US embassy cable - 05ASUNCION839

UNCLAS SECTION 01 OF 03 ASUNCION 000839 
 
SIPDIS 
 
STATE FOR WHA/BSC 
TREASURY FOR OSIA MAUREEN WAFER 
TREASURY FOR OTA WARFIELD, VAN KOCH, MILLAR 
 
E.O. 12958: N/A 
TAGS: PGOV, SNAR, KCRM, PA 
SUBJECT: PARAGUAY: CERTIFICATION REPORT 
 
REF: A. STATE 94578 
 
     B. 2004 STATE 245258 
 
1.  Below find Post's submission on host government 
cooperation on counternarcotics efforts based on the 
benchmarks identified in reftel B. 
 
Counternarcotics 
---------------- 
 
2.  The USG asked the GOP to keep pressure on major drug 
trafficking organizations by arresting and prosecuting their 
key members and seizing their assets. 
 
-- In November 2004, SENAD and DEA conducted a joint 
operation resulting in the capture of Brazilian national Ivan 
Carlos Mendes Mesquita, one of the region's most notorious 
drug traffickers.  Mesquita was the head of the Mesquita Drug 
Trafficking Organization operating in Paraguay and Brazil and 
has FARC connections.  The operation took place at Mesquita's 
ranch in the Chaco and resulted in the arrest of Mesquita and 
seven members of his drug trafficking organization and the 
seizure of 262 kilograms of cocaine, Paraguay's largest in 
recent history. Mendes Mesquita's plane was also seized.  On 
June 27, 2005 Mendes Mesquita was handed over to U.S. custody 
marking the successful conclusion to the six-month legal 
process and the first time Paraguay has extradited a fugitive 
of this significance to the United States. 
 
-- In January 2005, SENAD agents arrested Brazilian 
narcotrafficking fugitive Nilton Cesar Atunez, associated 
with the Beira Mar drug trafficking organization, as well as 
two of his associates and seized 103 kilograms of cocaine. 
Vehicles belonging to Atunez were also seized. 
 
-- Additionally, Paraguay has successfully expelled or 
secured extradition orders for five more Brazilian 
traffickers who had been living in Paraguay for a number of 
years as fugitives. 
 
-- The Mendes Mesquita case and others involving Brazilians 
demonstrate unprecedented cooperation between GOP and 
Brazilian intelligence authorities.  U.S. espoused 
professionalizatin of SENAD and support of senior GOP 
officials for CD operations led to this dramatic improvement. 
 
 
3.  The USG asked the GOP to sharpen the investigative and 
operational capability of the Chaco Mobile Enforcement Team 
(CMET). 
 
-- CMET will participate in Operacion Seis Fronteras over the 
next two months as part of an effort to strengthen its 
investigative and operational capabilities in the Chaco 
region. 
 
-- The members of the CMET recently participated in precursor 
and highway interdiction courses in Bolivia. 
 
-- Andean funds will enable Paraguay to expand its barracks 
in Mariscal Estigarribia, the base from which it conducts 
operations in the Chaco. 
 
4.  The USG asked the GOP to provide adequate funding for its 
counter narcotics programs. 
 
-- While most Paraguayan ministries suffered a 10 percent cut 
in 2005 funding, the Paraguayan Congress approved funding for 
its drug programs in 2005 at 2004 levels.   Given the 
political and economic environment, this is a noteworthy 
achievement and reflects the GOP commitment to its drug 
programs. 
 
-- Recently, Paraguay's President agreed to seek 
Congressional support for supplemental funding to hire 50 
additional agents. 
 
5.  The USG asked the GOP to increase the SENAD UIDF staff 
from 8 to 20. 
 
-- SENAD plans to assign 10 of the 50 new agents noted above 
to work with the SENAD UIDF raising its staff levels to 18 -- 
a number we consider adequate. 
 
Official Corruption 
------------------- 
 
6.  We asked the GOP to take active measures to rid the ranks 
of law enforcement, prosecutors and judges of personnel 
suspected of having links to narcotics and other illegal 
activities. 
 
--  In response to U.S. appeals, Paraguay's President decided 
to desist from seeking the promotion of Police Commissioner 
Aristides Cabral who was implicated in protecting major drug 
traffickers. 
 
-- In June, Paraguay successfully prosecuted and convicted a 
customs official on charges of illicit enrichment.  He was 
sentenced to three years and was levied a heavy fine.  All 
assets acquired with the illicit funds will be seized. In 
2004, Paraguay adopted the legislation that makes illicit 
enrichment a crime.  This case represents the first time a 
customs official has been convicted on a charge of illicit 
enrichment. 
 
-- In recent weeks Paraguayan law enforcement officials have 
arrested police officials, military officials, and a fiscal 
implicated in trafficking marijuana. 
 
7.  We asked the GOP to combat corruption in the Customs 
service and Tax Authority and increase information sharing 
among concerned agencies. 
 
-- Post's REA has worked closely with the Director of Customs 
as well as with the tax authority to adopt reforms that 
address concerns relating to corruption.  Tax and customs 
revenue have increased dramatically over the last year. 
 
-- Both Customs and the Tax Authority have created 
investigative units with U.S. assistance. In late 2004, 
Paraguay's Commerce and Industry Ministry created a unit to 
investigate IPR violations with INL funds. In June 2005, 
Paraguay's Finance Ministry created an internal investigative 
unit with oversight over Customs and the Tax Authority.  All 
of these units are being mentored by Post's REA. 
 
-- The USG will support creation of a Trade Transparency 
Module in the Customs Department that will facilitate more 
effective monitoring of imports and exports for 
irregularities. 
 
-- Information sharing among concerned agencies has improved 
but remains uneven.  To date cooperation has occurred mostly 
on an individual basis as opposed to an institutional basis. 
Recently, however, prosecutors have conveyed their readiness 
to rely upon SEPRELAD to conduct field investigations. 
 
Legislative Measures 
-------------------- 
 
8.  We asked the GOP to use authorities created in 2002 law 
to crack down on narcotics transportation networks. 
 
-- Paraguay's law enforcement community has effectively used 
the authorities created in the 2002 legislation, including 
informants and undercover operations, to investigate and 
prosecute aggressively narcotics transportation networks. 
 
9.  We asked the GOP to pass the anti-money laundering 
legislation before Congress. 
 
-- President Duarte introduced this draft law to Congress and 
supports its adoption. 
 
-- Key political leaders in Congress have conveyed support 
for the law but to date it has not yet been adopted.  We have 
been in contact with the IO community (UNODC, CICTE) about 
bring more political pressure to bear upon Paraguay to move 
ahead on money laundering and counter terrorism legislation. 
We are hopeful recent leadership changes of key Congressional 
committees will create an opportunity for successful adoption 
later this year. 
 
10.  We asked the GOP to enact effective chemical control 
laws. 
 
-- Upon review of the current legislation of chemical control 
laws, we have concluded that they are adequate.  Paraguay 
needs to take steps to improve implementation of existing 
laws. 
 
Money Laundering 
---------------- 
 
11.  We asked the GOP to conduct outreach activities to 
sensitize financial institutions about reporting 
requirements. 
 
-- Absent the adoption of the money laundering law, Post 
decided to delay outreach activities on reporting 
requirements out of concern it could generate confusion and 
opposition.  Post, together with SEPRELAD, is poised to 
undertake these activities as soon as the law is adopted. 
12.  We asked the GOP to improve coordination and information 
sharing protocols between the SEPRELAD FAU, the SENAD UIDF 
and other financial entities that prevent compromise of law 
enforcement sensitive information. 
 
-- MOUs establishing the information sharing protocol between 
the SEPRELAD and the Public Ministry and between SEPRELAD and 
the SENAD UIDF have been signed. 
 
-- Post's REA and RLA sponsored a seminar to members of the 
above-named institutions on protecting information from third 
parties. 
 
-- Coordination among concerned agencies has improved but 
remains uneven, occurring mostly on an individual basis as 
opposed to an institutional basis. 
 
13.  We asked the GOP to refocus SEPRELAD into a more 
effective and efficient organization, providing it with 
greater independence and a new bureaucratic structure. 
 
-- In March 2005, FINCEN and Edgmont found SEPRELAD a fully 
functional FIU according to international standards. 
 
-- That same month, FINCEN signed an MOU with SEPRELAD 
establishing full cooperation between the GOP and USG 
regarding information exchange. 
 
14.  We asked the GOP to ensure SEPRELAD received adequate 
financial and human resources to operate as an effective and 
fully functioning FIU. 
 
-- As noted above FINCEN and Edgmont found SEPRELAD a fully 
functional FIU according to international standards. 
 
-- In 2003, SEPRELAD had approximately 5 employees; in 2005, 
it has approximately 30 and its budget has increased some 
tenfold.  Post believes SEPRELAD is adequately funded and 
staffed. 
 
15. We asked the GOP to ensure prosecutors cooperate more 
effectively with SENAD UIDF and SEPRELAD. 
 
-- Information sharing among concerned agencies has improved 
but remains uneven.  To date cooperation has occurred mostly 
on an individual basis as opposed to an institutional basis. 
Recently, however, prosecutors have conveyed their readiness 
to rely upon SEPRELAD to conduct field investigations. 
 
 
 
 
 
 
 
 
KEANE