Identifier
Created
Classification
Origin
07TEGUCIGALPA1325
2007-08-07 17:18:00
SECRET
Embassy Tegucigalpa
Cable title:  

CORRECTED COPY: VISAS DONKEY: CORRUPTION 212 (F)

Tags:  KCOR KCRM CVIS ECPS KJUS 
pdf how-to read a cable
VZCZCXYZ0018
PP RUEHWEB

DE RUEHTG #1325/01 2191718
ZNY SSSSS ZZH
P 071718Z AUG 07
FM AMEMBASSY TEGUCIGALPA
TO RUEHC/SECSTATE WASHDC PRIORITY 6519
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
S E C R E T TEGUCIGALPA 001325 

SIPDIS

SIPDIS
VISAS

DEPARTMENT FOR INL/C/CP, CA/VO/L/C, INR/B, WHA/PPC,
WHA/CEN, EB

E.O. 12958: DECL: 08/06/2027
TAGS: KCOR KCRM CVIS ECPS KJUS
SUBJECT: CORRECTED COPY: VISAS DONKEY: CORRUPTION 212 (F)
VISA REVOCATION, CHIMIRRI CASTRO

REF: TEGUCIGALPA 579

Classified By: AMBASSADOR A. CHARLES FORD, REASONS 1.5 (B) AND (D)

Action Request and Summary
--------------------------

S E C R E T TEGUCIGALPA 001325

SIPDIS

SIPDIS
VISAS

DEPARTMENT FOR INL/C/CP, CA/VO/L/C, INR/B, WHA/PPC,
WHA/CEN, EB

E.O. 12958: DECL: 08/06/2027
TAGS: KCOR KCRM CVIS ECPS KJUS
SUBJECT: CORRECTED COPY: VISAS DONKEY: CORRUPTION 212 (F)
VISA REVOCATION, CHIMIRRI CASTRO

REF: TEGUCIGALPA 579

Classified By: AMBASSADOR A. CHARLES FORD, REASONS 1.5 (B) AND (D)

Action Request and Summary
--------------


1. (C) Post seeks a security advisory opinion under Section
212(f) of the Immigration and Nationality Act in accordance
with Proclamation 7550, suspending entry in to the United
States of Honduran/Argentine/Italian citizen Marcelo Antonio
Chimirri Castro(DPOB: 05 March 1966, Argentina). Information
at post demonstrates that during his tenure as the director
of the Honduran national telephone company Hondutel, Chimirri
has directly benefited from public corruption and that his
corruption has a direct and serious adverse effect on U.S.
national and security interests. Chimirri has repeatedly and
demonstrably extorted bribes from telephone company operators
to permit continued &grey line8 operations that are illegal
under Honduran law. Among the operators that have allegedly
paid these bribes are U.S. firms, thus demonstrating that
Chimirri has induced violations of the U.S. Foreign Corrupt
Practices Act (FCPA). As will be demonstrated below,
Chimirri,s actions have also impeded for many months the
passage of a new, CAFTA-compliant, Honduran telecoms law.
Lack of such a law has prevented legitimate, law-abiding,
U.S. firms from operating in Honduras. Post has also
received credible information that Chimirri has personally
threatened the lives of senior Honduran officials (including
the vice-president of Congress),law enforcement officers and
telecoms operators whom he felt were a threat to his
continued operations. End Action Request and Summary.

Exploiting "Grey Lines" in Honduras
--------------


2. (U) In December 2005, Honduran state telecommunications
company Hondutel lost their exclusivity to connect
international calls, but the delay in implementing a new
regulatory law allowed only two other companies, mobile
operators Tigo and Claro, to complete these types of calls.
While the limited competition has cut rates to call Honduras

from the U.S. by over half, rates still remain relatively
high when compared to regional standards at around 15 U.S.
cents (Note: Current technologies have driven the cost to
terminating even international calls to less then a U.S.
cent, mainly through the internet. End Note). The
artificially high rates have stimulated a thriving "grey
market" in calls terminating illegally in Honduras. These
grey line operations have been the target of legitimate law
enforcement activity, but also extortion by Chimirri.


3. (C) EconChief met April 18 with chief Honduran
anti-corruption prosecutor Henry Salgado, two of his
investigators, and Nationalist congressman Carlos Kattan
regarding alleged grey line operations and extortion
activities lead by Hondutel sub-director Marcelo Chimirri.
The investigators brought the owner of a self-confessed grey
line operation (Juan Carlos Morales Romero, PDOB: Nicaragua,
Sept 15, 1967). (COMMENT. Kattan has a direct personal
interest in attacking Chimirri because the latter raided an
alleged grey line operation run by his brother, Mauricio
Kattan. Nonetheless, and given independent statements from
other witnesses, Post lends significant credence to Kattan,s
statements here. END COMMENT.)


4. (C) Morales described how Hondutel had discovered his
operation in late 2006, and sent their chief anti-fraud
officer to investigate his company. This fraud officer,
working on behalf of Chimirri, proceeded to threaten to
disconnect the company,s services if Morales did not pay USD
100 thousand a month. Morales eventually settled for 30
thousand a month. In one instance, Chimirri himself
allegedly arrived and threatened to disconnect his services,
after specifically stating that one certain account
(belonging to President Mel Zelaya,s brother, Carlos Zelaya)
was not to be touched.


5. (C) Morales continued to pay for the next few months,
alternately paying in cash the anti-fraud chief, Hondutel
chief legal counsel Danilo Santos, and San Pedro Sula
businessman Marco Antonio Avila Alvarenga (DPOB: May 2, 1954,
GT). Morales also visited Avila in his house in Omoa, where
Morales proposed (and was refused) a lower settlement.
(COMMENT: Avila was identified as a key contributor to Mel
Zelaya,s successful campaign, and is rumored to have flown
Zelaya around in his personal helicopter before or
immediately after his election. END COMMENT.)


6.(C) Morales also stated that an associate (and U.S.
citizen) was in a similar situation ) Morales reported that
the U.S. citizen came to terms with Hondutel on extortion
amounts, and made several payments in order to continue his
call-pirating operations. Per Morales, the U.S. citizen
obtained a video of extortion money changing hands. (Note:
EconChief spoke with the U.S. citizen in June, and he
indicated that the video was of a payment to Chimirri's legal
counsel, Danilo Santos, but that he was also featured on the
tape and therefore was unwilling to release it. He went on
to state that he was currently delivering telephone traffic
to over 60 small grey line operators in Honduras, many of
which pay Chimirri regularly. He sized Chimirri's monthly
intake of grey line extortion money at approximately USD 700
thousand. Both Morales and the U.S. citizen, and numerous
other sources, agree that Santos is the principal "bag man"
Chimirri uses to collect payments. End Note).

Extorting Legitimate Operators
--------------


7. (C) The ex-President of telecom regulator CONATEL was also
a victim of Chimirri's extortion. After having served at
CONATEL under ex-President Maduro, Jose Renan Caballero left
to join U.S. telecommunications company Latinode
(www.latinode.com),and advocated on the company's behalf at
Post several times. In February 2007, Caballero suddenly
resigned. To EconOff, Caballero described how his company
had agreed to pay off Chimirri in order to obtain a lower per
call rate to terminate international calls. (Comment:
Latinode is one of 16 new international carriers that
Hondutel has contracted with since the new administration of
President Jose Manuel "Mel" Zelaya took office in 2005. Most
of these contracts, including Latinode, contain suspect
"confidentiality clauses" that seem to arbitrarily lower
their rates. End Comment).


8. (C) Latinode is also a key company of interest in an
on-going Foreign Corrupt Practices Act (FCPA) investigation
by the Department of Justice. Caballero indicated, as have
several other sources that Latinode owes approximately USD 3
million to Hondutel as of December 2006, when their contract
expired. Per anti-corruption prosecutor Salgado, Latinode
then made two deposits of USD 15 thousand each in January
2007 and again in February to a private Honduran bank account
of Hondutel's Danilo Santos. The confidential information
from Salgado, obtained through Honduras' Financial
Investigations Unit (UIF),directly corroborates Caballero's
story.


9. (C) Salgado also informed Post that they have confirmed
that another of the U.S. carriers deposited money directly
into a private bank account controlled by Chimirri. The
company, Huntington Telecom
(www.hunt-tel.com),deposited USD 10 thousand to Chimirri's
account in late August 2006. The account is nominally
controlled by his wife, Francis Quezada Garcia and his
daughter, Edith Ruth Chimirri Quezada. Per Salgado, Chimirri
frequently uses family members as fronts for acquired assets
that would cast suspicion on him. (Comment: Examples include
a fleet of luxury cars, and valuable land holdings. End
Comment).


10. (C) Carlos David Flores, son of ex-President Carlos
Flores and a telecom entrepreneur, confided to EconChief in
March 2007 that a good contact of his, who he identified as
the head of Huntington Telecom, had been a victim of a
Chimirri bribe. Salgado's information on Chimirri's bank
account directly corroborates this story. Carlos David then
went on to describe to EconOff how he and fellow investors
were personally extorted by Chimirri when his company
approached Hondutel about obtaining a license. In order to
approve the license, Chimirri asked directly "What is in it
for me?" The team left without an agreement. (COMMENT: When
Carlos David described his encounter with Chimirri to his
father, the ex-President immediately called President Zelaya
to complain. Interestingly, Flores' comment to Zelaya was to
"keep Chimirri away from my family." Fear of Chimirri and
what he might do is a common refrain in the industry. END
COMMENT).


11. (C) AMNET cable company, a subsidiary of U.S. company
Amzak International, was also threatened by Chimirri. AMNET's
country manager and top technical rep met with EconOff April
3 and played a taped conversation in which Chimirri said he
would "make it difficult" for the company if they didn't
vacate a certain market area that overlapped his own business

interest. Given that Chimirri could delay or cancel AMNET's
telecommunications capacity, or worse invade the company, the
company reps have basically decided that it would be in their
best interests to do so. (COMMENT: Several sources have
confirmed that Chimirri is clandestinely running a small
cable company in Tegucigalpa named TeleColor. Oddly, the
company has only a few thousand customers in a poor area of
Tegucigalpa, yet runs a state-of-the-art network. Some have
speculated that Chimirri makes the business profitable by
using confiscated equipment and channels sent illegally by
CableColor, an AMNET competitor owned by business magnate
Jaime Rosenthal. Others believe the cable operation is just
a front for a massive grey line operation that terminates
calls over CableColor. The Public Ministry has been alerted
to TeleColor, and, while it told EconOff that it anticipated
raiding the company by mid-April, it has not yet done so.
This inaction may be related to threats of violence made
against the Attorney General. See paragraph 14. END COMMENT).


Threatened Violence Against Opponents
--------------


12. (C) EconChief and Ambassador met with head of Hondutel
Jacobo Lagos on April 14, a Saturday, after Lagos requested a
meeting as soon as possible. Lagos detailed how he had
personally received threats from Chimirri on April 12
regarding Lagos, role in running Hondutel and the potential
impact to Chimirri,s illicit operations. Lagos said
Chimirri was urging a management shift that would leave Lagos
in charge of only administrative functions, leaving
operations entirely under Chimirri,s control.


13. (C) Later that month, Lagos attempted to gain more
control at Hondutel by obtaining board of director,s
approval on his plan to nullify Chimirri's management actions
over the past year and undertake a technical audit of
Hondutel facilities. Once he obtained approval on April 20,
he assembled a technical team and on Friday, April 27, sent a
memorandum to all Hondutel employees announcing the changes.
Lagos was then fired by President Zelaya on Monday, April 30.
(Note: No clear reason was ever given by the President for
firing Lagos. Finance Minister Rebeca Santos, head of the
Hondutel board of directors which gave the go-ahead to Lagos,
has refused to attend any other board meetings since. End
Note).


14. (C) Following a sharp exchange with Chimirri in front of
the National Congress, Attorney General Leonidas Rosa
Bautista received a call at his residence by a person who
specifically threatened his family. The caller did not state
a motive, but in an April 2 meeting with Ambassador and
EconOff, Rosa Bautista said that he believed the call came
from a Hondutel insider based on caller ID information. He
stated clearly to Ambassador and EconOff that the timing of
the threat and his actions against Hondutel was not
coincidental. (NOTE: After two years in office this is the
first direct threat made against Rosa Bautista. END NOTE)


15. (C) The press and private businessmen have also been
victims of Chimirri's threats. Jose Luis Rivera, the head of
the main private industry lobby group for Telecom (ASETEL),
indicated that his uncle, media owner Rafael Ferrari, had
been threatened by Chimirri for his role in supporting new
telecom legislation. Jorge Canahauti, a prominent owner of
the two largest Honduran newspapers, was contacted by an
interlocutor who indicated that unless his newspapers ceased
attacking the President and supporting the new telecom law,
his life would be in danger by Chimirri. Finally, a recent
radio interview with Chimirri quotes him directly as saying
that he would "kill them (Ferrari and Canahauti) first"
before he "got killed" (Note: This seems to refer to blocking
the new telecom law, but the threat is unmistakable. End
Note).


16. (C) On March 22, the Congress directed the GOH to request
Post to help investigate U.S. carrier activity and the Public
Ministry to launch several investigations. The decree was
sent to the Foreign Minister to pass to Post on March 29, but
was not delivered until April 18. Per Nationalist
Congressman Carlos Kattan, the office of President Zelaya
specifically asked the secretary of Congress (Liberal party
Congressman Alfredo Saavedra Paz) to delay as long as
possible these requests. EconChief called Ambassador Eduardo
Rosales Ramirez, Director of External Relations at the
Foreign Ministry on April 16 looking for the request.
Rosales called back on April 18 saying he found the request,
but it had literally been hidden in a desk. Rosales

indicated that he had &never seen that before in his
career.8


17. (C) On August 6, vice president of Congress Lizzie Flores
received a death threat related to a telecommunications law
that she recently introduced in Congress. This new law would
reduce Chimirri's ability to continue grey line operations,
and Post believes that he is directly responsible for these
threats. Per Congressional sources, Flores most likely will
not go forward with the new law for fear of physical
reprisals.

Why Proclamation 7550 Applies
--------------


18. (C) Chimirri,s extortion of Honduran and U.S. firms
directly attacks U.S. national interests in Honduras by (1)
suborning a bribe in violation of the FCPA; (2) undermining
U.S. efforts to open the Honduran market to legitimate U.S.
business; and (3) undermining U.S. efforts to foster the rule
of law in Honduras.


19. (C) Suborning a violation of U.S. criminal law is, per
se, an attack on U.S. national interests as codified in the
U.S. Code. As shown above, Chimirri did suborn, and receive,
a bribe from one identified U.S. company and apparently did
so in several other cases.


20. (C) The CAFTA-DR treaty, ratified by Honduras over a year
ago, promised a market opening through a new
Telecommunications law. Several companies have invested
millions of dollars, many of them U.S. citizen investors, to
prepare to compete in the new market environment. The delay
in passing the new telecommunications law has put in jeopardy
these investments. The delay has also allowed Marcelo
Chimirri and his associates to benefit from the artificially
high international rates and their lucrative business in grey
lines. The United States Government has devoted billions of
dollars and untold other efforts to trying to create a
stable, prosperous and democratic Honduras. These efforts
have been, and continue to be, gravely undermined by
pernicious corruption, of which Chimirri is a very efficient
practitioner.

Current Visa/Travel Plans
--------------


21. (SBU) Chimirri has not been informed that he may be
subject to the provisions of Presidential Proclamation 7550,
under Section 212(f) of the INA.


22. (SBU) According to a review of the Consular Consolidated
Database, Chimirri does not have a valid visa. Honduran
immigration records indicate that he travels to the United
States using an Italian passport and thereby benefits from
the Visa Waiver Program.


23. (SBU) We are not aware of any current travel plans,
though Chimirri regularly travels to or through the United
States.

Post Recommendation
--------------


24. (SBU) Based upon the facts of the case, Post recommends
that Marcelo Antonio Chimirri Castro be denied entry to the
United States.
FORD