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Viewing cable 07TEGUCIGALPA579, I AM THE STATE: HONDUTEL MANAGER REMAINS MAIN

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Reference ID Created Released Classification Origin
07TEGUCIGALPA579 2007-04-03 21:58 2011-08-30 01:44 CONFIDENTIAL Embassy Tegucigalpa
VZCZCXRO3642
PP RUEHLMC
DE RUEHTG #0579/01 0932158
ZNY CCCCC ZZH
P 032158Z APR 07
FM AMEMBASSY TEGUCIGALPA
TO RUEHC/SECSTATE WASHDC PRIORITY 5432
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHDC PRIORITY
RUEHC/DEPT OF LABOR WASHDC PRIORITY
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC PRIORITY 0620
RUEAFCC/FCC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEABND/DEA HQS WASHINGTON DC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 03 TEGUCIGALPA 000579 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/IFD, WHA/EPSC, INR/IAA, DRL/IL, AND WHA/CEN 
STATE PASS USTR 
 
E.O. 12958: DECL: 04/13/2017 
TAGS: ECON ECPS ELAB HO KJUS KPRV PGOV PINR
SUBJECT: I AM THE STATE: HONDUTEL MANAGER REMAINS MAIN 
OBSTACLE TO REAL REFORM IN HONDURAN TELECOM 
 
 
Classified By: Classified by Ambassador Charles Ford for reasons 1.4 (B 
,D) 
 
1. (C) SUMMARY:  While a new telecommunications law to 
liberalize the market remains stalled in the Honduran 
Congress, the battle to control the lucrative margins in 
international calling continues.  Hondutel, the state 
telecoms operator, has aggressively pursued companies charged 
with pirating calls; others have accused Hondutel of being 
the worst violator.  At the center of the controversy lies 
Hondutel operations director Marcelo Chimirri, the front man 
in a high profile offensive against illegal international 
calls.  With family relationships and friends inside the 
President's inner circle, he seemingly operates above the law 
and freely declares "I am the State."  Recently more 
information has surfaced on his shady activities that may 
help finally implicate him.  END SUMMARY. 
 
ROLLING UP COMPETITORS ONE BY ONE 
 
2. (C) Marcelo Antonio Chimirri Castro, (DOB May 3, 1966; 
POB: Argentina) a citizen of Honduras, Argentina and Italy, 
first began his tenure as the second-in)command at Hondutel 
by looking to cancel licenses that were not being actively 
used by companies in Honduras.  After complaints by several 
U.S. companies, EconChief and EconOff visited Chimirri and 
then Hondutel Chief Jacobo Regalado in July 2006 to 
investigate claims that they were eliminating competition by 
revoking licenses.  Chimirri and Regalado responded that 
these licenses were just being held for speculation and they 
were keeping them out of the black market.  (COMMENT: Their 
logic never really rang true ) licenses were awarded to 
companies based on technical and financial merits and 
wouldn,t be bought or sold on the secondary market.  END 
COMMENT). 
 
3. (C) While few companies were being allowed to begin 
operations, even the existing companies in the market have 
come under siege.  In a stated effort to reduce Hondutel's 
losses through grey line traffic (or fraudulent international 
calls, mainly run through the internet), Chimirri mounted a 
high-profile campaign to identify, invade and close down 
companies suspected of participating in the fraud.  Based on 
a pattern of grey line calling, Chimirri would notify the 
Public Ministry (Attorney General's office), literally pick 
up a prosecutor and several police on the way to a company 
site, then invade the business and confiscate the equipment 
) many times armed himself with a semi-automatic weapon and 
bullet proof jacket.  Over a 12 month span Chimirri invaded 
approximately 50 companies, confiscating and holding company 
equipment at Hondutel facilities (COMMENT: While it is true 
the signature of grey line traffic is relatively easy to 
spot, and Hondutel would have the ability to spot it, it 
remains a major conflict of interest to have one competitor 
police another.  END SUMMARY). 
 
ONE COMPANY TOO MANY 
 
4. (C) It was on the 51st company that Chimirri began to face 
problems.  As in the past, Chimirri "identified" the clear 
signature of grey line traffic, then rounded up his 
prosecutor and police to invade a company named Pronto in San 
Pedro Sula.  Pronto, however, was owned by a powerful 
business family, the Kattans, whose members ranged from the 
head of a manufacturing association to a leading opposition 
party congressman.  The Kattans went to court and won a 
decision against Hondutel, which was ordered to return the 
confiscated equipment.  While Chimirri and Hondutel defied 
the first attempt by the Public Ministry to retrieve the 
equipment, it was eventually returned to Pronto.  Experts are 
now rechecking the equipment for signs of grey line traffic 
and should have a report ready by mid-April. 
 
5. (C) With the Public Ministry under fire for allowing 
Chimirri to forcefully invade the companies (NOTE: and after 
a call from Ambassador to Attorney General Leonidas Rosa 
Bautista. END NOTE), the Ministry held a meeting among the 
parties in an attempt to reconcile their differences. 
Stating defiantly "Marcelo Chimirri, I am the State," 
Chimirri went on to describe how Hondutel has the right to 
pursue and decommission companies that they believe are 
 
TEGUCIGALP 00000579  002 OF 003 
 
 
fraudulently using their network.  When that effort failed to 
bring a resolution, tensions later escalated until a series 
of sharp exchanges between Chimirri and Rosa Bautista on TV 
brought the matter directly to Congress.  (COMMENT: Rosa 
Bautista, not known for taking on organized crime or 
political chieftains, appeared an unwillingly participant 
throughout the unfolding drama.  END COMMENT). 
 
6. (C) In a circus-like setting in front of the national 
Congress, Chimirri defended his actions while opposition 
Congressman heaped accusations on Hondutel management.  The 
result was a surprising unanimous decision by a normally 
heavily partisan Congress to investigate Chimirri's 
activities.  Chief among their demands was to investigate 
over a dozen new contracts with international carriers that 
contained low (and seemingly unsupportable) per minute rates 
(NOTE: The implication was that the contracts were negotiated 
with kick-backs.  END NOTE).  Congress also demanded to know 
why Chimirri had installed, through Hondutel, fiber optic 
capacity to his upscale home outside of Tegucigalpa 
equivalent to a mid-sized bank.  (COMMENT: The Public 
Ministry has focused on abuse of power as the principal 
charge in this case, given Chimirri's role in authorizing the 
lines to his house.  The enormous capacity could also 
indicate that Chimirri is running his own grey line 
operation, literally in-house.  END COMMENT). 
 
EXTORTION: A WINNING BUSINESS STRATEGY 
 
7. (C) With the Kattan case in the headlines, more 
information on Chimirri's role in grey line traffic has 
emerged.  Carlos David Flores, son of ex-President Carlos 
Flores, described to EconOff how he and fellow investors were 
personally extorted by Chimirri when his company approached 
Hondutel about obtaining a license.  In order to approve the 
license, Chimirri asked directly "what is in it for me?"  The 
team left without an agreement.  (COMMENT: When Carlos David 
described his encounter with Chimirri to his father, the 
ex-President immediately called President Zelaya to complain. 
 Interestingly, Flores comment to Zelaya was to "keep 
Chimirri away from my family."  Fear of Chimirri and what he 
might do is a common refrain in the industry.  END COMMENT). 
 
8. (C) The ex-President of telecom regulator CONATEL was also 
a victim of Chimirri's extortion.  After having served at 
CONATEL under ex-President Maduro, Jose Renan Caballero left 
to join a U.S. company, and advocated on the company's behalf 
at Post several times.   In February 2007, Caballero suddenly 
resigned.  To EconOff, Caballero described how his company 
had agreed to pay off Chimirri in order to obtain a lower per 
call rate to terminate international calls. (COMMENT: 
Caballero's former company is one of the dozen international 
carriers under investigation for having low, seemingly 
arbitrary per minute rates.  END COMMENT). 
 
9. (C) AMNET cable company, a subsidiary of U.S. company 
Amzak International, was also threatened by Chimirri. 
AMNET's country manager and top technical rep met with 
EconOff April 3 and played a taped conversation in which 
Chimirri said he would "make it difficult" for the company if 
they didn,t vacate a certain market area that overlapped his 
own business interest.  Given that Chimirri could delay or 
cancel AMNET's telecommunications capacity, or worse invade 
the company, the company reps have basically decided that it 
would be in their best interests to do so.  (COMMENT: Several 
sources have confirmed that Chimirri is clandestinely running 
a small cable company in Tegucigalpa named TeleColor.  Oddly, 
the company has only a few thousand customers in a poor area 
of Tegucigalpa, yet runs a state-of-the-art network.  Some 
have speculated that Chimirri makes the business profitable 
by using confiscated equipment and channels sent illegally by 
CableColor, an AMNET competitor owned by business magnate 
Jaime Rosenthal.  Others believe the cable operation is just 
a front for a massive grey line operation that terminates 
calls over CableColor.  The Public Ministry has been alerted 
to TeleColor, and has told EconOff that they anticipate 
raiding the company within the next two weeks.  END COMMENT). 
 
10. (C) Even Attorney General Bautista was not untouched by 
the controversy.  In the days following his sharp exchange 
with Chimirri, Bautista received a call at his residence by a 
 
TEGUCIGALP 00000579  003 OF 003 
 
 
person that specifically threatened his family.  The caller 
did not state a motive, but in an April 2 meeting with 
Ambassador and EconOff, Bautista said that he believed the 
call came from a Hondutel insider based on caller ID 
information (NOTE: After two years in office this is the 
first direct threat made against Bautista.  He stated clearly 
to Ambassador and EconOff that the timing of the threat and 
his actions against Hondutel was not coincidental.  END NOTE). 
 
11. (C) SUMMARY:  Given the artificially high international 
rates supported by Hondutel, and the near zero cost for 
terminating calls illegally over the internet, grey line 
trafficking is a huge and profitable business.  As the 
operations chief at Hondutel, Chimirri sits at the controls 
of a lucrative empire that specializes in kick-backs and 
extortion while stalling any real reform in the sector.  END 
SUMMARY. 
FORD