Monday, October 12, 2015

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.

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