NARCOTICS MAJOR LIST 2010 PARAGUAY

UNCLAS ASUNCION 000359

SIPDIS
SENSITIVE

TO INL/LP DHOOKER, INL/PC CCUNNINGHAM, KSTEWART, WHA/BSC MDASCHBACH

E.O. 12958: N/A
TAGS: SNAR PREL PA
SUBJECT: NARCOTICS MAJOR LIST 2010 PARAGUAY

REF: SECSTATE 28306


1) (U) The USG asked the Government of Paraguay (GOP) to devote
additional resources to counternarcotics operations and employ legal
tools to facilitate investigations, conduct asset seizure and
forfeiture, and prosecute major offenders.

-- (U) Paraguay is a major transit country for Andean cocaine
destined for Brazil, other Southern Cone markets and Europe.
According to SENAD and DEA Country office, 30-40 metric tons of
cocaine annually transit Paraguay's porous borders en route to
Brazil and other Southern Cone markets as well as to Europe, Africa
and the Middle East. The new Fernando Lugo administration, in
office only 10 months, has demonstrated the political will to be a
serious partner in fighting narcotics trafficking. President Lugo
is personally engaged on counternarcotics, and requested additional
U.S. assistance in that area shortly after assuming office. When
Bolivia shut down DEA's presence late in 2008, Lugo personally
agreed to an increased DEA presence in Paraguay. Minister Cesar
Aquino, the GOP official in charge of Paraguay's Counternarcotics
Secretariat (SENAD),has taken concrete steps to reorganize SENAD,
and made key personnel shifts in May 2009 in order to further
improve SENAD's output. The Lugo government will submit its first
budget in August 2009; many ministries, including SENAD, are already
working on their submissions. Minister Aquino told Pol/Econ Chief
June 4 he is asking for large across-the-board increases in SENAD's
budget for the upcoming year. (NOTE: SENAD's total budget is USD 2.8
million, of which only USD 95,440 is allocated to counter-narcotics
operations, while the rest (USD 2.7 million) covers salaries, fuel
and administrative expenses. END NOTE).


-- (U) With INL and DEA support, SENAD is working to arrest and
prosecute major offenders. In 2008, SENAD detained 419 persons (of
those, 147 were arrested for cocaine, eight for crack cocaine, and
eight for ephedrine trafficking). In the first quarter of 2009,
SENAD made 29 arrests (second quarter numbers are not yet
available). SENAD's higher profile arrests included the December 5,
2008 arrest of Brazilians Sergio De Souza AKA Da Nemen Costeira,
Danilo De Souza, Tiago Cordeiro AKA Calcinha, and Rodrigo De Rosa
Oliveira AKA Rata, all suspected of being members of "COMANDO
VERMELHO," one of the most powerful drug trafficking operations in
Brazil. SENAD released the suspects into Brazilian custody at the
Friendship Bridge between Ciudad del Este and Foz de Iguazu, Brazil.
SENAD also arrested three members of the Comando da Capital (PCC)
drug trafficking organization on June 3 in Pedro Juan Caballero.
The three detainees were Divino Teodoro das Chagas (real name Jiario
Barbosa Pache); Adriano Viera, and Danielle Nakano Areda, all
Brazilian citizens.


-- (SBU) In 2008, SENAD seized a record-high 172 metric tons of
marijuana and 277 kg of cocaine. SENAD also seized a record 127.36
kg of ephedrine. In the first quarter of 2009, SENAD seized 28 kg
of cocaine and 9,453 kg of marijuana. While second quarter numbers
are not yet available, SENAD's seizures have increased significantly
over the first quarter. In addition, SENAD's first-ever cellular
telephone intercept program (supported by DEA) began operating in
June, under close coordination with prosecutors and judicial
authorities. This new program is expected to render big results
within the year.


2) (U) The USG asked the GOP to take steps as quickly as possible to
comply with its international obligation to adopt comprehensive
terrorist financing legislation.

-- (U) The Government of Paraguay, via its Secretariat for the
Prevention of Money Laundering (SEPRELAD),has resumed serious work
on a bill which would criminalize terrorist financing. Using its
experience in the development of a similar law, Brazil is providing
SEPRELAD with technical assistance. SEPRELAD Director Oscar
Boidanich expects a draft to be presented to Congress in the near
future. In addition, SEPRELAD drafted an administrative bill, which
passed the lower house of Congress April 7, and is pending Senate
approval. The bill, if passed into law, would 1) include terrorist
financing as a suspicious activity requiring a Suspicious Activity
Report (SAR); 2) expand the number of required SARs reporting
institutions to include all actors who move money and are paid in
large sums of cash; and 3) render SEPRELAD a separate government
ministry reporting directly to the president, thus facilitating
information exchanges.


3) (U) The USG asked the GOP to expeditiously pass and implement new
criminal procedure code that is pending in Congress.
-- (U) The Government of Paraguay continues to work on passage of a
new criminal procedure code. The code remains pending in the
legislation commission of the lower house of Congress, where it is
being studied. Several high-profile political actors have expressed
keen interest in passing this important reform in coming months.
Meanwhile, after a year of extensive training of judges, prosecutors
and others, the fundamentally overhauled penal code will go into
full legal effect on July 16, 2009.

4) (U) The USG asked the GOP to devote adequate financial and human
resources to its anti-money laundering mission and develop
strategies to effectively regulate the amount of currency that is
imported to and exported from Paraguay.

-- (U) The Government of Paraguay took a number of positive steps in
2008 to combat money laundering, particularly with the passage of
the new penal code, which will take effect July 16, 2009. For the
first time in Paraguay money laundering will be treated as an
autonomous crime punishable by a prison term of up to ten years.
Additionally, SEPRELAD Director Oscar Boidanich has worked to
improve the quality of information reported in SARs. In only three
months, SEPRELAD processed 27 SARS and sent 22 cases to the Attorney
General's office, a 20 percent increase over the same period in
previous years. In 2008, the Attorney General's office processed 40
money laundering cases, 15 of which resulted in convictions.


5) (U) With respect to the area identified in the 1998 UN Drug
Convention, the Government of Paraguay has performed as follows:


Consumption / Demand Reduction

-- (U) SENAD has the principal coordinating role under the "National
Program against Drug Abuse" and works with the Ministries of
Education and Health and several NGOs on demand reduction. Due to
budget constraints, SENAD focuses on Asuncion and the Central
Department. In 2008, the Prevention Unit held 1,114 drug prevention
workshops in schools reaching 31,586 people including students,
parents and teachers. In the first quarter of 2009, SENAD held 322
workshops, which reached 7,162 students, teachers and parents.


Illicit crop eradication

-- (U) In 2008, SENAD destroyed 1,725 hectares of cannabis. In the
first quarter of 2009, the GOP eradicated 610 hectares of marijuana.
SENAD has focused eradication efforts in the departments of
Amambay, San Pedro, Canindeyu and Concepcion, where marijuana
cultivation is concentrated. SENAD has made significant advances by
increasing the amount of marijuana cultivations destroyed and by
reaching more remote areas than in previous years.

Asset seizure

-- (U) SENAD has taken serious measures to control drugs and their
negative effects on the general population by going after the assets
of drug trafficking organizations. In 2008, SENAD seized 65
vehicles, 31 motorcycles, 3 airplanes and one canoe. Minister
Aquino strongly supports the criminal procedure code reform, which
includes an improved asset forfeiture law.

Control of precursors

-- (U) Paraguay has a chemical control law. However, enforcement is
weak. SENAD and the Health Department have limited resources to
enforce the law throughout the country, but strictly regulate
individuals or companies obtaining precursor chemical permits.

-- (U) The GOP through SENAD and the Department of Health also
regulates the importation of pseudoephedrine. Violators can be
charged with illegal importation of controlled substances and other
related crimes, such as tax evasion, and can face sentences of five
or up to ten years in jail.

-- (U) In an effort to fight an emerging precursor chemical
trafficking trend, SENAD made several key seizures/arrests in late
2008 and 2009. On October 2, 2008 SENAD seized five kilos of
ephedrine contained in packages of tea hidden in a suitcase
belonging to Mexican citizen Leobardo Gaxiola Lopez at Asuncion's
airport. The transport route was Asuncion-Sao Paulo-Mexico.
Authorities detained two additional Mexican suspects at a hotel in
Asuncion.

-- (U) A deposit of illegal chemical precursors used for the
manufacture of cocaine hydrochloride was found on May 12, 2009 by
SENAD agents during a search and seize operation inside a house in
Capiata city. The seized goods were a total of 63 barrels filled
with sulfuric acid, 13 others with acetone and three bags containing
50 kilos of white powder. The girlfriend of Miguel Angel Alvarenga,
a fugitive drug trafficker since 2007 for a case involving 151 kg of
cocaine, was arrested in the operation.

-- (U) SENAD is closely working with U.S., Mexican, and Southern
Cone governments to increase controls to prevent pseudoepherine
trafficking from taking root in Paraguay or elsewhere in the
region.

Public Corruption

-- (U) There is no evidence that the GOP or any senior official
facilitates the distribution or production of narcotics or other
controlled substances. Nevertheless, corruption and inefficiency
within the Paraguayan National Police (PNP) and the judicial system
negatively affects SENAD operations. The Lugo administration has
made combating official corruption its top priority, and is
supporting the efforts of judges and prosecutors to pursue
high-profile corruption cases.

AYALDE