Thursday, October 3, 2019

Tony Hernandez Trial Day 2 - Some basic math

Testimony at Tony Hernandez's trial today included testimony from El Rojo who said he helped Tony move 140 tons of cocaine through Honduras.  We don't know if those are metric tons or english tons but the math is about the same order of magnitude for both.

According to a website that tries to keep track of cocaine prices across the country, the price is lowest in cities along our southern border, where they report Laredo, TX, Las Cruces, NM, and San Diego, CA all have the cheapest cocaine, at about $14, 500 per kilogram.  At that price:

140 English tons is 127, 006 kilograms of cocaine.
Cocaine sells for a mean street price of $14, 500 per kilogram in San Diego, CA
127006 kg. of cocaine at $14, 500 per kilogram is more than $1.84 billion

140 metric tons is 140,000 kilograms of cocaine.
Cocaine sells for a mean street price of $14,500 per kilogram in San Diego, CA
140,000 kilograms at $14, 500 per kilogram is more than $2.03 billion.

The witness indicated that he helped Tony Hernandez traffic right around $2 billion worth of cocaine!

Trial of Tony Hernandez, Day 1

The trial of Juan Antonio Hernandez Alvarado, aka "Tony" Hernandez, former Honduran Congress person and brother of the sitting President, Juan Orlando Hernandez Alvarado began today in a Federal Courthouse in New York City.  Tony Hernandez is charged with two counts of murder of rival drug traffickers, one in 2011 and one in 2013.  He is also charged with importing large quantities of cocaine into the United States. The Jury was seated, and the Prosecutor, Jason Richman, gave his opening statement, which is causing quite a stir.

In his opening statement, Richman said that El Chapo Guzman gave $1 million to Tony Hernandez to give to his brother, Juan Orlando Hernandez.  Richman said:

The defendant was protected by and had access to his brother, the current sitting president of Honduras, a man who himself has received millions of dollars in drug money bribes -- bribes he received from some of the largest cocaine traffickers in the world, -- bribes he received from men like El Chapo and the Sinaloa cartel who personally delivered $1 million to the defendant for his brother."
Richman also said of Juan Orlando Hernandez that he took some $1.5 million in drug money to win his first presidential campaign in 2013 in exchange for protection for the drug traffickers.   He accepted a further $40,000 from traffickers for his 2017 re-election campaign, Richman alleged.

Prosecutors accused Juan Orlando Hernandez of working with his brother Tony and former president Porfirio Lobo Sosa to take advantage of the drug trafficking to consolidate power and control in Honduras.

Former President Porfirio  (Pepe) Lobo Sosa was also accused, but not charged, in the opening statement by Jason Richman.  Pepe Lobo is alleged to have accepted $2 million in drug money for his 2009 campaign

Wednesday, March 6, 2019

DESA: Fraud and Corruption

On the third anniversary of Berta Cáceres' murder, MACCIH and the UFECIC-MP (Unidad Fiscal Especial Contra la Corrupción y la Impunidad del Ministerio Publico) announced new legal cases against 16 individuals, brought as a result of studying the approval and license allocation processes for the Agua Zarca dam on the Gualcarque river in Honduras. 

So far in the Honduran press, only El Tiempo and Proceso Digital reported it, both digital publications.  The major Honduran print papers have ignored it.

The combined forces of MACCIH and UFECIC-MP chose to investigate the more than 40 complaints about irregularities in concessioning and licensing hydroelectric projects that affect the Lenca people, complaints lodged by Berta Cáceres before her murder, complaints about DESA and the Agua Zarca dam. Ana Maria Calderón, the Corruption coordinator in MACCIH, noted that the implications of their findings have a much larger application:

In light of today's findings, the Mission suggests that the [Government of Honduras] review the remaining active contracts and the norms that regulated them, because to continue with this energy strategy could produce an unbalance in the market and bring about the bankrupcy of ENEE;  its possible that all the contracts tied to renewable sources were let in the same way [as this one].

If all of the many contracts and licensing processes underwent the same irregularities as this contract, it has implications for the future viability of ENEE, the national electric company, which currently runs at a loss.  The Honduran government is due to tell the IMF how they plan to bring this entity to profitability sometime in the next three months.  With more contracts authorized like the DESA one, they probably cannot.

The investigation found that DESA was created in 2009 by two brothers (the Abate Ponces) and almost immediately Roberto David Castillo Mejia was its de-facto representative. 

But Castillo Mejia was also employed full time in ENEE, in the department that reviews and allocates contracts for hydroelectric projects. Very convenient for DESA.

He obtained shares in the firm through a front company formed in Panama, called PEMSA, which had just two shareholders, Castillo Mejia and Carolina Lizeth Castillo Argueta.  Castillo Argueta was the lawyer for the ENEE workers' union at the time, but became DESA's lawyer as well and signed the contract for DESA.  She signed instead of Castillo Mejia to cover up his conflict with his role in PEMSA.  DESA has another investor, Inversiones Jacaranda, owned by the Atala Zablah banking family.

Both David Castillo Mejia and Carolina Castillo Argueta worked directly for the head of ENEE, Roberto Anibal Martinez Lozano, who signed the contract with DESA on behalf of ENEE.  He signed the contract despite knowing DESA was not on the list of ENEE approved contractors (a prerequisite to any ENEE contract).  He signed without investigating how a front company with no technical or financial assets was going to carry out this somewhat tricky contract.  In short, it was an illegal contract, but he signed anyway, even over objections from his legal department.

Fraud happened in the approvals process at a number of government institutions.  SERNA, the environmental resources agency, for example, approved the feasibility study on December 16, 2009, without bothering to locate the land on which the project would take place, or determining who owned that land, or confirming approvals from the municipality where the dam would be located, all abnormalities that the legal department at SERNA noted.  Yet they too recommended approval of the project.

The feasibility study itself was improperly done.  It was submitted to SERNA on October 5, 2009, just 24 hours and 5 minutes after ENEE gave its permission.  Nevertheless, SERNA and Castillo Argueta signed a contract on January 22, 2010 that gave DESA the use of national water.  This contract was signed despite a negative recommendation from the National Energy Council, which noted that DESA did not meet the legal requirements for a contract.

SERNA issued a "Category 2" environmental license for the Agua Zarca project on March 24, 2011.  MACCIH and UFECIC-MP allege the project was miscategorized in favor of DESA, giving them cheaper license fees. The environmental license required a two-year study of the amount of water flowing in the river, and the law specifies that is two years after the water use contract is issued. The study was supposed to contain two years of data on the volume of water flowing in the Gualcarque river.  It was supposed to be current data.

Instead the study contained data from a 2003 proposal previously rejected by ENEE, that Carolina Castillo Argueta had access to because the union she represented was supposed to partially finance the rejected project.

Less than two years after the water use license was approved on January 22, 2010, SERNA issued an environmental approval for the Agua Zarca dam.  They had to know the data included were falsified.

The 2003 project DESA plagiarized asked to construct a 6 MW power plant, and DESA's original request was also to build a 6 MW project. 

In August of 2010, DESA received a concession for a 14.5 megawatt project. 

On May 14,  2011, DESA asked for, and received an increase to 21.5 megawatts

DESA said it would add a third turbine to generate this power, but MACCIH suggests that it's not clear the river actually has enough water to support a third turbine, or even fully support the second turbine. Without a constructed project producing power using the proposed model, it's difficult to judge the alleged improvements. 

An economic analysis suggested the proposed investment in a third turbine was intended to increase the total investment DESA had in the project, which would then increase the purchase price ENEE would have to pay for their electricity. 

Higher investment ==> higher purchase price in ENEE's pricing models.

All in all, not only does the project have the problems we knew with community consultation and approval; as an engineering project, its feasibility was uncertain. The record of approvals and contradictory roles of individuals involved is a clear indication of violation of law. And it seems the main purpose in setting the project up the way it finally was approved and was to be implemented might have had more to do with extracting more government money, than with any actual power production.

The sixteen individuals charged in this case are:  Francisco Rafael Rivas Bonilla, Julio Alberto Perdomo Rivera,  Catarino Alberto Cantor López, Luis Eduardo Espinoza Mejía, Anna Lourdes Martinez Cruz, Aixa Gabriela Zelaya Gomez, Dario Roberto Cardona Valle, Mauricio Fermin Reconco Flores, José Mario Carbajal Flores, Oscar Javier Velásquez Rivera, Roberto Anibal Martínez Lozano, Roberto David Castillo Mejia, Julio Ernesto Eguigure Aguilar, Raul Pineda Pineda, Carolina Lieth Castillo Argueta, and Saida Odilia Pinel. 

They now stand accused of Abuse of Authority, failing to fulfill the requirements of a public official, falsification of documents, negotiating in a way not compatible with holding public office, and fraud.

Friday, January 26, 2018

Congressional Corruption Part 1

Lest we think that all is well in the Honduran Congress as a deliberative body, recent news reports in Honduras document widespread corruption in the Honduran Congress; everything from the way money ends up back in Congressperson's pockets to the way laws as published in the official newspaper, are completely different than what was voted on in Congress.  Corruption here is widespread, and deep.

The OAS mission to support the fight against corruption and impunity in Honduras (MACCIH for its acronym in Spanish) found out this week that the problem in Honduras with impunity and corruption isn't that they don't know how to follow the internationally recommended ways to combat corruption and write a legal framework that combats corruption.  Since the 2009 coup numerous panels have made legislative suggestions that have been totally ignored. Honduran legislators, the Judicial and Executive branches have have deliberately ignored them for a reason.

The problem in Honduras continues to be that the government at all levels, from the legislative, to the Judicial, and the Executive branches, is rife with corruption.   They actively choose to write legislation that facilitates corruption and impunity.  No amount of MACCIH investigating crimes and suggesting model legislation will fix that.  But only now is MACCIH waking up to the reality of Honduras.

This week the Honduran Supreme Court dismissed the first  corruption case that MACCIH brought to trial.  This was the case of the five Congresspeople who were paid off by the Executive branch for changing their allegiances to the National Party.  In return they were paid using funds Congress allocated to an NGO for social programs.  The money, some $300-$400,000 ended up in the private bank accounts of these five Congressmen.

It was a well documented case that should have easily resulted in a conviction.  Instead, the Honduran Supreme Court threw one roadblock after another at the prosecution.  First, they refused the request to have the Congressmen arrested to await trial in jail.  Next they scheduled the first trial date to be the Dia de Innocentes (Innocents’ Day).  The Supreme Couirt judge postponed hearings time after time.

Then Congress acted, or maybe the corrupt leaders of Congress acted would be more precise.  All those leaders were, at the time, members of the National Party.  The lame duck Congress came back after New Years and passed a series of laws, among then on January 18th a new "Ley Organica de Presupuesto"(decreto 117-2017)  with some interesting clauses.  The new law, as written, takes away from the Public Prosecutor's office the right to pursue crimes related to the budget of Honduras, instead giving it to the Tribunal Superior de Cuentas (TSC).  The law particularly states that while the TSC is auditing any budget item, the judicial branch cannot act.  To rub MACCIH's face in it, they made the law retroactive.

Given the new law, the Supreme Court judge dismissed the case against the five Congresspersons because the Public Prosecutor's office had no standing to bring the case.  MACCIH works with the Public Prosecutor's office, not the Tribunal Superior de Cuentas.  Not only does this destroy MACCIH's ability to investigate and prosecute the crimes it was set up to pursue, but it also closes investigations it had open on over 60 Congresspeople, including the President of the Congress, Mauricio Oliva.

Article 16 of the law gave Congresspeople the right to request, administer, and spend public funds from any source (government, NGOs, etc) that are for community development, social aid, and the improvement of law and democracy.  This change in the law legitimates the transfer of funds to the five charged Congresspersons.

Article 131 of the new law authorized the Tribunal Superior de Cuentas (TSC) to audit the use of these funds, specifically funds from 2006-2018, retroactively.  It gives the TSE 3 years to perform the audit of those years and only when it is done, and publishes its report, will changes be adduced and filed against anyone.  No criminal charges can be filed against anyone on these grounds while the TSC is investigating and writing its report.  Nor can civil charges be filed.

These changes passed with 69 votes for, and only 2 against, with 11 abstentions.  The changes shut down MACCIH's investigations and ability to bring charges against this kind of financial corruption.

New Police Chief Tied to Wilter Blanco

The new Police Chief of Honduras's National Police, José David Aguilar Moran, aided Wilter Blanco in moving cocaine from Honduras to the United States, the AP reported this morning.

Jose David Aguilar Moran was sworn in last week after President Juan Orlando Hernandez appointed him as the Police Chief of the National Police.  Juan Orlando Hernandez said of Aguilar Moran that he was "of the highest confidence".

According to a Honduran Security Ministry's Inspector General's report, in 2013, police stopped a tank truck with 780 kilograms of cocaine hidden in the tank.  The truck was on the way to a property owned by Wilter Blanco, a drug trafficker from Honduras who turned himself in to the DEA and was recently sentenced to 20 years in prison.Aguilar Moran was the chief of Police Intelligence at the time.

In 2013, Aguilar Moran was the head of the Intelligence division of the National Police.  The then Police Chief of La Ceiba, José Rolando Paz Murillo, was a known associate of Wilter Blanco, who visited Paz Murillo in his office and reportedly delivered millions of dollars in bribes to Paz Aguilar. 

The officers stopping the truck belonged to the Tourist Police in La Ceiba led by Grebil Cecilio Giron Miranda.  They had been tipped off to the truck containing cocaine by a phone call from a rival gang (Los Cachiros?) .  The truck was being escorted by 11 police officers in four vehicles.  After the truck was stopped, Giron Miranda escorted it to a local police station.  There the La Ceiba Police Chief, Paz Murillo, ordered him to release the truck and threatened to get all the officers who stopped the truck fired.

According to the report, Giron Miranda drew his gun and pointed it at Paz Murillo, made him lie on the ground, then handcuffed him.  While continuing to threaten Giron Miranda, Paz asked to make a phone call, who called Aguilar Moran, then passed the telephone to Giron Miranda.  Aguilar Moran reportedly ordered Giron Miranda to release the truck, Paz Murillo, and all those detained.

Among those involved in this case were Aguilar Moran, then Chief of Police Intelligence, the then Inspector General of the National Police, Orlin Javier Cerrato Cruz,  and Orbin Alexis Galo Maldonado, who at the time was Aguilar Moran's second in command.

The AP says that one of the officers escorting the truck was later forced to retire, but otherwise none of the involved police were punished, reportedly at the request of Blanco.  Nor was the Public Prosecutor's office informed.  Nor was the US Ambassador, Lisa Kubiske, informed. Paz Murillo is currently a judge in Roatan.

In addition to the Inspector General's report, the AP notes the event was mentioned in a page of Aguilar Moran's personnel file given to them, and corroborated by several former police officers in Honduras that they interviewed. Maria Maria Borjas, who headed the internal investigations division of the National Police until forced out, authenticated the Inspector General's report.

The Honduran Government, when asked for comment, called the report "fake".

Tuesday, January 9, 2018

Ponce Fonseca: Gang and Foreigners are Protesting in Honduras

General Rene Orlando Ponce Fonseca, head of the Joint Chiefs of Staff of the Honduran Armed Forces, sees Venezuelans, Nicaraguans, and Salvadorans protesting in Honduras; but not Hondurans.  I suggest he open his eyes.

On Monday, after 100,000 Hondurans marched in San Pedro Sula on Saturday to protest the fraudulent "official" results of the Honduran elections of last November, and tens of thousands marched in Tegucigalpa on Sunday for the same reason, General Ponce Fonseca gave an interview in which he said:
"These marches are infiltrated by members of criminal structures who have been joined by elements from other countries such as Venezuela, Nicaragua, and El Salvador, a point that's been well established."

Lets translate that.  For "members of criminal structures" read "gang members", and for "elements from other countries" read "foreign interference".  For "a point that's been well established" read "I say so". 

So according to General Ponce Fonseca gangs and foreigners are marching in Honduras, upsetting the peace, causing violence, and hurting his soldiers by pelting them with rocks.  Bear in mind that his soldiers have automatic weapons with live ammunition and have been firing on the crowds without provocation, and to deadly effect.

To make it clear, Ponce Fonseca continued:
"The intention to maintain chaos and burn down the country are objectives that take us to another dimension which is outside of all order, but the Armed Forces are prepared to defend the people."

So protesters are not Honduran people to General Ponce Fonseca.  The Honduran people are those who are not protesting.

No wonder we see the Honduran Military Police violating the human rights of protesters all the time. 

Monday, December 25, 2017

Party politics in Honduras, post 2017

While the OAS has not recognized the outcome of the presidential election, Juan Orlando Hernández is proceeding as if the election is settled. Meanwhile, media and political observers from outside Honduras have pivoted to critiques of Salvador Nasralla, Manuel Zelaya, or both for supposedly playing their cards the wrong way, and for the actions each is taking now.

This seems entirely misguided to us. It is worth noting that there was never a chance that Hernández would concede that the election was fraudulent. We doubt that he would have done anything even if the US placed pressure on him, beyond what he is doing: calling for a national "dialogue" that, as in his previous dialogues, is controlled by him and excludes those who view him as corrupt and illegitimate.

Given that reality, it is worth emphasizing that having the officially reported election results come in so close was surprising, and probably not just to those of us watching from outside. Poll tallies that came in as paper documents and were not scanned at the election site appear to have been manipulated. But those transmitted directly as scans allowed the popularity of opposition to Hernández to show clearly.

Which brings us to the next steps: what is happening, and what should we make of it?

Much is being made of the fact that Nasralla and Zelaya are proceeding separately. International commentators seem to be fascinated with the personality issues involved, and ignore the fact that the Alianza was not a party. It was formed under Honduran electoral law that allows for alliances.

Technically, the Alianza joined two existing parties: Libre and PINU. The party founded by Nasralla, PAC (Partido Anti-corrupción), was originally supposed to form part of the Alianza as well.

However, PAC was taken over in May by dissidents, after the TSE declared their original primary null and void on a technicality. The Honduran press described this situation as a mess. As reports published outside Honduras made clear, this culminated a move by a faction in PAC that was tied to the Partido Nacional.

So in the aftermath of the November election, Nasralla has no party affiliation. He has announced that he is starting over again, pushing for a fuerza nacional-- a national political movement, which in Honduras is a first step to forming a party. Nasralla specifically called for participation by "the Alianza that gave him the electoral triumph"
which will be expanded with all the other sectors of the country that oppose the dictatorship such as the people who have demonstrated in the streets, workers, the church, honest businessmen, unions, the Partido Liberal, and the youth that always accompanied him.
This is playing a long game, looking forward to the next election in 2021. It represents a calculated attempt to broaden his original constituency, appealing to the remnants of the Liberal Partido, which came in third in the national presidential race, but also inviting people who may have supported the Alianza but be less comfortable with Libre's strong social democratic agenda.

Nasralla doesn't really have any other choice if he wants to influence the political future. There is no "Alianza" party of which he might be called the leader in Congress. The shell of PAC, led by his rival, managed to win 1 seat in congress (with less than 1% of the vote nationally). In fact, even in the 2013 elections, PAC only gained 13 seats in the congress. It was always a presidential movement, created by a prominent and visible person, but not anything like a traditional party.

The stakes are different for Zelaya. With the end of the presidential campaign, he returns to his position as leader of Libre. Libre is a party that was built by experienced politicians, and includes a substantial national congressional presence. Libre won 30 seats in Congress (with 23% of the vote nationally). That's a net gain of two seats.

Libre actually overtook what remains of the Partido Liberal, which saw its congressional delegation shrink from 33 to 26 (with 20% of the national vote). The Liberal Party continues to work through the aftermath of the 2009 coup, which was led by one faction within the party against the sitting president from the same party. When Zelaya created Libre, many progressives that formerly were Partido Liberal members followed him.

One of the dynamics to watch is what will become of the remains of the Liberal Party. Luis Zelaya, the candidate for president, was an unexpected choice, a university professor with no history of political office holding. Part of his motivations for seeking office parallel those that guided Nasralla: the corruption scandal in the Honduran social services agency, IHSS. He also was moved by the extra-judicial killing of a university student.

Luis Zelaya shocked most observers when he supported the assertion by Nasralla that the Alianza candidate was the real winner of the contest. He has remained firm on this point. That has led to calls from within what his supporters call the lado oscuro or Dark Side of the party for his removal from his leadership of the party. Zelaya has openly accused those calling for his removal of being in a "perverse" coalition with the Partido Nacional.

Back in early 2015, Mauricio Villeda, then leader of the Liberal Party, was part of the first agreement to oppose the re-election of Juan Orlando Hernández. As recently as this spring, political strategists in Honduras were writing about his chances of leading a three-party alliance in the presidential race.

Which brings us to the next four years. If the Partido Liberal follows Zelaya, and he and his congressional delegation coordinate with Libre, they would form a voting bloc of 56 members, facing the Partido Nacional's 61 (based on a national vote of just under 48%).  This is enough on its own to block some of the constitutional moves that have been a staple of Hernández' consolidation of power.

And they could do more, with sufficient focus. The remaining 11 seats in Congress went to minority parties. The remnant PAC is suspected of being a National Party adherent. Other small parties that were floated as potential participants in a National Party alliance were the PUD, PDCH, FAPER and Vamos.

Only the first two of these political movements had seats in the previous congress, holding a total of five. PUD held on to its seat, but the PDCH lost three, ending up with a single seat. That brings the total votes that normally follow Hernández automatically to 63. This is two less than a majority in the 128 seat congress.

Adding the 4 congressional seats won by PINU to those of Libre, with which it formed the Alianza, would point to a core opposition of 34 votes. If the Partido Liberal under Luis Zelaya can work with Libre and PINU in the next congress on issues where they share concerns, they would still be at a disadvantage, with a total of 60 votes.

The wild card is something called the Partido Alianza Patriotica. It received enough votes in this election to receive 4 seats in congress. It ran the general who carried out the 2009 coup, Romeo Vásquez Velasquez. Not surprisingly, he ran on a tough on crime, support the military platform. In 2013, its first campaign, the party didn't even win a single congressional seat. So there's no history to go on.

And of course, there's the lone Partido Anti-corrupción diputado elected, who just may turn out to have more leverage than expected.