HONDUTEL BRIBERY CHARGES ELICIT CONSPIRACY THEORY

C O N F I D E N T I A L TEGUCIGALPA 000263 E.O. 12958: DECL: 04/13/2019 TAGS: KCRM KJUS ECPS PGOV HO SUBJECT: HONDUTEL BRIBERY CHARGES ELICIT CONSPIRACY THEORY REF: 07 TEGUCIGALPA 1356 AND PREVIOUS Classified By: Ambassador Hugo Llorens, E.O. 12958 1.4(b) and (d) ¶1. (C) Summary: President Manuel Zelaya has dispatched a high-level legal team to Miami to explore filing a libel suit against former State Department official Otto Reich for alleging that a Justice Department Foreign Corrupt Practices investigation into bribery at Honduran state telecom company Hondutel would eventually implicate Zelaya. Zelaya told the Ambassador he suspected the CIA was behind the case, as part of a plot to undermine him for becoming too cozy with Fidel Castro and Hugo Chavez. The Ambassador told Zelaya that his allegation was not credible, reviewed in detail the Department of Justice procedures in cases involving violations of the Foreign Corrupt Practices Act, and noted that he (President Zelaya) was not/not directly named in the court documents of this case. We are also stressing publicly and privately to other contacts that this is strictly a law enforcement action against a U.S. company. End Summary. -------------- FCPA Plea Makes Post-Holy Week Splash -------------- ¶2. (U) According to U.S. court documents and a Justice Department press release, Latin Node, Inc., a telecom company based in Miami, pled guilty in early April to bribing Honduran telecom officials to obtain lower international call termination fees from Hondutel. The company admitted to bribing three Hondutel officials: -- The deputy general manager, who subsequently became general manager -- The lawyer to the former -- The head of Hondutel's Evaluation Committee, who subsequently became Latin Node's head of business development for Latin America and the Caribbean. ¶3. (U) The Justice press release came out April 7, when most Hondurans were on vacation for the pre-Easter Holy Week. But the issue has blanketed the electronic media and the print press since vacationers returned. Particular attention is being paid to comments by former Department official Otto Reich that were carried in the Spanish-language Miami newspaper "El Nuevo Heraldo" April 9. Reich alleged that President Zelaya had "permitted or abetted" the sorts of practices documented in the Latin Node case and that "we shall see that he is also behind this." -------------- Zelaya Suspects Conspiracy -------------- 
 ¶4. (C) President Zelaya and the Ambassador discussed the case on April 10 and on April 13. In both instances Zelaya was very agitated, emphatically denied any involvement in this case, and said he planned to sue Reich for libel. Zelaya expressed the view that Reich worked for the CIA and that he was part of a conspiracy to tarnish Zelaya's image in retaliation for his having pursued closer relations with Cuba, Venezuela and Nicaragua. As he has in the past, Zelaya asserted various relationships between Reich and the Arcadia Foundation (a U.S.-based anti-corruption non-profit that has spearheaded media attacks on corruption at Hondutel),its founder/leader Robert Carmona (a Venezuelan citizen),Latin Node director Harley Rollins and other figures related to the case. Zelaya also asserted that Reich had sought to be a telecoms adviser to the GOH but Zelaya had turned him away, after which the Arcadia attacks commenced. ¶5. (C) The Ambassador dismissed Zelaya,s claim of CIA involvement as not credible, reminding him that Reich was not a U.S. official and that his statements did not represent U.S. government views. The Ambassador also briefed President Zelaya on the Department of Justice,s handling of cases involving violations of the Foreign Corrupt Practices Act, and noted that our law applied to U.S. citizens and firms that had violated U.S. law and not foreign officials who may have taken bribes, as may have been the case with Hondutel officials. The Ambassador also told President Zelaya that he was not under investigation in the case. Rather than focus his ire on the USG, the Ambassador suggested that Zelaya consider investigating the Honduran side of the case. ¶6. (U) On Easter Sunday, Defense Minister Edmundo Orellana, Private Secretary to the President Enrique Reina and National Electric Company Director/Energy Minister Rixi Moncada (all well known and respected lawyers) held a televised press conference in which they announced they would travel to Miami to explore filing a libel suit against Amb. Reich. The team departed April 12. Meanwhile, Zelaya Administration officials and sympathizers are publicly denouncing Reich for his alleged involvement in the Iran-Contra scandal and the attempted coup against Venezuelan President Hugo Chavez, among other things. -------------- -------------- Hondutel Director Requests Names of Bribe Recipients -------------- -------------- ¶7. (C) Jorge "Coque" Rosa, who took over as General Manager of Hondutel after former GM Marcelo Chimirri was arrested and charged with abuse of authority in late 2007, called on EconCouns April 13, accompanied by Hondutel Legal Director Ramon Ordonez. Rosa sought the names of the three officials identified in court papers as having received bribes from Latin Node. EconCouns replied that the descriptions of the officials in the court papers, identifying the positions they held at the company and when they held them, should make it obvious to Hondutel's management who they were. Rosa agreed that he could hazzard a guess but requested confirmation so that he could investigate the matter internally. (Comment: As far as Embassy can determine, none of the three officials identified as bribe recipients is still employed at Hondutel. One is obviously Chimirri. Another is his lawyer, who left Hondutel with him. The third is said to have left Hondutel to take a job with Latin Node. End Comment.) ¶8. (C) Rosa also wanted to coordinate the public message concerning the Latin Node plea agreement and subsequent media frenzy. EconCouns told him Embassy had determined to not go beyond what is contained in the court documents and to clarify that neither Otto Reich nor Robert Carmona is a party to the case or represents the USG. We would also point out that the FCPA applies to U.S. persons who bribe foreign officials, not to the foreign officials who accept those bribes, although we encouraged governments on the other end to investigate officials on the receiving end. Rosa indicated concurrence with that line. -------------- Comment -------------- ¶9. (C) Post judges that President Zelaya sincerely believes the CIA is orchestrating the Justice Department investigation into Hondutel corruption in an effort to smear him for his associations with leftist leaders who are rhetorically hostile to the United States. There is also press speculation here that the Latin Node plea agreement was timed to thwart Zelaya's effort to hold a referendum on whether to call a constituent assembly to amend the constitution to allow reelection of the president. Zelaya is probably also worried that publicity about the case will remind Hondurans of his past associations with Marcelo Chimirri, a disreputable figure who is generally considered to have raised corruption at the notoriously corrupt Hondutel to a new level during his term as manager. Chimirri's prosecution has long since faded from public attention. Post will continue to stress that this is an apolitical U.S. law enforcement matter. We will also encourage the GOH to pursue the underlying corruption issues on the Honduran end. End Comment. LLORENS