VZCZCXYZ0011
PP RUEHWEB

DE RUEHAC #0486/01 1641131
ZNR UUUUU ZZH
P 131131Z JUN 07
FM AMEMBASSY ASUNCION
TO RUEHC/SECSTATE WASHDC PRIORITY 5837
INFO RUEAWJB/DEPT OF JUSTICE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS ASUNCION 000486 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR INL JAMES HIDES, STATE FOR WHA/BSC, TREASURY FOR 
OSIA MAUREEN WAFER, TREASURY FOR OTA WARFIELD, VAN KOCH, 
MILLAR 
 
E.O. 12958: N/A 
TAGS: SNAR PGOV KCRM PA
SUBJECT: PARAGUAY: RESPONSE TO MAJOR LIST / CERTIFICATION 
PROCEDURES FY 2008 
 
REF: A. A. STATE 72494 
     ¶B. B. STATE 00056829 
 
¶1.  Below find Post's submission on the Government of 
Paraguay (GOP) cooperation on counter-narcotics and other 
drug-related issues. 
 
¶2.  The United States Government (USG) asked the GOP to keep 
pressure on major international drug organizations 
trafficking drugs through investigations, arrests, 
prosecutions of their key members and seizures of their 
assets. 
 
-- The GOP through its Anti-Drug Secretaria (SENAD) has taken 
significant measures to disrupt trafficking organizations in 
Paraguay. 
 
-- Working in concert with antinarcotics prosecutors and DEA 
agents, SENAD arrested five traffickers, including the son of 
a well-connected Paraguayan politician, June 2006, seized 195 
kg of cocaine and impounded the airplane used in transporting 
the drugs. 
 
-- SENAD also hit traffickers where it hurts -- their wallets 
-- by seizing over 1,200 weapons, 38 vehicles and 3 
airplanes.  SENAD also seized 1.5 million in assets 
(including a farm) from Anroldo Mareira-Macedo, a Brazilian 
fugitive connected to the Mendes Mezquita case (Mezquita was 
extradited to U.S. in 05); this latter case demonstrates 
SENAD's commitment to target higher-valued assets. 
 
-- SENAD oversaw creation of new facility with a helopad ) 
thanks to INL funds ) in Pedro Juan Caballero in a region 
notorious for drug trafficking.  It also won Congressional 
approval to fund 50 new agents.  The Embassy's Military 
Information Support Teams (MIST) have funded a publicity 
campaign including billboards that include the names and 
photos of Paraguay's most wanted traffickers, effectively 
forcing them into hiding. 
 
¶3.  The USG asked the GOP to expand SENAD's operation in 
Ciudad del Este (CDE) in the tri-border area, to emulate its 
success in Pedro Juan Caballero (PJC) and to increase efforts 
to shut down clandestine airstrips in the Chaco region that 
are used by drug traffickers. 
 
-- SENAD was not able to expand its operations in CDE as it 
would like for lack of funds.  However, SENAD signed a 
Memorandum of Agreement (MOA) with the International Guarani 
Airport in CDE to establish a Canine Unit at the airport 
using INL funds.  We expect this facility to be fully 
functional by August 07.  It will host three officers and two 
dogs; they will inspect airport passengers and cargo for 
illegal drugs. 
 
-- As noted prior, SENAD opened its new office in PJC in 
August of 2006, on Paraguay's border with Brazil, an area 
notorious for drug trafficking and other illegal activities. 
The office allows SENAD to base upwards of 25 agents in this 
region.  The U.S. provided $500,000 to complete this facility 
to include the construction of a helicopter pad and support 
facilities that were inaugurated April 2007.  This new 
facility greatly enhanced SENAD's capability to launch 
effective operations targeting major traffickers and their 
activities in the region. 
 
--SENAD has not effectively shut down clandestine airstrips 
in the Chaco region that are used by drug traffickers. 
However, SENAD was able to identify a significant number of 
the airstrips in the Chaco region.  SENAD surveillance has 
produced vital intelligence that in turn has led to 
significant drug and weapons seizures. 
 
¶4.  The USG asked the GOP to provide adequate funding for 
SENAD, so that it can continue to execute its 
responsibilities and conduct operations against major 
narcotics traffickers. 
 
-- The Paraguayan Congress' decided October 2006 to provide 
expanded funding for SENAD allowing the hiring of 50 new 
SENAD agents.  INL will provide funding for the agents to 
participate in DEA training August 2007. 
 
-- SENAD continues to lack sufficient funds for helicopter 
fuel, constraining its ability to use effectively its new 
facility in PJC (e.g. It has yet to conduct an operation 
using a helicopter from its new PJC facility).  It also lacks 
 
funds needed to expand operations throughout the country. 
 
Cultivation 
----------- 
 
¶5.  The USG asked the GOP to continue to put pressure against 
illegal drugs being cultivated or produced in Paraguay. 
 
-- Paraguay is not a major manufacturer or consumer of 
narcotics, but does produce marijuana which is primarily 
trafficked for consumption to neighboring countries in South 
America.  It is cultivated throughout the country, but 
principally along the border with Brazil and Bolivia.  The 
GOP through SENAD has made significant advances by destroying 
more marijuana in remote areas than the previous year.  All 
told, SENAD destroyed a total of 1,200 hectares in 2006 
reflecting an increase of 20 percent over 2005. 
 
Consumption / Demand Reduction 
------------------------------ 
 
¶6.  The USG asked the GOP to extend their Demand Reduction 
Program to Pedro Juan Caballero (PJC) area in addition to the 
central district. 
 
-- SENAD has the principal coordinating role under the 
"National Program against Drug Abuse" and works with the 
Ministries of Education and Health and several NGOs. 
Unfortunately, SENAD's available budget for the Demand of 
Reduction Program is very limited and this limitation 
prevents SENAD from reaching out to more areas of the country 
on its own.  SENAD's Prevention Unit does most of its 
outreach work in schools in the Central Department 
surrounding Asuncion.  This year SENAD extended the 
prevention program to PJC. 
 
-- The Prevention Unit held 1,409 workshops in 167 schools 
reaching 43,482 people including students, parents and 
teachers with its drug awareness program during 2006. 
 
Official Corruption 
------------------- 
 
¶7.  The USG asked the GOP to take active measures as they are 
needed to rid the rank of law enforcement, prosecutors and 
judges of personnel credibly suspected of having links to 
drug traffickers, money launderers and others who commit drug 
related crimes. 
 
-- Corruption and inefficiency within the Paraguayan National 
Police (PNP) and the judicial system negatively affects SENAD 
operations.  Paraguay's former Interior Minister named 
Aristides Cabral a Regional Security Advisor to the Ministry 
of the Interior in Alto Parana in May 07.  Cabral has been 
implicated in drug trafficking and was passed over for 
promotion due in large measure to the concerns we raised 
about his alleged involvement in drug trafficking. 
 
-- Paraguay's $35 million MCA program is focused on combating 
impunity and informality.  The government has used these 
funds to create, vet, and equip several investigation units 
but corruption remains a serious problem.  SENAD has an 
Internal Affairs Unit that has  investigated several cases of 
malfeasance. 
 
¶8.  We have asked the GOP to address rumors of illegal 
activities in Customs Service, Ministry of Hacienda (Tax 
Authority). 
 
-- As noted prior, Paraguay's MCA's program has funded 
efforts to create investigation units in each of these 
offices.  The programs rely on polygraph exams to weed out 
corrupt officials.  These units however need to do much more 
to combat institutionalized corruption. 
 
¶9.  The USG asked the GOP's Anticorruption Unit to be 
commended for opening investigations in 2006 into suspected 
activities by Victor Bogado, the President of the House of 
Deputies, and Humberto Galeano, the former head of President 
Duarte's protection unit. 
 
-- Prosecution of several high level officials carries high 
symbolic import.  Bogado, however, is protected from 
prosecution by congressional immunity.  It remains to be seen 
whether the Attorney General's office will be able to deliver 
a conviction against Galeano.  Meanwhile, Paraguayan Diputado 
Magdelano Silva is alleged to be implicated in drug 
 
trafficking but faces no current formal investigation. 
 
Legislative Measures 
-------------------- 
 
¶10.  The USG asked the GOP to adopt an anti-money laundering 
and anti-terrorist financing legislation in order to meet its 
international obligations. 
 
-- The Paraguayan House of Deputies passed a Penal Code 
Reform Bill that contains key provisions that strengthen 
existing legislation on money laundering and criminalize, for 
the first time, terrorism financing.  This bill awaits Senate 
approval. 
 
-- Companion legislation in the form of a Procedural Code 
Reform Bill is still under review by a special commission but 
should be ready for presentation to Congress in the coming 
months.  Embassy's RLA has participated on the commissions 
drafting both bills. 
 
-- Once the Penal Code and Procedural Code Bills along with 
legislation improving the regulation of Paraguay's FIU are 
passed, it will be essential to provide Paraguay's judicial 
authorities the necessary training to implement these laws. 
 
-- Three new investigative units within the Ministry of 
Finance are using the tools they have at hand to recommend 
for prosecution violators of Paraguayan law.  Tax, customs, 
illicit enrichment, and public corruption cases are being 
referred to the public ministries office.  Adoption of the 
afore-discussed legislation will strengthen the ability of 
these units to support the successful prosecution of complex 
financial crimes, including money laundering. 
 
¶11.  The USG asked the GOP to regulate the importation of 
pseudo ephedrine, and to improve the law enforcement efforts 
for other cocaine precursor chemicals. 
 
-- Currently a chemical control law is in place.  Both SENAD 
and the Health Department regulate individuals or companies 
obtaining precursor chemical permits.  However, budget 
constraints limit their ability to conduct operations 
targeting violators across the country. 
 
-- The GOP through SENAD and the Department of Health also 
regulates the importation of pseudo ephedrine.  Under the 
current legal regime, violators can be charged with illegal 
import of controlled substances and other related crimes, 
such as tax evasion, facing terms of five to ten years in 
jail. 
 
Money Laundering 
---------------- 
 
¶12.  The USG asked the GOP for additional financial and human 
resources that are needed for SEPRELAD's FAU, SENAD's UIDF, 
and the Attorney General's Office (Fiscalia), to enable them 
to effectively investigate and prosecute money laundering, 
terrorist financing, and other financial crimes. 
 
-- The Attorney Generals' Office plans to incorporate the 
Anti-Corruption Unit into the Economic Crimes Unit allowing 
for additional prosecutors to engage in cases involving money 
laundering. 
 
-- Once Paraguay adopts the Penal and Procedural Code Bills 
noted earlier, it will be essential to support efforts to 
train key judicial authorities in the implementation of this 
legislation. 
 
¶13.  The USG asked the GOP to apply other initiatives that 
would improve the effectiveness of the GOP's anti-money 
laundering regime which includes: conducting outreach 
activities to sensitize financial institutions about 
reporting requirements and improving coordination and 
information sharing protocols between the SEPRELAD FAU, the 
SENAD UIDF, and the Public Ministry that prevent compromise 
of law-enforcement-sensitive information. 
 
-- The Public Ministry has demonstrated greater willingness 
to work closely with other agencies, SEPRELAD and SENAD's 
UIDF that can contribute to the prosecution of complex 
financial crimes.  SENAD's UIDF and the Public Ministry are 
presently working together on several important cases. 
 
¶14.  The USG asked the GOP to control the movement of bulk 
 
cash across its borders as it is another key issue that calls 
for greater active involvement by the GOP. 
 
-- Paraguay's efforts to combat the movement of contraband 
across borders remains uneven notwithstanding the creation of 
new investigation units in the Finance Ministry, including 
Customs.  Controls on the movement of cash remain deficient. 
Airlines give out forms upon entry into Paraguay for 
passengers to declare cash.  However, the vast majority of 
individuals fail to report the import and export of cash and 
customs does little to dissuade travelers from not providing 
this information. 
FITZPATRICK