VZCZCXYZ0000
OO RUEHWEB

DE RUEHAC #0672 2752019
ZNR UUUUU ZZH
O 012019Z OCT 08
FM AMEMBASSY ASUNCION
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7284
INFO RUCNMER/MERCOSUR COLLECTIVE PRIORITY
RUEAWJB/DEPT OF JUSTICE WASHDC

UNCLAS ASUNCION 000672 
 
SENSITIVE 
 
SIPDIS 
 
DEPT FOR WHA/BSC MDASHBACH, BFRIEDMAN, MDRUCKER, WHA/FO CMCMULLEN 
 
E.O. 12958: N/A 
TAGS: PGOV ECON PREL PA
SUBJECT: LUGO'S FIRST MAJOR ATTACK ON CORRUPTION 
 
¶1. (SBU) SUMMARY:  The new Paraguayan government scored its first 
major victory against corruption in September.  Prosecutors and 
police conducted a mega-operation which uncovered the existence of 
the infamous "black suitcases" containing bribery monies.  For 
years, the Paraguayan press has reported the existence of "black 
suitcases" full of money derived from a mafia-type customs 
organization which passes illegal gains up the government chain of 
command.  Authorities charged all 13 port administrators with 
bribery and issued warrants for their arrest; 12 defendants were 
released on bail and were given house arrest while one defendant 
remains at large.  END SUMMARY. 
 
¶2. (SBU) The new Paraguayan government scored its first major 
victory against corruption in September.  President Lugo promised 
during the election campaign to conduct a frontal fight against 
endemic corruption in public entities.  Lugo's first anti-corruption 
efforts targeted the ports administration. 
 
¶3. (SBU) Prosecutors and police conducted a mega-operation which 
uncovered the existence of the infamous "black suitcases" containing 
bribery monies.  The investigation started when the new port 
administration's president, Albino Gonzalez, received information 
about the illegal activity when some port administration agents 
involved in the scam "tested the waters" to see if Gonzalez would 
continue the practice.  Gonzalez informed his superior, Minister of 
Public Works Efrain Alegre, who in turn informed the Public 
Prosecutors' Office.  The Economic Crimes Unit then set up an 
undercover operation in which it filmed each of the 13 port 
administrators visiting Gonzalez's office to hand in his weekly 
contributions.  Gonzalez told the press that in three weeks since he 
took office, he received more than USD 25,000 in contributions.  The 
audio record revealed that the administrators promised to "deliver" 
as much USD 400,000 per month to Gonzalez's office.  Gonzalez told 
the press that according to past practice, he was supposed to keep 
USD 100,000 and distribute USD 300,000 to his higher-ups in 
government. 
 
¶4. (SBU) For years, the Paraguayan press has reported the existence 
of "black suitcases" full of money derived from a mafia-type customs 
organization which passes illegal gains up the government chain of 
command.  The ports administration handles all imports to and 
exports from Paraguay and charges service fees for storage and 
handling of all containers entering or leaving the country.  The 
ports' fee is a percentage of the value of the goods declared with 
the country's customs authorities, which are often drastically 
undervalued.  In the past decade, there were several enigmatic road 
assault cases against customs and ports agents traveling from the 
interior to Asuncion.  In each case, police officials reported that 
"nothing of value was stolen."  However, in September 2005, a 
customs vehicle traveling from Ciudad del Este towards Asuncion was 
riddled with bullets.  The press speculated that the murdered agent 
had been carrying a suitcase containing USD 300,000. 
 
¶5. (SBU) Authorities charged all 13 port administrators with bribery 
and issued warrants for their arrest.  After the first two 
defendants were released on bail and were given house arrest, ten 
others turned themselves in and received the same legal treatment. 
One administrator remains at large.  Prosecutors said they may also 
present money laundering, illicit enrichment, criminal association 
and corruption charges against the defendants. 
 
¶6. (SBU) COMMENT: President Lugo's first major attack on endemic 
Paraguayan corruption continues to make headlines.  The public is 
somewhat skeptical that the case will move forward given the fact 
that not a single defendant is currently behind bars (none had a 
previous criminal record, which explains why all were given house 
arrest).  This will be the first test of the Lugo administration's 
mettle on corruption, and will likely give Lugo his first glimpse at 
the weaknesses in the Paraguayan judiciary. END COMMENT. 
 
 
AYALDE