Since 2014 three different Mayors in the Honduran department of Yoro have been identified as criminals participating in murder for hire and the drug trade in Honduras.
The Department of Yoro, readers will remember, is important to the Zetas. It's where their drug planes historically have landed, both in clandestine airstrips and along established paved roads.
In July 2014, the Mayor of the town of Yoro, Arnulfo Urbina Soto, was arrested for drug trafficking, murder, rape, money laundering, and the possession of illegal weapons. After a two year long investigation, the National Police alleged that Urbina Soto led a drug trafficking gang of 37 people that had been operating at least since 2009. The National Police allege that Urbina Soto expropriated land in the small towns of Rio Nance and Rio Abajo, Locomapa, Yoro and converted them to landing strips for drug planes.
At the time of his arrest Urbina Soto, in addition to being Mayor, was a National Party operative, having coordinated the Presidential campaign of Juan Orlando Hernandez in 2013 in Yoro. His daughter, Diana, is a member of the Honduran Congress.
Urbina Soto is not alone.
In August 2015 the Fuerza de Seguridad Interinstitutional (FUSINA) went to Jocon, Yoro, to arrest members of Los Solis, wanted for being hit men, murderers, and cattle thieves, among other crimes. They captured five alleged members of Los Solis, but failed to capture the alleged leader, Mayor Santos Gabriel Elvir Arteaga. Los Solis was established around 2000 by the Solis family, but when Elvir Arteaga became Mayor in 2009 he also gained control of Los Solis, according to Police, and only two Solis family members are thought to be still part of the group. Mayor Santos Elvir is a member of the Liberal Party and still at large.
Thursday the Mayor of Sulaco, Yoro, was arrested on charges of homicide, murder, illicit association, and carrying illegal weapons. Mayor José Adalid Gonzalez Morales is alleged to be the leader of Los Banegas, a group operating in and around Sulaco, Yoro, consisting of 30-40 members. They are wanted for cattle theft, extortion, robbing buses and trucks, murder, and distribution of narcotics in Sulaco. The investigation into Gonzales Morales began three months ago when police arrested seven members of the group.
Los Banegas are alleged to have killed eight people in and around Sulaco. Gonzalez Morales is accused of killing peasant activist Secundino Orellana, who previously had been arrested and shot during peasant land protests.
In the 2013 elections, Gonzales Morales, a member of the National Party, received a verbal endorsement at a National Party rally by then Presidential Candidate Juan Orlando Hernandez, who called him "one of the best Mayors Honduras has ever had."
Friday, October 23, 2015
Thursday, October 22, 2015
Honduras Allegedly Bugs Telephones of Supreme Court Justices?
The Honduran Public Prosecutor's office is alleged to have tapped the telephones of its Supreme Court Justices in an apparent violation of its own laws. So said one of the defense lawyers of Teodoro Bonilla in court yesterday.
Teodoro Bonilla is the Vice President of the Judicial Counsel, the group which oversees the performance of Judges in Honduras. He is accused of getting two different judges to change guilty rulings against two of his relatives for money laundering and having illegal weapons among other charges.
Yesterday in court, the Public Prosecutor's office made a motion for Justice Victor Manual Lozano Urbina to recuse himself from hearing the case because of his manifest friendship with the accused, Bonilla. They introduced as supporting evidence of that friendship a recording of a phone call, from a tapped telephone, between Justice Lozano and Bonilla.
Justice Lozano, in all fairness, had attempted to recuse himself from the case precisely because of his friendship with Bonilla at the beginning of October, but the Justices of the Supreme Court denied his motion to recuse himself and ordered him to hear the case.
The Defense argued:
Never-the-less the defense argued that Justice Lozano should hear the case.
We have to remember that it was the defendant's lawyer who concluded that it was Justice Lozano's phone, and not Bonilla's phone that was tapped. Other statements, including by another defense lawyer, suggest it was Bonilla's phone that was tapped. Furthermore, they argue that the date of the phone call is from prior to the opening of an investigation of Bonilla and therefore was illegally obtained and used.
Honduran law is clear on the collection and use of wiretaps. To legally listen in on phone calls in Honduras requires an active investigation against the person by the Public Prosecutor's office, and a judge's signed order authorizing the wiretap.
To get a wiretap warrant, the Prosecutor's Office must present to the Judge in writing, the full name of the person(s) whose communications are to be tapped, a description of the illegal activities that warrant the wiretap, the legal code being violated, what communications are to be intercepted (eg, phone carries, IMEI number of phone, etc), the duration of the tap, the name and title of the person requesting the wiretap, and most importantly, the number of the open investigation. Wiretaps are related to a particular investigation and may not be used in another case.
To use wiretap information in a legal case in Honduras, the Public Prosecutor must request judicial approval to use the wiretap data. It does not appear that the Public Prosecutor did so in this case. Instead he introduced wiretap information in a pre-trial motion.
The law says a wiretap may not be used in any other case other than the specific investigation that made it necessary. This becomes relevant because the defense has argued that it dates from before the investigation of Bonilla began and therefore is not legally admissible.
Bonilla's lawyer has requested the judicial order authorizing the phone tap on Bonilla in order to make it public.
Justice Lozano admitted the prosecutor's motion to recuse himself and denied the motion by the defense to remain on the case. The motion to recuse now goes to the named appeals court, consisting of 3 other Supreme Court Justices: Silvia Santos, German Garcia, and Elmer Lizardo.
Teodoro Bonilla is the Vice President of the Judicial Counsel, the group which oversees the performance of Judges in Honduras. He is accused of getting two different judges to change guilty rulings against two of his relatives for money laundering and having illegal weapons among other charges.
Yesterday in court, the Public Prosecutor's office made a motion for Justice Victor Manual Lozano Urbina to recuse himself from hearing the case because of his manifest friendship with the accused, Bonilla. They introduced as supporting evidence of that friendship a recording of a phone call, from a tapped telephone, between Justice Lozano and Bonilla.
Justice Lozano, in all fairness, had attempted to recuse himself from the case precisely because of his friendship with Bonilla at the beginning of October, but the Justices of the Supreme Court denied his motion to recuse himself and ordered him to hear the case.
The Defense argued:
"They have a phone intercept on the communications of Justice Victor Manuel Lozano. We assume that they have intercepts on the telephones of all of the Justices of the Supreme Court, for which the defense alleges that this is an illegal piece of evidence that violates the Constitution of the Republic, treaties and human rights agreements of which Honduras is a part."
Never-the-less the defense argued that Justice Lozano should hear the case.
We have to remember that it was the defendant's lawyer who concluded that it was Justice Lozano's phone, and not Bonilla's phone that was tapped. Other statements, including by another defense lawyer, suggest it was Bonilla's phone that was tapped. Furthermore, they argue that the date of the phone call is from prior to the opening of an investigation of Bonilla and therefore was illegally obtained and used.
Honduran law is clear on the collection and use of wiretaps. To legally listen in on phone calls in Honduras requires an active investigation against the person by the Public Prosecutor's office, and a judge's signed order authorizing the wiretap.
To get a wiretap warrant, the Prosecutor's Office must present to the Judge in writing, the full name of the person(s) whose communications are to be tapped, a description of the illegal activities that warrant the wiretap, the legal code being violated, what communications are to be intercepted (eg, phone carries, IMEI number of phone, etc), the duration of the tap, the name and title of the person requesting the wiretap, and most importantly, the number of the open investigation. Wiretaps are related to a particular investigation and may not be used in another case.
To use wiretap information in a legal case in Honduras, the Public Prosecutor must request judicial approval to use the wiretap data. It does not appear that the Public Prosecutor did so in this case. Instead he introduced wiretap information in a pre-trial motion.
The law says a wiretap may not be used in any other case other than the specific investigation that made it necessary. This becomes relevant because the defense has argued that it dates from before the investigation of Bonilla began and therefore is not legally admissible.
Bonilla's lawyer has requested the judicial order authorizing the phone tap on Bonilla in order to make it public.
Justice Lozano admitted the prosecutor's motion to recuse himself and denied the motion by the defense to remain on the case. The motion to recuse now goes to the named appeals court, consisting of 3 other Supreme Court Justices: Silvia Santos, German Garcia, and Elmer Lizardo.
Friday, October 16, 2015
CONATEL attempts to shut down Cholusat Sur
(updated to link to image of CONATEL order)
The government of Honduras, in the form of the Comision Nacional de Telecommunicaciones (CONATEL), has issued an order to close the opposition TV station, Cholusat Sur, Channel 36 in Tegucigalpa in 4 days.
Why? you might ask.
For an "attempt against the economy" of Honduras.
It all begins in June of this year, with Channel 36 covering the news story that the Banco Ficohsa and more importantly, its Honduran owner, Camilo Atala, have been charged in Panama with money laundering.
This is not speculation. This is not rumor. It's a fact.
Atala is head of the Honduran branch of the Consejo Empresarial de America Latina (CEAL). This was the group that hired Lanny Davis in 2009 to lobby then- Secretary of State Hillary Clinton not to declare the Honduran coup a military coup. Atala is a powerful member of the Honduran elite.
In the current news coverage, Esdras Amado López has been reporting how Banco Ficohsa in Honduras moved $1.5 million dollars (about 33 million lempiras) as part of the IHSS scandal, without fulfilling the CNBS paperwork requirements for the transfer. The IHSS scandal is what initially fueled and continues to inspire the torchlit marches against corruption that also include demands for the resignation of President Juan Orlando Hernández.
The money moved by Banco Ficohsa, Amado Lopez reports, was requested by IHSS head Mario Zelaya to pay bribes to facilitate payment of the Compania de Servicios Multiples and its subsidiary, Central American Technologies. These were payments for goods and services that were never delivered.
Amado Lopez says that both the US Department of Justice and the Fiscalia de Chile have documentation linking the Banco Ficohsa to the illegal movement of IHSS monies.
Chile is where one of Mario Zelaya's mistresses lives and she is charged in the IHSS scandal.
The US Department of Justice allegedly knows about the money sent from Honduras to Panama by the Banco Ficohsa, then deposited in MultiBank in Panama. Reportedly, the funds were then transferred to a bank in Louisiana where Mario Zelaya used them to buy real estate, property now confiscated for the government of Honduras by the US Department of Justice.
Other news sources have reported on this story, both inside of and outside of Honduras, citing court papers in Louisiana as the source of their information.
CONATEL, in its notification to Cholusat Sur that it was beginning procedures to shut down the station, said that this reporting was "an attempt against the economy" of Honduras in violation of the Constitution, the Telecommunications regulations, and the Administrative regulations.
So, it is now officially an "attempt against the economy" to report facts in Honduras.
The government of Honduras, in the form of the Comision Nacional de Telecommunicaciones (CONATEL), has issued an order to close the opposition TV station, Cholusat Sur, Channel 36 in Tegucigalpa in 4 days.
Why? you might ask.
For an "attempt against the economy" of Honduras.
It all begins in June of this year, with Channel 36 covering the news story that the Banco Ficohsa and more importantly, its Honduran owner, Camilo Atala, have been charged in Panama with money laundering.
This is not speculation. This is not rumor. It's a fact.
Atala is head of the Honduran branch of the Consejo Empresarial de America Latina (CEAL). This was the group that hired Lanny Davis in 2009 to lobby then- Secretary of State Hillary Clinton not to declare the Honduran coup a military coup. Atala is a powerful member of the Honduran elite.
In the current news coverage, Esdras Amado López has been reporting how Banco Ficohsa in Honduras moved $1.5 million dollars (about 33 million lempiras) as part of the IHSS scandal, without fulfilling the CNBS paperwork requirements for the transfer. The IHSS scandal is what initially fueled and continues to inspire the torchlit marches against corruption that also include demands for the resignation of President Juan Orlando Hernández.
The money moved by Banco Ficohsa, Amado Lopez reports, was requested by IHSS head Mario Zelaya to pay bribes to facilitate payment of the Compania de Servicios Multiples and its subsidiary, Central American Technologies. These were payments for goods and services that were never delivered.
Amado Lopez says that both the US Department of Justice and the Fiscalia de Chile have documentation linking the Banco Ficohsa to the illegal movement of IHSS monies.
Chile is where one of Mario Zelaya's mistresses lives and she is charged in the IHSS scandal.
The US Department of Justice allegedly knows about the money sent from Honduras to Panama by the Banco Ficohsa, then deposited in MultiBank in Panama. Reportedly, the funds were then transferred to a bank in Louisiana where Mario Zelaya used them to buy real estate, property now confiscated for the government of Honduras by the US Department of Justice.
Other news sources have reported on this story, both inside of and outside of Honduras, citing court papers in Louisiana as the source of their information.
CONATEL, in its notification to Cholusat Sur that it was beginning procedures to shut down the station, said that this reporting was "an attempt against the economy" of Honduras in violation of the Constitution, the Telecommunications regulations, and the Administrative regulations.
So, it is now officially an "attempt against the economy" to report facts in Honduras.
Monday, October 12, 2015
Deconstructing the Grupo Continental?
Jaime Rosenthal Oliva wants to take steps that will preserve the business of the Grupo Continental while his family contests charges brought against them.
Honduras' Comisión Nacional de Bancos y Seguros (CNBS) has other ideas. On Saturday, it voted to force liquidation of the Banco Continental.
In response, the Rosenthal family issued its third public statement, calling for a voluntary liquidation that would
The Rosenthal family proposed that they would voluntarily liquidate the Grupo Continental:
In proposing this action, the Rosenthal family is directly addressing the technical weakness that allowed the CNBS to propose forced liquidation. They argue that this action would directly affect 11,000 employees and 25,000 more people indirectly, as well as cutting off access to account holders, estimated to number 220,000.
The CNBS did not agree to the plan offered by the Rosenthal family. In his statement acknowledging this decision, calling again for its reconsideration, Jaime Rosenthal noted that the Grupo Continental is responsible for 5% of the Gross National Product of Honduras.
It is probably worth noting that at this point, no one has been convicted of a crime. What have been alleged is not drug trafficking itself (although some Honduran media are happily applying that term to the charges) but money laundering.
Basically, this could happen through the bank accepting deposits from people who the US prosecutor thinks the bank should have suspected produced their income through illegal activities. Under US law, deposits of more than $10,000 a day need to be reported, so someone could deposit amounts under that ceiling, repeatedly, creating a suspicious pattern of activities that a bank might ignore. Another option to launder money is to use a business that can bring in cash of varying amounts without suspicion-- antiquities and art, for example. Deposits from front businesses would not necessarily be questioned by a bank.
Banks also are used in money laundering through "layering":
The details of the charges are not available, so we do not know precisely how the alleged money laundering took place. (A charge of suborning a public official is also mentioned in Honduras press coverage, but until further details are available, it is difficult to be certain what the basis of that charge might be.)
Honduran media are reporting that it was the Banco Continental's relationship with the Rivera Maradiaga family, which was swept up in drug trafficking investigations in 2013, that is the basis of the money laundering charges. Jaime Rosenthal is quoted as saying "no bank in the world has the ability to investigate all its clients". Yani Rosenthal noted that the Empacadora Continental had bought cattle from the River Maradiaga ranching enterprise ("as I think all the packers in Honduras did"), and Jaime Rosenthal admitted that the bank had made business loans for some of the Rivera Maradiaga companies.
It would have been hard for a major bank in Honduras to avoid doing business with them: reportedly, they owned gas stations, shopping malls, palm oil processing plants, cattle ranches, hotels, and transport businesses-- not to mention their private zoo.
The meat-packing deals of the Grupo Continental with the Rivera Maradiaga family date back to the 1970s and 1980s, which appears to predate the Rivera family move into drug trafficking. More recent loans described by Rosenthal provided funding for the agricultural businesses.
And then there is that zoo, also financed with a loan from the Banco Continental, seized in the drug raids. Jaime Rosenthal explained that loan as part of his philosophy of improving public goods:
There is a lot yet to learn about this case. That it will be consequential in Honduran culture and politics is already evident on the front page of Tiempo, which emerged during the coup of 2009 as the only newspaper in Honduras that reported factually what was happening, and which now has an uncertain future, due to a prosecution that Tiempo today links to their continued support for opposition to the current government:
Honduras' Comisión Nacional de Bancos y Seguros (CNBS) has other ideas. On Saturday, it voted to force liquidation of the Banco Continental.
In response, the Rosenthal family issued its third public statement, calling for a voluntary liquidation that would
safeguard the interests of thousands of families employed by the Grupo, and maintain other enterprises such as the newspaper Tiempo and Channel 11.
The Rosenthal family proposed that they would voluntarily liquidate the Grupo Continental:
the family would give a bond to increase the capital in the bank to 100 million lempiras, in order to reach the index of capital adequacy demanded by the CNBS at 6% (currently, it is at 5.2%).
In proposing this action, the Rosenthal family is directly addressing the technical weakness that allowed the CNBS to propose forced liquidation. They argue that this action would directly affect 11,000 employees and 25,000 more people indirectly, as well as cutting off access to account holders, estimated to number 220,000.
The CNBS did not agree to the plan offered by the Rosenthal family. In his statement acknowledging this decision, calling again for its reconsideration, Jaime Rosenthal noted that the Grupo Continental is responsible for 5% of the Gross National Product of Honduras.
It is probably worth noting that at this point, no one has been convicted of a crime. What have been alleged is not drug trafficking itself (although some Honduran media are happily applying that term to the charges) but money laundering.
Basically, this could happen through the bank accepting deposits from people who the US prosecutor thinks the bank should have suspected produced their income through illegal activities. Under US law, deposits of more than $10,000 a day need to be reported, so someone could deposit amounts under that ceiling, repeatedly, creating a suspicious pattern of activities that a bank might ignore. Another option to launder money is to use a business that can bring in cash of varying amounts without suspicion-- antiquities and art, for example. Deposits from front businesses would not necessarily be questioned by a bank.
Banks also are used in money laundering through "layering":
Layering involves the wire transfer of funds through a series of accounts in an attempt to hide the funds' true origins. This often means transferring funds to countries outside the United States that have strict bank-secrecy laws. Such countries include the Cayman Islands, the Bahamas, and Panama. Once deposited in a foreign bank, the funds can be moved through accounts of "shell" corporations, which exist solely for laundering purposes. The high daily volume of wire transfers makes it difficult for law enforcement agencies to trace these transactions.
The details of the charges are not available, so we do not know precisely how the alleged money laundering took place. (A charge of suborning a public official is also mentioned in Honduras press coverage, but until further details are available, it is difficult to be certain what the basis of that charge might be.)
Honduran media are reporting that it was the Banco Continental's relationship with the Rivera Maradiaga family, which was swept up in drug trafficking investigations in 2013, that is the basis of the money laundering charges. Jaime Rosenthal is quoted as saying "no bank in the world has the ability to investigate all its clients". Yani Rosenthal noted that the Empacadora Continental had bought cattle from the River Maradiaga ranching enterprise ("as I think all the packers in Honduras did"), and Jaime Rosenthal admitted that the bank had made business loans for some of the Rivera Maradiaga companies.
It would have been hard for a major bank in Honduras to avoid doing business with them: reportedly, they owned gas stations, shopping malls, palm oil processing plants, cattle ranches, hotels, and transport businesses-- not to mention their private zoo.
The meat-packing deals of the Grupo Continental with the Rivera Maradiaga family date back to the 1970s and 1980s, which appears to predate the Rivera family move into drug trafficking. More recent loans described by Rosenthal provided funding for the agricultural businesses.
And then there is that zoo, also financed with a loan from the Banco Continental, seized in the drug raids. Jaime Rosenthal explained that loan as part of his philosophy of improving public goods:
“When we did the analysis of that loan we realized that it was a very good loan, not just for them but for the country. The loan would be paid by them and would promote a part of the country for tourism where normally people do not go. They would do a great job because it would begin to bring people from throughout Central America”.
There is a lot yet to learn about this case. That it will be consequential in Honduran culture and politics is already evident on the front page of Tiempo, which emerged during the coup of 2009 as the only newspaper in Honduras that reported factually what was happening, and which now has an uncertain future, due to a prosecution that Tiempo today links to their continued support for opposition to the current government:
Neither the president of Editorial Honduras, nor the director, nor the editor in chief, editors or reporters were clear until last night if DIARIO TIEMPO would circulate today because a rumor emerged that the OABI would interrupt the offices at any moment.
As if it were the last time, and under a dense cloud of uncertainty, the journalistic team of DIARIO TIEMPO closed the edition corresponding to today last night.
...
This Monday, the employees of Editorial Honduras and the whole journalistic team will return to the offices, nonetheless, last night they left believing that today they would encounter it taken over by the security and police that the government of Juan Orlando Hernández would send.
The Plataforma de Indignados, in a communique last night, has characterized the government of Juan Orlando Hernández as “an authoritarian regime”.
“We call upon the regime to free itself from foreign interference in this case and place the human element before diplomatic or financial interests of external and internal agents”, the communique asks.
Rosenthals Accused of Money Laundering
Thursday while we were traveling back to California, the Department of the Treasury identified three members of the powerful Rosenthal family as Specially Designated Narcotics Traffickers.
Accused are Jaime Rosenthal Oliva, his son, Yani Rosenthal Hidalgo, his nephew, Yankel Rosenthal Coello, and the family lawyer, Andres Acosta Garcia. Each has been charged "in connection with a multi-year scheme to launder the proceeds of narcotics trafficking offenses and foreign bribery offenses through accounts located in the United States".
Thursday night Yankel Rosenthal Coello was arrested as he got off a flight in Miami, and Friday he was charged in court.
The Rosenthal family is one of the richest in Honduras. Together they form Inversiones Continental, better known as Grupo Continental, an amalgamation of some 35 companies run largely as a family business.
As a result of this action, the Office of Foreign Assets Control of the US Treasury has designated Inversiones Continental, chartered in Panama, and three of its Honduran businesses, Inversiones Continental SA de CV, Empacadora Continental SA de CV, and the Banco Continental as companies that US businesses and citizens may not do business with. Also included in the list were three companies they owned chartered in the British Virgin Islands, and three more in Florida. The Florida companies were in real estate and investment. Any US assets of these individuals and these companies are now frozen.
Oscar Chinchilla, the Honduran Public Prosecutor, said on Friday that he had no knowledge of the US investigation. The Rosenthal family has hired a US lawyer to defend themselves.
Yankel Rosenthal, whose arrest made the indictment known publicly, is a soccer executive in Honduras and runs the popular Marathon soccer team. Yani Rosenthal is a Liberal Party activist who has tried to run for President. He is Vice President of Grupo Continental and runs Alimentos Continental and was an adviser to President Juan Orlando Hernandez on investment until June of this year. He was Chief of Staff of the Executive branch for President Jose Manuel Zelaya Rosales, and a Congressman from 2010 to 2014. Jaime Rosenthal Oliva is an MIT educated civil engineer who was greatly affected by the economics of Paul Samuelson while at MIT. He is President of Grupo Continental. He has been a Vice President of Honduras and is still active in politics in the Liberal Party.
Yani Rosenthal gave an interview Thursday on the Honduran television program Frente y Frente in which he said that to his knowledge, they have had no dealings with the Valle Valle family or any of its businesses. In two cases his Empacadora bought cattle from a company owned by the Rivera Maradiaga family, and loaned money to some of their businesses.
This news will have major political effects in Honduras. The Rosenthal family and money fuels a major faction within the Liberal Party, where Jaime has been, until recently, a perpetual candidate for President. This is the current of the Liberal Party that has maintained opposition to the ultra-conservative wing of the party headed by Roberto Micheletti Bain, which rose to power as a result of the 2009 coup against Zelaya and still controls the party Central Committee. Jaime Rosenthal has been widely seen as preparing his son, Yani, to both take his place in the party, and to run for President from the Liberal party.
The Rosenthal family also owns the opposition newspaper, El Tiempo, and one of the opposition Television broadcasters, Channel 11.
In his first response to the developments, Jaime Rosenthal issued a statement thanking people for trusting his family with their bank deposits and assuring them that all deposits, loans, etc. will be honored. He continued: "The Rosenthal Hidalgo family has decided to sell whatever business or investment that they own so that anyone who has had confidence in us can feel secure that they will never have a loss because of our responsibility. All deposits and investments made with us will be supported by the family with all that we have."
Since then, however, the Honduran banking commission has announced its own plans to address the situation. These plans, and their potential impacts, are the subject of a our next blog post.
Accused are Jaime Rosenthal Oliva, his son, Yani Rosenthal Hidalgo, his nephew, Yankel Rosenthal Coello, and the family lawyer, Andres Acosta Garcia. Each has been charged "in connection with a multi-year scheme to launder the proceeds of narcotics trafficking offenses and foreign bribery offenses through accounts located in the United States".
Thursday night Yankel Rosenthal Coello was arrested as he got off a flight in Miami, and Friday he was charged in court.
The Rosenthal family is one of the richest in Honduras. Together they form Inversiones Continental, better known as Grupo Continental, an amalgamation of some 35 companies run largely as a family business.
As a result of this action, the Office of Foreign Assets Control of the US Treasury has designated Inversiones Continental, chartered in Panama, and three of its Honduran businesses, Inversiones Continental SA de CV, Empacadora Continental SA de CV, and the Banco Continental as companies that US businesses and citizens may not do business with. Also included in the list were three companies they owned chartered in the British Virgin Islands, and three more in Florida. The Florida companies were in real estate and investment. Any US assets of these individuals and these companies are now frozen.
Oscar Chinchilla, the Honduran Public Prosecutor, said on Friday that he had no knowledge of the US investigation. The Rosenthal family has hired a US lawyer to defend themselves.
Yankel Rosenthal, whose arrest made the indictment known publicly, is a soccer executive in Honduras and runs the popular Marathon soccer team. Yani Rosenthal is a Liberal Party activist who has tried to run for President. He is Vice President of Grupo Continental and runs Alimentos Continental and was an adviser to President Juan Orlando Hernandez on investment until June of this year. He was Chief of Staff of the Executive branch for President Jose Manuel Zelaya Rosales, and a Congressman from 2010 to 2014. Jaime Rosenthal Oliva is an MIT educated civil engineer who was greatly affected by the economics of Paul Samuelson while at MIT. He is President of Grupo Continental. He has been a Vice President of Honduras and is still active in politics in the Liberal Party.
Yani Rosenthal gave an interview Thursday on the Honduran television program Frente y Frente in which he said that to his knowledge, they have had no dealings with the Valle Valle family or any of its businesses. In two cases his Empacadora bought cattle from a company owned by the Rivera Maradiaga family, and loaned money to some of their businesses.
This news will have major political effects in Honduras. The Rosenthal family and money fuels a major faction within the Liberal Party, where Jaime has been, until recently, a perpetual candidate for President. This is the current of the Liberal Party that has maintained opposition to the ultra-conservative wing of the party headed by Roberto Micheletti Bain, which rose to power as a result of the 2009 coup against Zelaya and still controls the party Central Committee. Jaime Rosenthal has been widely seen as preparing his son, Yani, to both take his place in the party, and to run for President from the Liberal party.
The Rosenthal family also owns the opposition newspaper, El Tiempo, and one of the opposition Television broadcasters, Channel 11.
In his first response to the developments, Jaime Rosenthal issued a statement thanking people for trusting his family with their bank deposits and assuring them that all deposits, loans, etc. will be honored. He continued: "The Rosenthal Hidalgo family has decided to sell whatever business or investment that they own so that anyone who has had confidence in us can feel secure that they will never have a loss because of our responsibility. All deposits and investments made with us will be supported by the family with all that we have."
Since then, however, the Honduran banking commission has announced its own plans to address the situation. These plans, and their potential impacts, are the subject of a our next blog post.
Tuesday, September 15, 2015
Mediating The Status Quo
Yesterday John Biehl del Rio, the Chilean diplomat designated by the Organization of American States to be their representative to the National Dialogue in Honduras, with the title of "mediator", called the indignados and LIBRE "pig-headed" and "imbeciles".
That's not how you mediate a dialogue, that's how you end one.
The job of a facilitator or mediator is to listen to both sides of an issue and to try to bring them into conversation about their common ground. It's not the role of a mediator to publicly insult one side in the process they are mediating.
By his words, Biehl has been showing all along that he isn't really a mediator.
Gentle readers will recall that in June, in response to the marchas de antorchas, with their demand for an international commission against impunity and corruption, Honduran President Juan Orlando Hernández unilaterally announced a Sistema Integral Contra la Impunidad (SICA, "Integrated System against Impunity") and called for a "National Dialogue" whose participants the government would designate.
The proposal, not immediately available to the Honduran press at the time, called for the establishment of several oversight committees for the Honduran judiciary, all of the committee members appointed by the Executive Branch. It specified no procedures or reporting mechanisms by which the "National Dialogue" would provide any input or revision to the proposed SICA process or composition.
Hernández presided over the first few meetings himself, meeting with jurists and business, before turning the whole process over to a Congress member to organize and oversee.
Some parts of civil society saw the National Dialogue as a government show, with no stated objective, and refused to participate.
Those not participating include the indignados, who for the last 16 weeks have marched every Friday calling for a Comision Internacional Contra de la Impunidad (CICIH) and for President Hernandez to resign. The two opposition political parties that were first on the ballot this last election (LIBRE and PAC) have refused to participate for much the same reasons: the control of the process by the current government and the lack of any connection between the "dialogue" and possible reforms.
Hernández's proposal "reforms" the Judicial Branch by making it responsible to committees for judicial oversight and review established and appointed by the Executive Branch. This further erodes judicial independence.
This was the official response of the government to the indignados, and it was hoped that it would weaken support for their calls for a CICIH, and silence their calls for Hernández's resignation.
When that didn't work, Hernández formally asked the OAS and UN for facilitators or mediators to help bring all of Honduran civil society to participate in the National Dialogue. Enter John Biehl del Rio.
Biehl del Rio has a fairly long history of engagement with Honduras.
As a chief adviser to Costa Rican President Oscar Arias, he was the principal mediator for the San Jose Accords intended to return José Manuel Zelaya to office after the 2009 coup. Before that he spent 4 years in and around Tocoa in the Bajo Aguan, teaching peasants about cooperatives.
It may be that in Honduras, Biehl del Rio sees similarities to how he described his native Chile in 2010:
The nightmare Biehl del Rio was referring to in Chile was the rise of the military which overthrew Salvador Allende. While Biehl del Rio was not a supporter of Allende, he went into exile after Pinochet took power.
In Honduras, however, it seems the place of the military in his critique is taken by the indignados and political parties opposed to the current president. Much of what Biehl del Rio has said about the opposition in Honduras echos the sentiments about Chile quoted above.
Biehl told the Honduran press that
So for Biehl, the indignados are merely pre-campaign presidential politicking.
But Honduras isn't Chile, and there are indications that Biehl del Rio may not completely understand Honduran politics.
Among his other pronouncements he called the Honduran Congress "representative of the people (or Nation) and a transversal cut through society", suggesting it should play a leading role in the National Dialogue.
Now the Honduran Congress is many things, but it does not represent Honduran society, directly or indirectly. Congress members are loyal and answerable to the political party that ensures their election, and do not represent a local constituency. There is really no way to consider these political insiders a "transversal cut" through society-- nothing in the Honduran political system works that way. This is part of the problem that has brought so many people out on the streets.
Biehl del Rio may see similarities to his Chile in 2010, but in the intervening years, he's lost his ability to say this diplomatically, and is reduced to calling the Honduran opposition names.
That means instead of mediating, he has adopted a side-- with a president elected by a minority of voters in an intensely split election, whose party is wrapped in a scandal over the financing of that very election, and who is trying to insist that he knew nothing of the money moving around. It's a bad side to be on, and it is unfortunate that it has led him to dismiss the largest show of public engagement in governance in modern Honduran history.
That's not how you mediate a dialogue, that's how you end one.
The job of a facilitator or mediator is to listen to both sides of an issue and to try to bring them into conversation about their common ground. It's not the role of a mediator to publicly insult one side in the process they are mediating.
By his words, Biehl has been showing all along that he isn't really a mediator.
Gentle readers will recall that in June, in response to the marchas de antorchas, with their demand for an international commission against impunity and corruption, Honduran President Juan Orlando Hernández unilaterally announced a Sistema Integral Contra la Impunidad (SICA, "Integrated System against Impunity") and called for a "National Dialogue" whose participants the government would designate.
The proposal, not immediately available to the Honduran press at the time, called for the establishment of several oversight committees for the Honduran judiciary, all of the committee members appointed by the Executive Branch. It specified no procedures or reporting mechanisms by which the "National Dialogue" would provide any input or revision to the proposed SICA process or composition.
Hernández presided over the first few meetings himself, meeting with jurists and business, before turning the whole process over to a Congress member to organize and oversee.
Some parts of civil society saw the National Dialogue as a government show, with no stated objective, and refused to participate.
Those not participating include the indignados, who for the last 16 weeks have marched every Friday calling for a Comision Internacional Contra de la Impunidad (CICIH) and for President Hernandez to resign. The two opposition political parties that were first on the ballot this last election (LIBRE and PAC) have refused to participate for much the same reasons: the control of the process by the current government and the lack of any connection between the "dialogue" and possible reforms.
Hernández's proposal "reforms" the Judicial Branch by making it responsible to committees for judicial oversight and review established and appointed by the Executive Branch. This further erodes judicial independence.
This was the official response of the government to the indignados, and it was hoped that it would weaken support for their calls for a CICIH, and silence their calls for Hernández's resignation.
When that didn't work, Hernández formally asked the OAS and UN for facilitators or mediators to help bring all of Honduran civil society to participate in the National Dialogue. Enter John Biehl del Rio.
Biehl del Rio has a fairly long history of engagement with Honduras.
As a chief adviser to Costa Rican President Oscar Arias, he was the principal mediator for the San Jose Accords intended to return José Manuel Zelaya to office after the 2009 coup. Before that he spent 4 years in and around Tocoa in the Bajo Aguan, teaching peasants about cooperatives.
It may be that in Honduras, Biehl del Rio sees similarities to how he described his native Chile in 2010:
"There is a political world that needs to go. When the national task fundamentally consists in practicing the art of disagreeing to thereby gain power, there prevails a will and ambitions that destabilize the possibility of a good government. The culture of confrontation which we inherit from the past, severely limits the ways to satisfy the necessities of the people. To use and supply yourself with stereotypes from another historical epoch to exercise opposition or to govern is to deliberately damage the country....If the opposition looks for the failure of the government to rise to power, it is jointly responsible for restarting one of the worst nightmares of the country."
The nightmare Biehl del Rio was referring to in Chile was the rise of the military which overthrew Salvador Allende. While Biehl del Rio was not a supporter of Allende, he went into exile after Pinochet took power.
In Honduras, however, it seems the place of the military in his critique is taken by the indignados and political parties opposed to the current president. Much of what Biehl del Rio has said about the opposition in Honduras echos the sentiments about Chile quoted above.
Biehl told the Honduran press that
There are many people who have taken this hard time for Honduras as a kind of political pre-campaign, and this crisis as an opportunity to kill their possible rivals. This I have noted in conversations. With these people it is very difficult to make advances because they only have one thing in mind. Hondurans are very political, at least in Tegucigalpa and San Pedro Sula. They give the impression that everyone wants to be president and as such their positions are very sharp and cutting because they see that this is a weak moment."
So for Biehl, the indignados are merely pre-campaign presidential politicking.
But Honduras isn't Chile, and there are indications that Biehl del Rio may not completely understand Honduran politics.
Among his other pronouncements he called the Honduran Congress "representative of the people (or Nation) and a transversal cut through society", suggesting it should play a leading role in the National Dialogue.
Now the Honduran Congress is many things, but it does not represent Honduran society, directly or indirectly. Congress members are loyal and answerable to the political party that ensures their election, and do not represent a local constituency. There is really no way to consider these political insiders a "transversal cut" through society-- nothing in the Honduran political system works that way. This is part of the problem that has brought so many people out on the streets.
Biehl del Rio may see similarities to his Chile in 2010, but in the intervening years, he's lost his ability to say this diplomatically, and is reduced to calling the Honduran opposition names.
That means instead of mediating, he has adopted a side-- with a president elected by a minority of voters in an intensely split election, whose party is wrapped in a scandal over the financing of that very election, and who is trying to insist that he knew nothing of the money moving around. It's a bad side to be on, and it is unfortunate that it has led him to dismiss the largest show of public engagement in governance in modern Honduran history.
Friday, September 11, 2015
Who Pays for the Infrastructure Needs of ZEDEs?
Potential ZEDE developers seem to be risk-averse when it comes to developing the infrastructure needed for them to succeed.
Juan Orlando Hernandez recently traveled to Asia, picking up the slightly overdue feasibility report for a ZEDE in southern Honduras from the Korean International Cooperation Agency, (KOICA). The project being studied is to develop a deep water port in the city of Amapala, on El Tigre island two km off the Honduran Pacific coast, as well as a logistics center in the municipality of Alianza on the adjacent mainland.
Why develop a port at Amapala?
For years the Panama Canal has been a bottleneck to shipping from Asia to the Atlantic coast ports of the US and Europe. The largest ships today cannot fit in the locks, and the canal simply has insufficient capacity, even for existing ships which do fit in the locks. There's often a one to three day wait to go through.
The delay and size restrictions have prompted three projects along the Pacific coast of Central America.
The Panama Canal authority itself is building a new set of locks that can accept larger ships, but its overall capacity is limited by the amount of fresh water available in drought years, as at present. Under current conditions only 17 cargo ships a day can transit the canal.
There is a separate Chinese project to build a new sea level canal across Nicaragua underway.
Honduras' southern ZEDE is yet another alternative, in which container ships would dock in Amapala and unload their cargo to be transported and sorted and stored in the logistics area. It would then get trucked over a new road from Nacaome to Puerto Cortés where it would be matched with container ships docked there for delivery to Atlantic ports.
Hernández says the feasibility report was entirely positive. Despite this, there was no announcement of the proposed ZEDE being formed.
Instead, Hernandez announced an agreement for cooperation between the port of Busan in South Korea and the port of Amapala to improve their training and port procedures.
At Hernández's very next stop, in Japan, he solicited something never before discussed as a Honduran government infrastructure project. He asked the Japanese International Cooperation Agency (JICA) to finance the building of a bridge from the island of Zacate Grande to Amapala.
Zacate Grande is itself connected via a bridge to the mainland, and houses many vacation ranches owned by wealthy Hondurans.
There's no reason to develop the port at Amapala without also connecting it to the mainland to take advantage of the port facilities. Previous discussions of the Amapala port had always included development of the bridge as part of the ZEDE development.
Now the government of Honduras is seeking to get someone else to pay for the development of this critical piece of infrastructure for the ZEDE, rather than have the ZEDE itself fund it. Was this change dictated by the feasibility report? Did that report separate the bridge from the port development and say Honduras should provide it as part of the infrastructure? JICA did not commit to building the bridge, but agreed to study the project.
On his return from his Asian trip, Hernández signed contracts with Mexican companies for development of two more sections of the new highway to connect the south coast of Honduras with the Caribbean coast port of Puerto Cortés. The funds for this construction are borrowed from Mexico.
This roadway is also a strategic piece of infrastructure to enable planned ZEDEs in the south of Honduras. Without easy transport between the Pacific and Caribbean coasts there is no reason to develop the port of Amapala. This new roadway is scheduled to open in 2017.
For all the hype of a ZEDE as a way to develop Honduras, the current proposal seems to be requiring a large outlay in infrastructure development from the host country before there is even a commitment of ZEDE development.
Hernández promises ZEDE announcements soon...
Juan Orlando Hernandez recently traveled to Asia, picking up the slightly overdue feasibility report for a ZEDE in southern Honduras from the Korean International Cooperation Agency, (KOICA). The project being studied is to develop a deep water port in the city of Amapala, on El Tigre island two km off the Honduran Pacific coast, as well as a logistics center in the municipality of Alianza on the adjacent mainland.
Why develop a port at Amapala?
For years the Panama Canal has been a bottleneck to shipping from Asia to the Atlantic coast ports of the US and Europe. The largest ships today cannot fit in the locks, and the canal simply has insufficient capacity, even for existing ships which do fit in the locks. There's often a one to three day wait to go through.
The delay and size restrictions have prompted three projects along the Pacific coast of Central America.
The Panama Canal authority itself is building a new set of locks that can accept larger ships, but its overall capacity is limited by the amount of fresh water available in drought years, as at present. Under current conditions only 17 cargo ships a day can transit the canal.
There is a separate Chinese project to build a new sea level canal across Nicaragua underway.
Honduras' southern ZEDE is yet another alternative, in which container ships would dock in Amapala and unload their cargo to be transported and sorted and stored in the logistics area. It would then get trucked over a new road from Nacaome to Puerto Cortés where it would be matched with container ships docked there for delivery to Atlantic ports.
Hernández says the feasibility report was entirely positive. Despite this, there was no announcement of the proposed ZEDE being formed.
Instead, Hernandez announced an agreement for cooperation between the port of Busan in South Korea and the port of Amapala to improve their training and port procedures.
At Hernández's very next stop, in Japan, he solicited something never before discussed as a Honduran government infrastructure project. He asked the Japanese International Cooperation Agency (JICA) to finance the building of a bridge from the island of Zacate Grande to Amapala.
Zacate Grande is itself connected via a bridge to the mainland, and houses many vacation ranches owned by wealthy Hondurans.
There's no reason to develop the port at Amapala without also connecting it to the mainland to take advantage of the port facilities. Previous discussions of the Amapala port had always included development of the bridge as part of the ZEDE development.
Now the government of Honduras is seeking to get someone else to pay for the development of this critical piece of infrastructure for the ZEDE, rather than have the ZEDE itself fund it. Was this change dictated by the feasibility report? Did that report separate the bridge from the port development and say Honduras should provide it as part of the infrastructure? JICA did not commit to building the bridge, but agreed to study the project.
On his return from his Asian trip, Hernández signed contracts with Mexican companies for development of two more sections of the new highway to connect the south coast of Honduras with the Caribbean coast port of Puerto Cortés. The funds for this construction are borrowed from Mexico.
This roadway is also a strategic piece of infrastructure to enable planned ZEDEs in the south of Honduras. Without easy transport between the Pacific and Caribbean coasts there is no reason to develop the port of Amapala. This new roadway is scheduled to open in 2017.
For all the hype of a ZEDE as a way to develop Honduras, the current proposal seems to be requiring a large outlay in infrastructure development from the host country before there is even a commitment of ZEDE development.
Hernández promises ZEDE announcements soon...
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