TFH01: REPORTS OF FROZEN BANK ACCOUNTS DENIED

UNCLAS TEGUCIGALPA 000611 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: EFIN PGOV KDEM HO SUBJECT: TFH01: REPORTS OF FROZEN BANK ACCOUNTS DENIED REF: TEGUCIGALPA 579 ¶1. (U) SUMMARY: The Attorney General's Office and local banks both deny reports that bank accounts of people tied to the deposed government of President Manuel "Mel" Zelaya have been frozen. The Embassy has contacted government and banking officials to chase these reports down, and found that in most cases, bank accounts are still active. In a press release July 16 the National Banking and Insurance Commission said fraudulent letters using the Commission's name were circulating to individuals stating there are problems with their accounts. END SUMMARY. ¶2. (U) Last week it was reported in the press that the bank accounts of 48 former Zelaya officials had been frozen. ¶3. (SBU) Additionally an official from the Zelaya administration reported to the Embassy that his bank account was frozen, and First Lady Xiomara Castro told the Ambassador she had been unable to cash a check on her personal account. The Zelaya administration official later reported he had gone to the National Banking and Insurance Commission (CNBS) to complain about his reported account freeze and was told there was no order to freeze his account. Another Zelaya official told the Embassy that his credit card had been canceled with explanation, but that he still had access to his bank account. ¶4. (SBU) Econoff contacted Danelia Ferrera, chief prosecutor at the Public Ministry (Attorney General's Office),about these reports. Ferrera said a signed order would be required before a bank could legally freeze an account. She said neither of the prosecutors who would have the authority to issue such letters, nor any judge, had signed an order to freeze accounts of Zelaya administration officials. Ferrera said the media reports were based on rumors. The Public Ministry subsequently put out a statement, carried in the press, that no accounts had been frozen. The rumors nonetheless persist. ¶5. (U) Representatives from four banks contacted by the Embassy this week all reported that they had not received any order to freeze any accounts. One bank reported that in fact a large international transfer of funds by a Zelaya official had been executed. Another bank added that it had reduced some credit card limits for some individuals because of heightened risk, but not frozen their accounts. ¶6. (SBU) One consequence of the June 28 coup that removed Zelaya and installed Roberto Micheletti as de facto interim President was a temporary disruption to government payments. Government officials, who are paid by electronic transfer, were last paid on June 20. The next scheduled payday is July 17, and the de facto government has said it intends to pay salaries in full on that date. Government officials who resigned or were fired after June 28 should receive a pro-rated salary for the days they worked. One possibility, then, is that rumors are being fed because some officials have been refused transactions for insufficient funds because they thought automatic deposits had been made into their accounts that were not. ¶7. (U) CNBS issued a press release that was carried in "El Heraldo" July 16 stating that false letters have been circulating, illegally using the Commission's name, informing people that there are problems with their accounts. LLORENS