VZCZCXYZ0001
RR RUEHWEB

DE RUEHMU #1789/01 2071516
ZNR UUUUU ZZH
R 261516Z JUL 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 0882
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE

UNCLAS MANAGUA 001789 
 
SIPDIS 
 
STATE PASS USTR 
 
SENSITIVE BUT UNCLASSIFIED 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EINV ECON USTR KIDE NU
SUBJECT: LAND DISPUTES THREATEN TOURISM SECTOR INVESTMENT 
 
REF: MANAGUA 1663 
 
Summary 
------- 

¶1. (SBU) Summary: A U.S. investor reports that local FSLN members, 
with backing from senior FSLN official Lenin Cerna, have 
orchestrated a land invasion and smear campaign to derail a USD 88 
million tourism development along the southwest coast of Nicaragua. 
In retaliation for going public with a recording of an extortion 
attempt made by a local FSLN official, the investor believes that 
the Ministry of the Environment and Natural Resources has falsified 
environmental complaints.  Municipal representatives have also filed 
a lawsuit disputing the investor's title to the property.  Tourism 
chamber officials fear that negative publicity related to this and 
other land disputes has dampened interest in further investment in 
the tourism sector.  End summary. 
 
Land Invasion 
------------- 

¶2. (SBU) On November 29, 2006, Amcit Armel Gonzalez met with 
Econoffs to discuss difficulties his Grupo del Sol development 
company has faced in the Department of Rivas, located in southwest 
Nicaragua.  Grupo del Sol plans to invest up to USD 88 million 
throughout the department, including USD 8 million in "El Castil," 
Arenas Bay, to build upscale vacation homes.  Gonzalez claims he 
purchased El Castil from the Pedro Joaquin Chamorro Cooperative in 
¶2000.  However, in December 2004, Gonzalez learned that Emerson 
Zacarias Canales--husband of the mayor of Tola, the municipality 
where the property is located--had filed a lawsuit against Gonzalez 
claiming that Zacarias and another Tola local had purchased the 
cooperative and that they are the rightful owners.  In November 
2006, squatters, allegedly encouraged by Zacarias, began to occupy 
El Castil.  On November 29, Grupo del Sol security guards shot and 
injured three squatters.  Undeterred, squatters continued to occupy 
El Castil. 
 
Extortion 
--------- 

¶3. (SBU) On May 25, 2007, Gonzalez met again with Econoffs, stating 
that Gerardo Miranda--former FSLN congressman, former FSLN mayor of 
San Juan del Sur, and current nominee for the position of Consul in 
Liberia, Costa Rica--offered to bring closure to Gonzalez' property 
dispute.  Gonzalez claims that Miranda took him to Sandinista party 
offices where he and other Sandinistas began negotiating a 
settlement.  Gonzalez told Econoffs that he declined to negotiate in 
that meeting, but that by messenger he subsequently offered one lot 
in El Castil worth an estimated USD 500,000 as compensation for 
Miranda's assistance in putting an end to the dispute. 
 
¶4.  (SBU) In a second meeting in Gonzalez' office, which Gonzalez 
recorded, Miranda turned down Gonzalez' offer of one lot and 
demanded USD 4 million, threatening Gonzalez with "a decade of 
litigation" if he declined.  Throughout the meetings, Sandinista 
negotiators referred to an unspecified leader, "el jefe," who both 
Gonzalez and Nicaraguan Liberal Alliance (ALN) National Assembly 
Deputy Alejandro Bolanos Davis, another investor in the project, 
believe is Lenin Cerna, the former director of State Security in the 
1980s and a senior FSLN official (reftel). 
 
Exposure 
-------- 

¶5. (SBU) On May 27, 2007, Gonzalez and other Grupo del Sol 
investors, including Bolanos Davis, went public with the recorded 
extortion attempt on the weekly television news program "Esta 
Semana."  Since then, the story has been a daily fixture in local 
media, with FSLN-controlled media lashing out at Gonzalez and 
Bolanos. 
 
Government Reaction 
------------------- 

¶6. (SBU) Miranda and other officials sued Gonzalez for slander, and 
the FSLN/PLC controlled Supreme Electoral Council (CSE) went after 
Bolanos ordering the revocation of his seat in the National Assembly 
(reftel).  Ministry of the Environment and Natural Resources 
(MARENA) officials have subsequently accused Grupo del Sol of 
failing to secure environmental permits and have ordered 
construction halted at El Castil and the rest of Arenas Bay.  MARENA 
claims that Grupo del Sol ignored the order, and the Attorney 
General's Office is now investigating the issue to determine whether 
criminal charges should be brought against Gonzalez and other 
investors.  Gonzalez asserts that FSLN officials fabricated the 
environmental issues in response to his extortion claims.  He and 
other investors also fear that the participation of the Attorney 
General's Office in the process opens the door to outright 
expropriation. 
 
Comment 
------- 

¶7. (SBU) While claims of FSLN extortion and illegal interference in 
court proceedings have been bandied about for years, this is the 
first time an investor has gone public, cried foul, and provided 
proof.  The investors in question appear to be paying dearly for 
their audacity.  Other U.S. investors have also told Emboffs that 
they have been victims of violent extortion attempts, but they 
refuse to go public in fear of reprisals.  The apparent willingness 
of some FSLN party officials to openly abuse public office for 
private gain spells trouble for investors, especially for those who 
own coveted coastal properties.  In mid-July, a local newspaper 
quoted the president of the Nicaraguan Chamber of Tourism as saying 
that as a result of Grupo del Sol's experience in Rivas, tourism 
investment is "frozen" and that a "domino effect" is imminent.  End 
comment. 
 
TRIVELLI