US embassy cable - 05GUATEMALA1403

S E C R E T SECTION 01 OF 05 GUATEMALA 001403 
 
SIPDIS 
 
NOFORN 
 
E.O. 12958: DECL: 06/02/2030 
TAGS: PINR, SNAR, GT 
SUBJECT: GUATEMALA COUNTERDRUG PERFORMANCE: C-CN5-00289 
 
REF: STATE 87299 
 
Classified By: DBWHARTON, DEPUTY CHIEF OF MISSION.  REASON 1.4(C). 
 
 
1.  (C) The Berger Government (GOG) is seized with and 
increasingly alarmed by the growing power of drug traffickers 
in Guatemala.  Guatemala,s political, business, and even NGO 
and Church leaders recognize drug trafficking and the crime 
and violence it spawns as a very serious threat to the 
nation,s institutions, economy and society.  At the same 
time, lack of resources ) both material and legal -- and the 
endemic corruption that GOG leaders acknowledge and are doing 
their best to combat, prevent the GOG from making meaningful 
progress in the effort to fight drug trafficking and other 
forms of organized crime. 
 
(C) A recurring theme in US-Guatemalan relations is expressed 
by GOG officials as "We want and need to reduce drug 
trafficking, but cannot do so without American assistance." 
There is some truth to this, in that US restrictions on the 
Guatemalan military are a significant factor in the GOG,s 
lack of air and sea interdiction capabilities.  It is also 
the case that, at roughly $2.5m. to $3m. per year of INCLE 
funds, we are not/not making an investment in anti-drug 
assistance commensurate with our interests in preventing 
Guatemala from becoming a narco-state.  At the same time, a 
persistent tendency of senior Berger government officials to 
see the issue in resource terms fails to recognize legal and 
procedural reforms Guatemala could make to greatly strengthen 
its ability to fight crime.  Specifically, Guatemala needs to 
enact legal reforms that would give its police and 
prosecutors the right to use court-ordered wiretaps, conduct 
undercover operations such as controlled deliveries, and 
prosecute criminals on conspiracy charges.  The GOG also 
needs to enact changes in law and process so that criminals, 
property and cash can be seized, made forfeit, and put to use 
in law enforcement activities against organized crime before 
the associated criminal cases run their full course. 
 
(S) If the GOG does enact needed legal reforms, as we have 
been advocating, US interests would be well served by 
increasing our anti-drug assistance.  Specifically, 
establishment of DEA-managed Special Investigative Units 
(SIUs) in Guatemala and normalization of military-to-military 
relations with restored security assistance along regional 
norms would help give Guatemala the intelligence gathering 
and end-game capabilities it must have to mount an effective 
counternarcotics program. 
 
2.  Responses to INR,s specific questions follow: 
A.  (S) What improvements to Guatemala,s counterdrug laws 
and performance have been made during the past year?  Have 
seizures increased?  Any significant legal developments? 
 
(C) There has been progress toward better cooperation between 
the Ministry of Government (responsible for police) and the 
Public Ministry (responsible for investigators and 
prosecutors) on procedural matters.  A June 2004 agreement 
signed between the two ministries codified procedures for 
inter-agency control and sharing of evidence.  The Embassy 
has also worked hard to promote legal reform, hiring a former 
Supreme Court justice to prepare a legal brief arguing that 
wiretapping is not unconstitutional.  The Ambassador has 
promoted the idea persistently with all senior officials, 
from the President on down.  We have also been working with 
key members of Congress to promote legislative action on the 
reforms needed to give GOG police and prosecutors the legal 
tools needed to go after criminal organizations and leaders. 
(C) With the exception of an increase in opium poppy 
eradication (due to an increase in opium poppy cultivation), 
GOG counterdrug results are not encouraging.  Cocaine 
seizures in the first half of CY 2005 are about 700 kg, only 
about 6% of the CY2005 target (12,000 kg), less than 20% of 
CY2004 (4,481 kg) seizures, and less than 10% of CY2003 
seizures (9000kg). 
 
(C) The drop in cocaine seizures is due to lack of resources, 
changes in trafficking patterns, and corruption in law 
enforcement organizations (acknowledged by and of concern to 
senior GOG officials).  The Guatemalan Air Force, responsible 
for protection of national airspace, investigation of air 
tracks of interest (ATOIs ) suspected drug flights), and 
transportation of police and prosecutors to ATOI landing 
sites in the remote Peten province, has literally worn out 
its equipment and it will be several months before the MAP 
funds released in February 2005 begin to restore the lost 
capability.  A narrow interpretation of our ability to 
provide assistance from INCLE funds to the Guatemalan 
military and inadequate funding levels (from both the USG and 
the GOG) has precluded adequate repair, training and fuel for 
Guatemala aircraft and has taken the Air Force out of action. 
 Similar shortages of equipment and fuel have precluded 
effective operations by the Guatemalan Navy.  Moreover, 
traffickers have shifted from daylight-hour drug flights to 
night flights and increased use of &go-fast8 boats to move 
cocaine into Guatemala.  The Guatemalan Air Force, even if it 
had flyable aircraft, has no capacity for night operations 
and the cost of becoming capable of nights ops is prohibitive 
at current INCLE funding levels.  Endemic corruption within 
the SAIA (specialized anti-drug police), PNC (national 
civilian police), customs officials and port authorities make 
road and port seizures highly unlikely. 
 
B. (S) What has the new administration done to combat 
corruption within the Government of Guatemala? 
 
(U) The GOG is making substantial efforts against corruption. 
 It is actively prosecuting several high-level corruption 
cases, has dismissed several hundred police officers and 
brought charges against many others, and has implemented new, 
transparent procurement and contracting procedures. 
 
(U) Candidates for entry into SAIA (the specialized anti-drug 
police) undergo a background investigation, polygraph exam, 
and urinalysis testing.  On average, these procedures 
eliminate 60 percent of the applicants.  This program has 
been expanded to the Anti-Corruption, Money Laundering and 
Narcotics prosecutors, offices, and includes the periodic 
re-testing of all active SAIA members. 
 
(U) The GOG has also moved aggressively against all forms of 
public corruption.  In 2004 the anti-corruption prosecutor 
(an Embassy-supported program) brought cases against 383 
individuals, including many high-ranking former government 
officials, army officers and police.  These cases include the 
former vice president, finance minister, and head of the 
revenue and customs service.  Former President Portillo fled 
to Mexico when it became apparent that he was about to be 
arrested on corruption-related charges.  With support from US 
prosecutors, the GOG is pursuing two major embezzlement cases 
in which money was likely moved through US institutions. 
 
(U) The Director General of the police has established a 
"zero tolerance" policy on corruption.  During 2004, more 
than 2,000 cases were opened against police officers, 
including 23 command-level officers.  Half of the 650-person 
criminal investigative division was fired. A counter-drug 
prosecutor who solicited a bribe from a defendant was 
sentenced to 13 years in prison, and another counter-drug 
prosecutor is currently under investigation for theft of 
government funds. 
 
C. (S) How has the reduction of Guatemalan military forces 
affected the drug trade in Guatemala? 
 
(C) The reduction in the overall number of soldiers from 
about 27,000 to about 15,000 has not had a significant 
effect.  The change of Army structure from geographic 
commands to functional commands has, however, led to the 
closure of numerous military bases and a subsequent decline 
in GOG presence in isolated sections of the country, 
particularly along the northern border with Mexico in the San 
Marcos region and throughout the Peten.  Sadly, there is no 
evidence that the former military presence in these areas 
ever deterred drug trafficking.  In fact, removing the 
military presence from areas used by drug traffickers has 
probably had the effect of reducing both traffickers, 
payrolls and military corruption.  As described above, lack 
of funding for maintenance, fuel and training of military 
aircraft and naval vessels has essentially ended GOG 
capability to interdict cocaine shipments by air and sea, but 
this is not a consequence of military downsizing. 
 
D. (S) Is there evidence of narco-corruption in the political 
system?  Are drug monies flowing to political parties? 
 
(S) There is anecdotal evidence of trafficker support to 
parties, candidates and politicians.  Accounts include 
political candidates being offered the use of aircraft that 
may be owned by persons associated with drug trafficking.  We 
are also aware of campaign contributions of murky provenance. 
 At least one member of Congress has close relations with 
persons thought to be involved in drug trafficking.  These 
accounts tend to be hearsay, though, and very difficult to 
document or refute.  There is no evidence of parties or 
national politicians providing protection or other favors for 
traffickers.  On the contrary, all of the party leaders and 
politicians with whom we have regular contact beseech us for 
support in the fight against drug trafficking and practically 
beg us to take suspected traffickers to the US for trial and 
imprisonment. 
 
(S) Narco-corruption is a greater concern in courts and 
police forces.  A judge,s decision in late 2004 to allow 
bail for one of Guatemala,s leading traffickers, someone 
known to be wanted by the USG, is a good example of suspected 
corruption.  The accused trafficker, Byron Linares, 
absconded.  National Civilian Police (PNC) and the 
specialized anti-drug police, SAIA, are considered even by 
PNC Chief Erwin Sperissen and Minister of Government Carlos 
Vielmann to be corrupt.  Police are very badly paid, poorly 
managed, trained and equipped, and not respected by the 
population at large.  The government has a police reform plan 
that bears promise, and we are currently working with the 
government to identify ways we can provide support for the 
reform program.  The government has made a good effort to 
prosecute corruption in the PNC and SAIA, and a number of 
officers have been arrested, tried and convicted, but 
corruption remains endemic throughout the police. DEA manages 
a small vetted unit of counter-drug police that has proven to 
be reliable.  Beyond this vetted unit, however, we do not 
trust the police,s ability to resist corruption. 
 
E. (S) How are the Guatemalan police effective in countering 
drug trafficking?  In what areas are they lacking?  Do they 
have adequate resources and personnel to be effective? 
 
(C) The Guatemalan police are not effective against drug 
trafficking.   They lack integrity, training, motivation, 
equipment, transportation and management.  The problems of 
integrity and motivation are due in large part to the lack of 
effective middle management.  SAIA has, however, been 
effective in manual eradication of poppy and marijuana, which 
they have been willing to do on short notice whenever the 
Embassy has organized a mission.  There are enough SAIA 
agents (about 300) to have some effect, but without the 
resources mentioned above, they are not effective. 
 
(C) PNC and SAIA forces need an effective internal 
investigative capability in order to detect corrupt officers 
via financial and lifestyle investigations.  Our ESF-funded 
Law Enforcement Development (LED) program is working closely 
with the newly re-organized PNC internal inspection unit 
(with the full support of PNC Chief Sperrisen but this 
function remains under-resourced and investigator case-loads 
are too heavy to allow real effectiveness. 
 
F. (S) What evidence is there of police or military collusion 
with drug traffickers, such as helping in off-loading drugs 
or providing security for facilitated drug shipments? 
 
(C) We doubt that police or military collusion includes 
direct, physical involvement in drug trafficking.  The most 
compelling evidence of police and/or military assistance to 
traffickers is the virtual absence of seizures.  Accepting 
the estimate of 100 to 200 tons of cocaine per year moving 
through, over or around Guatemala, current seizure rates are 
well under 1%.  In late 2003 there were indicators of active 
police and military assistance to traffickers.  In mid-2005, 
police and military seem to prefer passive collusion ) 
looking the other way ) rather than activities such as 
actual unloading or security operations. 
 
G. (S) What is the division of labor between the police and 
the military in the drug arena?  What is the level of 
cooperation? 
 
(U) For ground operations, the military only provide support 
) transportation, communication, and perimeter security.  In 
these operations the military have no powers of arrest or 
investigation and its intelligence service is greatly 
degraded.  In maritime operations, the Guatemalan Navy has 
vested authority to stop and detain suspect maritime traffic. 
 If suspects are detained or contraband seized, arrangements 
are made for pier-side transfer to civilian authorities upon 
return to port.  The police bear responsibility for arresting 
traffickers, but have no air or marine transportation 
resources of their own.  Cooperation between the police and 
military is fair but marked by mutual distrust and intense 
competition for limited resources. 
 
H. (S) Does Guatemala cooperate with other countries on 
counternarcotics issues? 
 
(C) Yes, but mostly on an ad-hoc basis, primarily involving 
informal agreements to permit &hot pursuit8 of traffickers 
along national frontiers.  Intelligence sharing is minimal. 
Of note, Guatemala has allowed both the El Salvadoran and the 
Mexican air forces to conduct intercepts over Guatemalan 
territory. 
 
I. (S) Who are the major drugs traffickers in Guatemala? 
What are their nationalities?  How large are their 
organizations? 
 
(C) The five largest trafficking organizations in Guatemala 
are known by the family names of their leaders.  They are: 
- Leon 
- Lorenzana 
- Mendoza 
- Zarceno 
- Paredes 
The leaders of each of these organizations are Guatemalan. 
We do not have hard information about the size of the 
organizations, but believe they are small, essentially 
family-based and run groups. 
 
J. (S) What role do Colombian and Mexican cocaine traffickers 
play in Guatemala,s drug trade?  At what point to Mexican 
and Colombian traffickers establish ownership over cocaine? 
How often do they finance cocaine loads up front?  How do 
they pay for the services of Peruvian and Bolivian drug 
groups? 
 
(C) Mexican and Colombian traffickers are much larger and 
more powerful than Guatemalan drug trafficking organizations. 
 Guatemalans are at a distinct disadvantage in the cocaine 
trade because they can only acquire cocaine from Colombians, 
and need the cooperation of Mexicans to move the drugs north. 
  Guatemalans often play an important role in the drug 
business by acting as &escrow accounts8 for drugs 
transferred from Colombian suppliers to Mexican buyers.  A 
large cocaine shipment may be held in Guatemala until the 
Colombians receive payment from the Mexicans. 
 
(C) Ownership of cocaine is determined early in the 
trafficking process, usually in one of the two following ways: 
Scenario A: Colombian traffickers ship their own product 
north by using a Guatemalan-based drug transporting 
organization.  In this scheme, the Colombian trafficker 
simply pays for the services of a Guatemalan transporter 
(and, eventually, a Mexican transporter) to get his 
&Colombian cocaine8 north to the US.  The scheme involves 
many alliances and requires considerable trust among the 
&owner8 of the cocaine and those who are contracted to 
transport it.   The farther north a Colombian can land his 
cargo (by air or sea), the fewer people he must pay for 
transportation and protection of the shipment.  Accordingly, 
alliances between Colombian and Mexican cartels are 
important, and Guatemalan traffickers have been &junior 
partners.8  Due to the increasing effectiveness of Mexican 
anti-drug operations, however, Colombian traffickers have 
shifted their landing points south into Guatemala.  From 
Guatemala, single large shipments (multi-ton quantities) are 
broken up into many smaller shipments, thereby reducing 
exposure to loss through seizure in Mexico. 
 
(C) Scenario B: Guatemalan traffickers purchase cocaine from 
Colombian suppliers and ship their &Guatemalan cocaine8 
north to the US.  On occasion, if the Guatemalan trafficker 
has a good reputation and is considered powerful enough, the 
Colombians will &front8 the cocaine to the Guatemalan for 
repayment later.  Colombians sell cocaine to Guatemalans at a 
price that is higher than the local Colombian price but still 
considerably lower than the US price. 
 
(C) Scenario C:  We are also seeing Colombian groups moving 
into Guatemala to set up shop.  With increased pressure in 
their home country, some Colombian organizations have found 
it easier to conduct business in Guatemala, using Guatemalans 
as mid-level managers and hired help. 
 
K. (S) How do drug groups in Guatemala launder their funds? 
Where do they keep or invest their illicit income? 
 
(U) In the last 2 years the Guatemalan banking system has 
become much better at policing itself (Guatemala was removed 
from the FATF black list in mid 2004) and is no longer a 
major mechanism for laundering money. 
 
(C) Guatemalan traffickers use 2 methods of dealing with US 
Dollar proceeds: 
A - They smuggle bulk quantities of dollars to Guatemala and 
use illegal exchange houses to convert the money into 
Quetzals.  With the Quetzals, they buy land, real estate, and 
durable goods in Guatemala.  Those items are then sold 
immediately to legitimate buyers. 
B ) They use the &Black Market Peso Exchange8 (BMPE) to 
convert Dollars to Colombian Pesos.  In this scenario the 
Guatemalan trafficker gives Dollars to a member of the BMPE. 
The BMPE converts the Dollars to Colombian Pesos, pays the 
Colombian cocaine supplier on behalf of the Guatemalan 
trafficker, and smuggles the US Dollars to Panama where they 
are used to pay legitimate bills in the free-trade zone. 
 
L. (S) What is the role of gangs in the drug trade in 
Guatemala?  What, if any, evidence is there of gangs 
cooperating with drug trafficking groups? 
 
(C) Gangs in Guatemala serve as the low-level distributors of 
illegal drugs to the local population and serve as outlets 
for the sale of cocaine left in Guatemala as payment for 
logistics and security.  Although we do not have definitive 
information on their cooperation with trafficking 
organizations, we believe that, thus far, gang cooperation 
with drug trafficking groups is at the street level and does 
not extend to transportation, money laundering, communication 
or other higher level activities.  Gang members, with their 
attention-getting tattoos, clothing, signs and criminal 
records, are too high profile for work with traffickers 
seeking to maintain relatively low profiles.  For the same 
reason, gang members are not useful as body-smugglers. 
HAMILTON