Viewing cable 04TEGUCIGALPA1554
Title: CODEL SHELBY DISCUSSES BANKING, MONEY LAUNDERING,

IdentifierCreatedReleasedClassificationOrigin
04TEGUCIGALPA15542004-07-13 21:42:00 2011-08-30 01:44:00 UNCLASSIFIED Embassy Tegucigalpa
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 03 TEGUCIGALPA 001554 
 
SIPDIS 
 
STATE FOR H, EB, S/CT, INL, DRL/IL, AND WHA/CEN 
STATE PASS USTR FOR JWOLFE 
STATE PASS AID FOR LAC/CEN 
TREASURY FOR OTA: JANTONOVICH 
DOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: EAID ECON EFIN ETRD KJUS PREL PTER OREP HO
SUBJECT: CODEL SHELBY DISCUSSES BANKING, MONEY LAUNDERING, 
AND ECONOMIC DEVELOPMENT 
 
REF: A. TEGUCIGALPA 1434 
 
     ¶B. TEGUCIGALPA 1490 
     ¶C. TEGUCIGALPA 819 
 
¶1.  Summary: Codel Shelby's June 28-30 visit underscored the 
close economic and political relationship between the 
U.S. and Honduras, while providing a welcome focus on 
financial regulation and prevention of money laundering and 
terrorist financing.  In meetings with GOH officials and 
business and banking sector leaders, the delegation discussed 
the Millennium Challenge Account (MCA), port security, and 
the Central American Free Trade Agreement 
(CAFTA).  The senators expressed interest in further 
assisting the Government of Honduras (GOH) with economic 
development, security training, and financial reform.  The 
visit took place during unrelated protests by teachers and 
environmentalists, which did not impact the delegation 
directly.  End Summary. 
 
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Meeting with Ministers and President Maduro 
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¶2.  Senator Richard Shelby (R-AL) and Senator John Cornyn 
(R-TX) visited Honduras June 28-30 as part of a five-country 
visit through Central America.  In their first meeting at the 
Presidential Palace, Norman Garcia, Minister of Industry and 
Commerce, presented the group with a broad overview of the 
main economic issues facing Honduras, namely CAFTA and the 
MCA.  The Senators raised the fight against terrorist 
financing and money laundering, as well as immigration and 
remittances.  Minister of Finance Arturo Alvarado arrived 
partway through the meeting, having come directly from 
teacher negotiations.  He updated the delegation on the 
status of negotiations and explained the background to the 
government's policy of controlling growth of teacher salaries 
to maintain fiscal balance and keep within the macroeconomic 
framework of the IMF agreement (ref A). 
 
¶3.  Honduran President Ricardo Maduro, joining the meeting in 
progress, described the relationship between the U.S. and 
Honduras as one of shared convictions and the common belief 
in basic responsible behavior, citing his administration's 
willingness to invest scarce political capital on issues of 
importance to the U.S., such as Iraq and Cuba, as evidence of 
Honduras, commitment to this friendly relationship.  Maduro 
spoke optimistically of the 
MCA, viewing it as a means to invest in important 
infrastructure projects and promote economic development. 
Regarding CAFTA, Maduro commented that open markets are key 
to Honduras' prospects for economic growth, stating that 
ratification of CAFTA would be the single most important 
thing the U.S. Congress could do for Honduras. 
 
¶4.  As the conversation turned to the Senators, interests in 
financial institutions and the rule of law, Maduro 
highlighted recent accomplishments, such as a revised 
judicial system and a method of auditing state purchases. 
Maduro emphasized the challenge that a lack of continuity 
from one administration to the next poses for maintaining 
these advances. 
 
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Meeting with Citibank 
--------------------- 
 
¶5.  The next morning, the delegation, accompanied by members 
of the Honduran Banking and Insurance Association 
(AHIBA), attended a breakfast hosted by Citibank.  Citibank 
President Maximo Vidal reviewed the bank's operations in 
Honduras, emphasizing its focus on education, economic and 
community development, and quality of life.  Senator Shelby 
raised issues such as remittances and the prospects for 
economic growth in Honduras.  He discussed infrastructure 
projects (including those that may potentially be funded by 
the MCA - see ref B) and port security improvements as ways 
to facilitate and stimulate economic growth.  Senator Cornyn 
also emphasized the importance of port security, noting that 
a balance must exist between security and commercial issues, 
such that security is adequate, but does not inhibit 
commercial activity. 
 
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Meeting at CABEI 
---------------- 
¶6.  Next, the delegation met with representatives of the 
Central American Bank of Economic Integration (CABEI) to 
discuss CABEI,s role in the region.  CABEI's Chief 
Economist Marvin Taylor explained that about two-thirds of 
CABEI lending goes to the public sector, and stressed the 
bank's role as a leader in microlending, with a focus on 
small and medium enterprises.  Senator Shelby voiced his 
support for the bank,s focus on economic development, 
extolling the benefits of regional and economic integration. 
Senator Cornyn asked what challenges CABEI faces and how the 
U.S. may assist the bank.  Taylor cited a lack of continuity 
within the Honduran government as a principal roadblock to 
progress, in addition to a &fragile8 macroeconomic 
environment.  Taylor described CAFTA as a fantastic 
opportunity to solidify economic growth.  Taylor suggested 
incorporating the U.S. into CABEI as a member, thereby 
increasing U.S. investment. 
 
--------------------------------------------- --------- 
Factory Tour and Lunch with Manufacturers' Association 
--------------------------------------------- --------- 
 
¶7.  Following the meeting at CABEI, members of the Honduran 
Manufacturers, Association (AHM) met with the delegation and 
guided them on a tour of the MANEX factory facility. 
The tour highlighted the use of U.S.-made material and 
equipment at the factory, emphasizing the importance of 
Honduras as a destination for U.S. exports, and Honduran 
reliance upon the U.S. as a market for the industry's 
finished products.  The factory managers explained to the 
delegation that the factory must uphold the labor standards 
of the companies that contract its work. 
 
¶8.  After the tour of the factory, AHM representatives hosted 
a lunch for the delegation, and gave a presentation showing 
the increase in textile-related exports from the United 
States to Honduras over the past decade.  Because the 
outsourcing of jobs is of primary concern to many in the 
United States, AHM members focused on U.S. economic gains due 
to foreign investment in the Honduran textile industry.  The 
Senators acknowledged the association,s support for the 
passage of CAFTA, with Senator Cornyn expressly stating that 
he supports CAFTA as well. 
 
---------------- 
Money Laundering 
---------------- 
 
¶9.  To discuss Honduran efforts to combat money laundering, 
the delegation met with Dr. Ana Christina Mejia de Pereira, 
President of the National Banking Commission (CNBS), and 
Doris Aguilar, Special Prosecutor for Organized Crime, a unit 
of the Public Ministry.  The Treasury Department advisor from 
the Office of Technical Assistance, who is currently 
providing training on money laundering issues to the GOH, 
also attended the meeting. 
 
¶10.  Mejia began by providing an overview of the anti-money 
laundering law passed in 2002 and the steps taken since the 
law's passage (ref C).  She discussed the establishment of 
the Financial Information Unit (FIU) and the development of a 
cooperative working relationship among this unit, the police 
investigative units responsible for financial crimes, and the 
Public Ministry officials responsible for prosecution of 
those crimes.  Aguilar discussed recent 
Public Ministry successes in prosecuting financial crimes, 
but also focused on the challenges that remain, including a 
lack of resources.  Mejia and Aguilar were very complimentary 
of the assistance that the GOH has received from the USG in 
the last two years, both from the Treasury Department and 
from State INL funds.  Senators Shelby and Cornyn were 
pleased to hear that USG assistance has been useful, and 
pledged their commitment to continued support in the future. 
 
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Media Coverage 
-------------- 
 
¶11. Senators Shelby and Cornyn held a press conference on the 
steps of the Presidential Palace after their meeting with the 
President, which was covered by all major news media. 
Coverage highlighted the Senators, interest in financial 
regulations to prevent money laundering and terrorist 
financing, port security and certification, and economic 
integration and development.  Senator Shelby stated that 
Honduras is strategically situated to help other countries in 
the region grow by developing its own internal economy and 
infrastructure.  Senator Cornyn spoke of the positive 
consequences that CAFTA would have for Honduras and for the 
region.  One news article inaccurately indicated that both 
Senators support the ratification of CAFTA, when in fact only 
Senator Cornyn declared his support for the agreement.  The 
press accurately described the Senators as optimistic about 
Honduras being a future potential recipient of funding from 
the MCA. 
 
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Comment 
------- 
 
¶12.  Codel Shelby was well received by all sectors here, 
including the press, and supported USG interests and Embassy 
efforts on a range of issues.  The Senators' visit was 
especially appreciated by the GOH officials in charge of 
investigation and prosecution of financial crimes, who were 
happy to be able to discuss this important issue with the 
Chairman of the Senate Banking Committee.  The Senators were 
very pleased with their meeting with President Maduro, coming 
away with a strong personal connection and a sympathetic 
understanding of the difficulties that Maduro's 
administration is currently facing. 
 
¶13.  This cable was not cleared by Codel members prior to 
their departure. 
 
Palmer