VZCZCXYZ0647
PP RUEHWEB

DE RUEHAC #0132 0601044
ZNR UUUUU ZZH
P 291044Z FEB 08
FM AMEMBASSY ASUNCION
TO RUEHC/SECSTATE WASHDC PRIORITY 6654
INFO RUCNMER/MERCOSUR COLLECTIVE
RHMFISS/HQ USSOUTHCOM MIAMI FL

UNCLAS ASUNCION 000132 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/BSC KBEAMER 
 
E.O. 12958: N/A 
TAGS: SNAR PGOV PREL PA
SUBJECT: PRESIDENT INVESTIGATED FOR MONEY LAUNDERING 
 
REF: A. A. ASUNCION 18 
     ¶B. B. ASUNCION 127 
 
¶1.  (U) Prosecutors in Paraguay's financial crimes 
specialized unit launched an investigation February 28 
against President Nicanor Duarte Frutos on suspicion of 
violating Paraguay's anti-money laundering statutes.  The 
unit's lead prosecutor, Carlos Arregui, appointed two 
prosecutors, Rene Fernandez and Liliana Alcaraz, February 27 
to investigate cash transactions involving an Interbanco bank 
account co-owned by Duarte and Colorado President Jose 
Alberto Alderete.  According to the complaint filed February 
22 by Deputy Rafael Filizzola, Duarte received multiple 
donations totaling USD 950,000 from unknown donors one week 
before the December 2002 Colorado primary.  Filizzola claimed 
Duarte closed the account in February 2003 after spending the 
money on his presidential campaign.  Filizzola also alleged 
that Duarte received the funds from illicit sources and 
alleged unlawful enrichment for accepting funds as a public 
official.  (NOTE:  Duarte resigned as education minister in 
January 2001 to campaign for the presidency and was not a 
public official at the time of the alleged money laundering. 
Deputy Filizzola is the Democratic Progressive Party (PDP) 
chairman and a supporter of opposition presidential candidate 
Fernando Lugo.  END NOTE.) 
 
¶2.  (C) Duarte dismissed the investigation February 28 as 
politically motivated and claimed that if drug traffickers or 
other illicit contributors donated to his campaign, "they 
helped the wrong man."  He asserted that his administration 
has been effective in executing anti-narcotics operations, 
increasing government transparency, and fighting piracy. 
Duarte claimed that that much of his campaign funding -- but 
not necessarily the money in this particular account -- came 
from donations by businessmen Osvaldo Dominguez Dibb and 
Antonio Vierci, although he refused to disclose how much 
money he received.  (NOTE:  Dominguez is owner of La Nacion 
and Cronica newspapers and involved in the local cigarette 
industry.  Vierci, owner of Stock supermarkets, the Ultima 
Hora newspaper, and Telefuturo cable channel, is a supporter 
of former presidential candidate Luis Castiglioni.  Duarte 
ordered an investigation against Vierci's Stock Supermarket 
in Ciudad del Este December 11, on the eve of this year's 
Colorado primary (Ref A).  END NOTE.)  Financial crimes 
prosecutors told RLA February 28 that the investigation does 
not have a set timetable, but they want to resolve the case 
well in advance of elections.  The prosecutors complained 
that no matter what they find in their investigation, the 
Colorados will attempt to use their findings for political 
gain (if they find nothing, by over politicizing the unit to 
shore up Duarte's senate candidacy and his reputation; if 
they find wrongdoing, by alleging the charges are political 
and withholding support from the courts, which Duarte 
controls). 
 
¶3.  (SBU)  COMMENT:  This investigation will likely have 
little impact on the April 20 national election.  Colorado 
presidential hopeful Blanca Ovelar may be beginning to 
distance herself from Duarte, and she is polling (according 
to a COIN poll released February 26) in second place with 25 
percent of the vote (behind Lugo's 31 percent and just ahead 
of Oviedo's 23 percent)(Ref B).  The higher voter turnout, 
the more Ovelar, who has the highest negatives in the field, 
is likely to fall behind Lugo.  Duarte enjoys political 
immunity as president, and if elected senator as expected, 
would continue to enjoy immunity from prosecution until he 
leaves political office, unless a majority votes to strip 
him.  END COMMENT. 
 
Please visit us at     http://www.state.sgov.gov/p/wha/asuncion 
 
CASON