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RR RUEHWEB

DE RUEHBO #4798/01 1862040
ZNY CCCCC ZZH
R 052040Z JUL 07
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 6781
INFO RUEHBR/AMEMBASSY BRASILIA 7620
RUEHCV/AMEMBASSY CARACAS 9139
RUEHLP/AMEMBASSY LA PAZ JUL LIMA 5211
RUEHZP/AMEMBASSY PANAMA 0431
RUEHQT/AMEMBASSY QUITO 5808
RUEAIIA/CIA WASHDC
RUEKJCS/SECDEF WASHDC

C O N F I D E N T I A L BOGOTA 004798 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 07/05/2017 
TAGS: PTER PGOV PREL ECON CO
SUBJECT: HOW EX-PARAMILITARIES FINANCED THEMSELVES THROUGH 
CORRUPTION OF LOCAL GOVERNMENTS 
 
REF: A. BOGOTA 3618 
     ¶B. BOGOTA 2464 
 
Classified By: Political Counselor John S. Creamer. 
Reason: 1.4 (b,d) 
 
 
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Summary 
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¶1.  (C)  Colombia's decentralization in the 1990s made local 
governments a tempting target for paramilitary infiltration. 
The paramilitary demobilization, confessions through the 
Justice and Peace process, and a renewed GOC security 
presence in former-para regions have exposed numerous cases 
of paramilitary looting of municipal finances, especially on 
Colombia's north coast.  Local politicians were offered 
"silver or lead," a choice between being bought off with 
bribes or killed.  Paramilitaries pocketed ten to twenty 
percent of all local government funds, and controlled much of 
the rest through shady government contracts.  Education and 
health funds were a particularly lucrative source of funding. 
 End Summary. 
 
------------------------------- 
Infiltrating  Local Governments 
------------------------------- 
 
¶2.  (C)  United Self-Defense Forces of Colombia (AUC) founder 
Carlos Castano publicly admitted that 70 percent of all 
paramilitary funds came from narcotrafficking.  The rest came 
from plundering local government funds and from "vacunas," 
extortion levied on citizens and businesses (see septel on 
vacunas).  By the mid-1990s, the AUC had a presence in over 
three-quarters of all departments and a third of all cities, 
especially on the country's north coast. Para infiltration 
was a major source of paramilitary financing and influence 
(ref A).  The paramilitary demobilization, confessions under 
the Justice and Peace Law, and greater security in areas 
previously dominated by paras are enabling officials to 
expose corruption without fearing for their lives. 
 
--------------------------------------------- 
An Unintended Consequence of Decentralization 
--------------------------------------------- 
 
¶3.  (C)  Under Colombia's 1991 Constitution, governors and 
mayors, previously appointed by the central government, 
became directly elected.  Local authorities also received 
greater control over health, education and welfare spending 
with transfers from the national government to local 
governments tripling within a decade.  Weak local governments 
with new power and money created opportunities for 
paramilitaries to increase political influence and to broaden 
 funding sources according to Fabio Sanchez, director of the 
Center for Economic Development at the University of the 
Andes.  Sanchez's research shows a strong link between the 
amounts of funds transferred to local governments and the 
levels of paramilitary activities in those areas. 
 
------------------- 
"Silver...or Lead?" 
------------------- 
 
¶4.  (C)  Paramilitaries stole government funds for cash and 
influence.  Gustavo Duncan, an expert on paramilitaries at 
the Foundation for Security and Democracy, estimates 
paramilitaries typically stole anywhere from 10-50 percent of 
total local government revenues in the worst areas of the 
North coast, putting five to ten per cent in their pockets 
and using the rest to buy off government officials and pay 
allies.  Duncan notes that by stealing local resources, 
paramilitaries also crippled government's ability to deliver 
basic services and infrastructure.  In some areas, this 
eroded government legitimacy and helped produce an illegal 
"narco-economy." 
 
¶5.  (C)  Poloffs talked to six mayors from the department of 
Casanare who claim they were forced to sign a secret 
agreement to pay the "Martin Llanos" para block a percentage 
of public funds.  Payments were made through "contracts" for 
services that were never provided.  The mayors said prior to 
the 2002 elections, all mayoral candidates were forced to 
 
sign the agreement after their families were threatened. 
After the elections, and with a reinforced Police presence in 
their region for the first time in years, they felt safe 
enough to tell authorities, including President Uribe and the 
Prosecutor General's Office (Fiscalia), about the forced 
payments.  The mayors, who claim they filed official reports 
seeking help and denouncing the threats, now face charges of 
having colluded with the paras. 
 
--------------------------------------------- ------------- 
"Armed Clientelism" at the Municipal and Department Levels 
--------------------------------------------- ------------- 
 
¶6.  (U)  Soledad, a manufacturing center of over 300,000 
located in the north coast department of Atlantico, is a case 
study of paramilitary infiltration and "armed clientelism" at 
the municipal level.  Paramilitary Edgar Fierro Florez ("Don 
Antonio"), who worked for Rodrigo Tovar Pupo ("Jorge 40"), 
dominated Soledad's local government from the late 1990s to 
¶2006.  "Don Antonio" is estimated to have stolen over USD 4 
million from the city's health and education funds, and 
diverted far more through corrupt contracts. 
 
¶7.  (C)  Educational funds were a lucrative source of money 
and votes in Soledad.  Alfredo Noya, Soledad's secretary of 
Education, set up a deal where 20 percent of all the city's 
educational funds were split between the AUC, the mayor, and 
local politicians.  Juan Carlos Garzon, paramilitary analyst 
for the Organization of American States Mission (MAPP/OAS) in 
Colombia, explained educational funds were skimmed through 
the use of fake contracts to build schools, provide school 
lunches, and hire teachers.  Garzon said controlling the 
education system also helped paramilitaries influence 
elections as families often turn to teachers for guidance on 
how to vote.  Don Antonio ensured the election of Soledad's 
mayor--Rosa Stella Ibanez Alonso--an election that was later 
overturned for fraud. 
 
¶8.  (C)  Sucre Department on the Atlantic coast was a major 
narcotrafficking corridor and paramilitary stronghold. 
Three Sucre national legislators and four departmental 
legislators, including the president and vice-president of 
the departmental assembly and the department's most powerful 
local politicians, were arrested for paramilitary links (ref 
B).  Paramilitary leader Salvatore Mancuso testified that 
paras controlled the majority of all council members in 
Sucre's major cities.  Duncan estimates that, in addition to 
drug money, paramilitaries pocketed ten to twenty percent of 
local revenues and controlled contracts worth another twenty 
to thirty percent.  Opposition Polo Democratico Senator 
Gustavo Petro called Sucre a "typical case" of paramilitary 
infiltration. 
 
¶9.  (U)  Paramilitaries also exploited the GOC's health 
system for the poor in their zones of influence, a huge cash 
cow at the municipal and department level.  The GOC provides 
coverage for the poor through "Instituciones Prestadoras de 
Servicios" (IPS), health services companies contracted by 
local governments.  The central government transfers funds to 
local governments for IPS coverage based on the number of 
poor in the area.  Paramilitaries--and their either complicit 
or coerced local officials--easily milked the system.  IPS 
would frequently use only 25 percent of funds received to 
provide services (rent offices, hire doctors, buy medicine, 
etc.) while stealing the rest. 
Drucker 

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