US embassy cable - 03TEGUCIGALPA1259

UNCLAS SECTION 01 OF 06 TEGUCIGALPA 001259 
 
SIPDIS 
 
SENSITIVE 
 
FOR L/CID 
FOR EB/IFD/OIA 
 
E.O. 12958: N/A 
TAGS: EINV, EFIN, PGOV, KIDE, KSPR, HO 
SUBJECT: 2003 EXPROPRIATION REPORT: HONDURAS 
 
REF: SECSTATE 83098 
 
1. (U) 
HONDURAS 
 
 
     The United States Government is aware of thirteen (13) 
claims of United States persons that may be outstanding against 
the Government of Honduras (GOH).  The U.S. Government is also 
aware of numerous other investment disputes involving U.S. 
investors, the majority of which have arisen out of inadequate 
titling procedures and involve disputes between U.S. citizens and 
private Honduran citizens. 
 
2. (U) Eight of the claims described below involve the Honduran 
National Agrarian Institute (INA) and land invasion by squatters. 
Land invasions are common for both Honduran and foreign 
landowners.  According to the National Agrarian Reform Law, idle 
land fit for farming can be expropriated and awarded to the 
landless poor.  Generally, an INA expropriation case begins after 
squatters target and invade unprotected property. The squatters 
then file for the land with the INA under the Agrarian Reform 
Law.  In most cases, pursuing the subsequent legal avenues have 
proven to be costly and time consuming, and have rarely lead to 
positive results.  The U.S. Embassy is actively engaged in 
dialogue with the INA and claimants in order to encourage 
progress toward resolution of outstanding disputes.  Most cases 
reported below require further legal action in Honduran courts by 
the claimants or decisions by the court. 
 
3. (U) a) Claimant A 
 
     b) 1985 
 
     c) Claimant A's family land known as Jerico was taken over 
by the Mayor of Trujillo in 1985.  That same year, the 
Municipality began titling and selling off parcels of Claimant 
A's land.  By 1991 Claimant A had won every court case up through 
the Supreme Court level, thereby declaring Claimant A's family as 
the legal owners of Jerico lands.  Claimant A requested that the 
public registrar's office inscribe the court's rulings and 
correct the situation in the public registry, having falsely 
registered the illegal titles. 
 
To date the Municipality of Trujillo has not returned the 
parceled sections of land to Claimant A's family.  In May 2002, 
after Embassy advocacy, the public registrar informed the Embassy 
that Claimant A's lands were officially inscribed in the 
registry.  Legally, that office can no longer register titles 
issued by the Municipality for Jerico lands.  Claimant A alleges 
that the Municipality continues to title and sell Jerico lands 
under a different name. 
 
In April 2003, the Embassy informed Claimant A of the GOH's new 
arbitration procedure (Decreto No. 349-2002) that allows the 
government and claimants to jointly submit disputes for 
arbitration as an alternative to continued legal proceedings. 
Claimant A informed the Embassy the family is interested in 
entering into arbitration with the Municipality, however the 
Mayor is not.  The Mayor instead wishes to draft a private, extra- 
judicial agreement with Claimant A's family.  The Embassy 
continues to encourage the two parties to reach an agreement. 
 
4. (U) a) Claimant B 
 
     b) 1984 
 
     c) Claimant B inherited 2,417 acres of land from his father. 
Claimant B's dispute started in 1963 when peasant groups squatted 
on his father's land.  Allegedly in 1975, INA signed a letter of 
intent to purchase the land but never did.  In 1984 when small 
farmers began squatting on Claimant B's land near Nacaome, Valle 
Department, Claimant B again offered to sell the land to INA. 
Claimant B reported he has documents showing that the INA 
intended to initiate expropriation proceedings in 1989, though it 
is not entirely clear that this process was ever actually 
started.  Claimant B reports that in 1992 INA responded it was no 
longer interested in purchasing the land.  INA decided not to 
follow through with the expropriation order, but instead 
suggested that Claimant B sue to have the squatters removed. 
Claimant B may remove the liens in civil-court procedures and get 
a court order to remove the squatters.  Due to Claimant B's ill 
health, legal proceedings were never initiated. 
 
In June 2002, Claimant B's son reported that a court case is 
still an option. In April 2003, the Embassy informed Claimant B 
of the GOH's new arbitration procedure (Decreto No. 349-2002) 
that allows the government and claimants to jointly submit 
disputes for arbitration as an alternative to continued legal 
proceedings.  Claimant B indicated he will not pursue arbitration 
due to his skepticism about the arbitration procedure.  The 
Embassy considers this case inactive at this time, pending 
further action by Claimant B. 
 
5. (U) a) Claimant C 
 
     b) 1992 
 
     c) In 1990 Claimant C's land in Cofradia, Cortes Department 
was invaded by a group of squatters.  In 1992, the INA issued a 
certification of occupation (title) to the squatters.  Claimant C 
reports difficulty in discussing the case with GOH officials, who 
claim not to have taken action against the land.  In 1995 INA 
realized this land is classified as urban and therefore claimed 
to have no authority to resolve the dispute.  The agency said it 
can neither give the land to the squatters nor evict them.  In 
1996 the INA also reported that others have claims to the land in 
addition to the squatters and Claimant C.  In December 1998 INA 
issued a resolution denying a petition presented by Claimant C to 
annul the title (formerly issued by INA) held by the campesino 
squatters.  Claimant C has not contested the granting of this 
title in court. 
 
At various times in recent years the Embassy has assisted 
Claimant C in communicating with INA concerning his claim.  In 
June 2002, Claimant C reported that he may seek to evict the 
squatters in court.  In April 2003, the Embassy informed Claimant 
C of the GOH's new arbitration procedure (Decreto No. 349-2002) 
that allows the government and claimants to jointly submit 
disputes for arbitration as an alternative to continued legal 
proceedings.  The Embassy has yet to receive a response from 
Claimant C concerning arbitration and considers this case 
inactive at this time, pending further action by the claimant. 
 
6. (U) a) Claimants D 
 
     b) 1974 
 
     c) Claimants D are a U.S. citizen brother and sister with 42 
hectares of property near Balfate, Atlantida Department. 
Claimants D report squatter problems beginning in 1974 when the 
INA reportedly placed squatters "temporarily" on their land. 
Despite repeated promises from GOH officials, no action has been 
taken to evict these squatters.  A group of squatters who arrived 
more recently and who repeatedly threatened the owners was 
removed by Honduran authorities at the request of the Embassy, 
which has worked extensively on Claimants' behalf.  According to 
INA attorneys, in 1974 INA began proceedings to expropriate much 
of the land belonging to Claimants D. 
 
In late 1995, INA officials told the Embassy that it was planning 
formally to expropriate a portion of the property, not including 
valuable beachfront, and compensate Claimants D.  In 1997, GOH 
officials confirmed this remained their intention.  One of the 
Claimants visited the Embassy and reiterated opposition to the 
expropriation.  While in the past Claimants D had reportedly 
contracted with a lawyer to prosecute their claim, the Embassy 
has no current knowledge regarding the status of Claimants D's 
legal actions.  The most recent information received by the 
Embassy confirms that INA is in the final stages of expropriating 
the property.  Despite not hearing from Claimants D since 1996, 
the Embassy, through regular communication with the INA office in 
Tegucigalpa, has advocated for a fair and transparent resolution 
to this case. In April 2003, the Embassy informed Claimants D of 
the GOH's new arbitration procedure (Decreto No. 349-2002) that 
allows the government and claimants to jointly submit disputes 
for arbitration as an alternative to continued legal proceedings. 
The Embassy has yet to receive a response from Claimant D 
concerning arbitration and considers this case inactive at this 
time, pending further action by the claimant. 
 
7. (U) a) Claimant E 
 
     b) 1975 
 
     c) Claimant E contacted the Department of State in July 
1996, alleging that his property, which he had leased from INA 
and then developed into a large banana plantation, had been 
invaded by squatters with the encouragement of GOH officials. 
Claimant E explained that he had previously filed a lawsuit in 
Honduran courts and lost.  Claimant E has exhausted all 
administrative and legal avenues of recourse, culminating in an 
unfavorable Supreme Court ruling. 
 
The Embassy has helped arrange meetings between Claimant E and 
the President of the Supreme Court, the Vice-President of the 
country and the INA Director.  The Department of State has 
reviewed information and evidence provided by Claimant E 
pertaining to his claim and his efforts to resolve it, and is 
considering whether the circumstances of his case would support a 
U.S. Government espousal action based upon a denial of justice 
claim. 
 
Honduran government officials maintain that while Honduran law 
requires the payment of compensation for improvements made on 
leased land that is expropriated under Honduras' land reform 
laws, the Honduran Supreme Court decision against compensation 
for Claimant E makes such a settlement impossible.  In 2002, the 
Embassy has met with several high level representatives in the 
Honduran government to push for consideration of possible forms 
of resolution of this and similar cases.  GOH officials, however, 
repeatedly state that since this case has been decided at the 
Supreme Court level, there is nothing more that can be done for 
Claimant E and they consider this case closed. 
 
8. (U) a) Claimant F 
 
     b) 1991 
 
     c) In 1991, a squatter group invaded Claimant F's property 
near Guaimaca, Francisco Morazan Department.  INA issued the 
squatters a "certificate of occupation" for the land in 1992. 
The INA subsequently revoked the certificate when Claimant F 
contested it, but the squatter group remained.  Claimant F later 
offered to give the group a portion of the property to resolve 
the dispute.  The squatters declined the offer, and did not allow 
anyone to enter the land.  They threatened violence against 
people seeking to evict them and several times threatened to kill 
Claimant F. 
 
Claimant F contacted the Embassy in February 1998 to ask for 
assistance in resolving the case. In April 1998, Claimant F 
traveled to Honduras, met with the Embassy, and hired a new 
attorney.  Claimant F, Embassy officers, and Claimant F's 
attorney met with the INA's attorney several times to discuss the 
case.  The INA agreed to work with Claimant F to persuade the 
squatters to accept Claimant F's prior offer to avoid a court 
battle. 
 
Working closely with the Embassy, the INA accepted Claimant F's 
offer to donate 176 hectares of agricultural land to the INA to 
give to the campesino squatters in return for INA's help in 
evicting the squatters from the rest of his land.  In May 2001, 
Claimant F filed a criminal suit against the squatters, who were 
summarily evicted from the property.  However, a few of the 
original squatters reinvaded the land several weeks later. 
Claimant F indicated that the offer to donate substitute land was 
conditioned on certain actions by the INA and that the offer had 
expired. 
 
In January 2003, INA expropriated 176 hectares of Claimants F's 
land and granted him 80,020.36 lempiras in compensation (USD 
4,644.25 - roughly USD 10 per acre).  Claimant F has appealed to 
the National Agrarian Counsel for a overturning of the INA's 
resolution to expropriate his land.  Claimant F's appeal is 
currently pending and he has yet to receive compensation due to 
his pending appeal. In April 2003, the Embassy informed Claimant 
F of the GOH's new arbitration procedure (Decreto No. 349-2002) 
that allows the government and claimants to jointly submit 
disputes for arbitration as an alternative to continued legal 
proceedings. The Embassy has yet to receive a response from 
Claimant D concerning arbitration. 
 
9. (U) a) Claimant G 
 
     b) 1993 
 
     c) Claimant G purchased land in Comayagua, Comayagua 
Department, in 1993.  A group of campesino squatters subsequently 
invaded the land and allegedly received INA support.  Claimant G 
won a complaint before the INA and paid the squatters for 
improvements they made on the land in anticipation of their 
removal.  However, the INA ignored its own ruling, gave title to 
the squatters, and moved to annul Claimant G's title.  On June 
30, 1998, a court ruled against Claimant G and ordered to revoke 
the title.  Subsequently, INA accepted the court's ruling and 
annulled Claimant G's title.  In May 2000, Claimant G filed a 
legal procedure asking for the Supreme Court to review the case. 
In December 2000, per a Supreme Court request, the INA sent its 
file to the Court.  The Embassy understands that this case is 
still pending.  In April 2003, the Embassy informed Claimant G of 
the GOH's new arbitration procedure (Decreto No. 349-2002) that 
allows the government and claimants to jointly submit disputes 
for arbitration as an alternative to continued legal proceedings. 
The Embassy has yet to receive a response from Claimant G 
concerning arbitration and considers this case inactive at this 
time, pending further action by the claimant. 
 
10. (U) a) Claimant H 
 
     b) 1998 
 
     c) Claimant H owned a fishing boat registered in Florida. 
When the boat arrived in Roatan, Bay Islands, Honduras, in 1987, 
the Honduran Navy allegedly seized it without justification (the 
claim that there was no justification for the seizure remains 
unsubstantiated).  After years of litigation to recover the boat, 
Claimant H was notified in 1996 that the Navy had sold the boat 
in 1989 by executive decree.  However, the decree was not 
published in the official gazette until 1996.  Claimant appealed 
through the Honduran court system up to the Supreme Court, losing 
each time on procedural grounds.  The Embassy is not aware of any 
recent developments in this case. 
 
11. (U) a) Claimant I 
 
     b) 1999 
 
     c) Claimant I owns land near El Progreso, Yoro Department. 
The land suffered from squatter invasions for more than 30 years. 
In 1969, Claimant I's now-deceased husband signed an agreement 
with INA, donating some land to distribute to squatters in return 
for INA's promise to protect the rest of the land from further 
invasions.  Notwithstanding the 1969 agreement, the INA 
expropriated an additional parcel of land in 1987 that had been 
occupied by a separate group of squatters.  The new group of 
squatters subsequently illegally sold the land to a third party 
not eligible to buy it under the land reform law. 
 
In 1999, INA confirmed that the property belongs to Claimant I 
and in 2000 issued an eviction order to evict the third-party 
occupants.  The police refused to recognize INA's eviction order. 
In 2001, the local court rejected Claimant I's request for an 
eviction and in June 2002, the Appeal's court again ruled against 
Claimant I.  Claimant I informed the Embassy in late 2001 that 
her attorney had received death threats regarding the case and 
that the attorney's property had been damaged.  Claimant I may 
appeal the unfavorable ruling in the Supreme Court.  The Embassy 
routinely raises this case with Honduran court and government 
officials and will continue to assist Claimant I's efforts to 
recover the land.  In April 2003, the Embassy informed Claimant I 
of the GOH's new arbitration procedure (Decreto No. 349-2002) 
that allows the government and claimants to jointly submit 
disputes for arbitration as an alternative to continued legal 
proceedings. Claimant I responded she is not interested in 
pursuing arbitration. 
 
12. (U) a) Claimant J 
 
     b) 2000 
 
     c) Since 1927, Claimant J's Honduran wife's family has owned 
the title to 44 hectares of urban land in Trujillo, Colon 
Department.  Beginning in the mid 1990s, the land was invaded by 
squatters.  Over the years, Claimant J's family won a total of 
seven eviction judgments, only to see the land invaded anew after 
each eviction.  In 1999, Claimant J requested from the 
Municipality of Trujillo permission to divide the property into 
lots for development.  The permission was never granted.  In 
2000, the property was invaded for the eighth time.  In late 
2000, before the court ruled on the eviction, the Municipality 
began expropriation proceedings, effectively freezing the 
eviction procedure. 
 
Claimant J suspects that the squatters invaded the land with the 
tacit approval of local political leaders.  In a May 2001 meeting 
with an Embassy officer, the Mayor of Trujillo admitted that the 
Municipality was expropriating the land, but contradicted himself 
on the justification for the expropriation.  Legal documents and 
correspondence show that Claimant J has not been offered 
compensation.  While the Municipality has finished its 
administrative procedure to expropriate the property, the case is 
still pending resolution in court.  In a May 2002 meeting with 
the Ambassador, municipal officials admitted that the previous 
municipal administration may have made a mistake in expropriating 
Claimant J's property.  The officials stated that the 
Municipality of Trujillo would respect the decision of the court. 
Embassy officers consistently urge Honduran court and government 
officials to reach a fair resolution of this case.  Embassy staff 
have stayed in touch with local law enforcement officials when 
the situation appears to have potential for violence.  In April 
2003, the Embassy informed Claimant J of the GOH's new 
arbitration procedure (Decreto No. 349-2002) that allows the 
government and claimants to jointly submit disputes for 
arbitration as an alternative to continued legal proceedings. 
Claimant J has shown some interest concerning arbitration, but to 
date has not moved to file his request with the Attorney 
General's office.  The request needs to be filed by July 29, due 
to the short time frame designated by the law. 
 
13. (U) a) Claimant K 
     b) 1999 
 
     c) Claimant K owned 41 hectares of property on Utila, Bay 
Islands, to be used to develop a tourism project.  Claimant K 
estimates the value of the property at approximately $2.9 
million.  In 1999, the Ministry of Public Works announced the 
public tender to build a new airport in Utila on Claimant K's 
land and subsequently expropriated Claimant K's property without 
paying compensation.  Claimant K requested compensation from the 
Ministry of Public Works in late 2001.  Embassy officials urged 
the Ministry on three occasions in 2002 to effect prompt and 
effective compensation.  Ministry officials solicited the court 
in Utila to confirm the legal background regarding the 
expropriated property.  The court has not yet issued its opinion. 
In June 2002, Ministry officials said that Claimant K's case will 
be submitted to an inter-agency commission for a determination of 
the value of the land.  In a January 2003 meeting with Embassy 
officials presidential legal advisors were informed of Claimant 
K's case.  The advisors said that they would address the issue of 
compensating Claimant K with the Minister of Public Works.  The 
Embassy has not received any confirmation that this was done. 
 
In April 2003, the Embassy informed Claimant K of the GOH's new 
arbitration procedure (Decreto No. 349-2002) that allows the 
government and claimants to jointly submit disputes for 
arbitration as an alternative to continued legal proceedings. 
Claimant K's attorneys informed the Embassy that this case is in 
its final stages.  They are waiting on a final evaluation to 
calculate the economic compensation to be awarded. 
 
14. (U) a) Claimant L 
 
     b) 1976 
 
     c) Claimant L owns land on the southeastern edge of Honduras 
in territory that once was Nicaragua until the two governments 
moved the boarder in 1960.  In 1976, Claimant L's father (then 
owner) filed to register his lands with the corresponding land 
registry office in Honduras but never received any reply.  In 
2003, when Claimant L inherited the property she discovered the 
INA had parceled off and sold almost half of the 3,460 acres of 
land. In April 2003, the Embassy informed Claimant L of the GOH's 
new arbitration procedure (Decreto No. 349-2002) that allows the 
government and claimants to jointly submit disputes for 
arbitration as an alternative to continued legal proceedings.  On 
April 10, 2003, Claimant L filed an administrative proceeding 
with the INA with plans to file for arbitration.  Claimant L 
hopes for eventual economic compensation for the invaded lands. 
 
15. (U) a) Claimant M 
 
     b) 1995 
 
     c) In 1995, the Municipality of La Ceiba issued a title for 
land owned by Claimant M to a local Honduran family.  This family 
in turn sold the lands to a third party family with very strong 
political influences.  Claimant M's attorney filed a law-suit to 
cancel said transaction, without success.  Only after continued 
Embassy advocacy was the case finally sent to the Attorney 
General's office in early 2002. In May 2002, the Attorney General 
sent the case back to the Municipality of La Ceiba for final 
resolution, having issued his opinion in favor of Claimant M.  On 
March 28, 2003, the Municipality voted to cancel the title 
originally issued to the local Honduran family.  To date, 
however, the municipality has failed to actually revoke the 
title, and the Honduran party has renewed its appeal efforts. 
 
In April 2003, the Embassy informed Claimant M of the GOH's new 
arbitration procedure (Decreto No. 349-2002) that allows the 
government and claimants to jointly submit disputes for 
arbitration as an alternative to continued legal proceedings. 
 
16. (SBU) Key to Claimants' Identities: 
 
Claimant A: Eduardo Valenzuela, U.S. citizen, waiver received 
Claimant B: Gustavo Valle, U.S. citizen, limited waiver 
Claimant C: Carlos Madrid, U.S. citizen, waiver received 
Claimant D: Lily Jones Bourne and Edward Purcell Jones, U.S. 
          citizens, no waiver 
Claimant E: Alfred McDaniel, U.S. citizen, waiver received 
Claimant F: Mark Latty, U.S. citizen, no waiver 
Claimant G: Antonia Fajardo de Hubert, U.S. citizen, waiver 
          received 
Claimant H: Anthony Fish Company, U.S. company, no waiver 
Claimant I: Norma Bogran, U.S. citizen, no waiver 
Claimant J: Jaime Castano, U.S. citizen, no waiver 
Claimant K: James Harley Crockett, U.S. citizen, no waiver 
Claimant L: Maria Cecilia Cerna, U.S. citizen, waiver received 
Claimant M: Yolanda Guite, U.S. citizen, no waiver 
 
Pierce