay one percent of the value of products shipped
from Colombia. Colombian officials have called for the
extradition of Chiquita officials to Colombia for
prosecution.


5. (C) The ELN and FARC also charge companies for
"protection." Enciso said in Norte de Santander, large
companies typically paid the ELN at least USD 5,000 per month
for "security." FARC shakedowns have been more blatant.
Felipe Silva, the head of Nestle Colombia, said the FARC
demanded USD 400,000 per year in 2006 from the company to
leave its milk collection and processing in the Caqueta
department alone. When Nestle refused, the FARC bombed
Nestle plants and harassed milk trucks, cutting Nestle's
production by half (ref B).


6. (C) Gustavo Duncan, a security analyst, said companies
frequently disguised vacunas as payments for services.
Typically, consumer products (beer, snacks) companies would
contract for distribution with a para-associated firm: the
contracts were inflated with large surcharges that went to
the illegal group. Mancuso testified that Bavaria Beer
Company paid AUC leader Rodrigo Tovar Pupo ("Jorge 40") 50
cents for every case of beer it distributed in areas
controlled by Macaco, and claimed soft drink company
Postobon paid a monthly fee of USD 5,000. Both companies
deny the allegations. Mancuso said individual distributors

and truckers near the Atlantic coast were also charged a fee
for every delivery.

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Filling Empty Spaces
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7. (C) Juan Carlos Garzon, an analyst for the Organization
of American States Mission (MAPP/OAS),said that prior to the
para demobilization in 2004, many poor households made
payments of USD two to five per month in para-controlled
areas. Large ranch owners paid as much as USD 300 a month.
Garzon said the money was used to help sustain para groups at
the local level. Garzon said the AUC would generally fulfill
their bargain to provide protection, but there are cases
where residents who paid vacunas were displaced by the AUC.
Residents in FARC dominated areas described a similar
situation to us. They said the FARC would levy charges of
ten percent of all profits on small businesses and charge
residents a small "tax." Residents said they got little in
return.


8. (C) Illegal armed groups referred to small "vacunas"
levied on large swathes of the population as "taxes."
Duncan said an important purpose of such "taxes" was to
create the perception in the public's mind that the AUC and
the FARC were the effective "state" in areas where GOC
presence was weak or nonexistent. By paying the AUC or FARC,
the public acknowledged these groups were more powerful than
the state. Andres Penate, Director of the Department of
Administrative Security (DAS),described how his
cattle-farming relatives stopped paying a vacuna and started
paying taxes to the GOC once the government was able to
provide security in their area, telling the paras they were
"paying the vacuna to the bigger guy."


9. (C) Duncan said the AUC and the FARC provided some
services in an attempt to gain public acceptance and to make
it easier for them to engage in illegal activities. He noted
that most local para commanders owned bulldozers that they
used to make crude roads for which a toll was usually
charged. Both the AUC and the FARC generally administered
some type of rough justice in areas they controlled. Duncan
said the AUC even had members trained as informal judges to
resolve minor disputes. Justice was not impartial: issues
were often decided based on who was closer to the AUC.
Drucker