Pubdate: Thu, 03 Aug 2006
Source: Washington Post (DC)
Page: A16
Copyright: 2006 The Washington Post Company
Contact:  http://www.washingtonpost.com/
Details: http://www.mapinc.org/media/491
Author: Monte Reel, Washington Post Foreign Service
Bookmark: http://www.mapinc.org/topics/smugglers
Bookmark: http://www.mapinc.org/pot.htm (Marijuana)

PARAGUAYAN SMUGGLING CROSSROADS SCRUTINIZED

Tri-Border Region Seen As Hub for Aid to Radical Groups

CIUDAD DEL ESTE, Paraguay -- For years, this region -- where the 
boundaries of Paraguay, Brazil and Argentina converge -- has been 
considered a teeming stew of globalization's more unseemly 
byproducts. Much of the trade that crosses the borders, officials 
say, is illegitimate. The region is full of smuggled goods and laundered money.

Now U.S. officials are launching a broad series of new measures aimed 
at uncovering money-laundering rings that they believe are funding 
Hezbollah and other radical groups.

"I am highly confident that's the case," said Daniel Glaser, deputy 
assistant treasury secretary for terrorist financing and financial 
crimes. "We believe there is evidence."

The U.S. government's efforts to uncover money laundering by groups 
linked to terrorism depends largely on the work of local officials. 
But a scene stumbled upon in the darkness last week hinted at some of 
the challenges that U.S. and local officials face.

On a bridge connecting Paraguay and Brazil, Paraguayan border 
officials were sitting at tables in the dark, using flashlights to 
check the passports of a tiny fraction of those who crossed, perhaps 
one in 20 drivers, according to an informal count.

At the same time, a short distance upstream, two small boats slipped 
across the water. The boats carried nearly 1,400 pounds of marijuana, 
bound tightly in bricks of packing tape and stuffed into cardboard 
boxes. The only reason Paraguayan federal agent Maria Adelaida 
Vasquez found out about the marijuana was that two officers from the 
federal prosecutors' office coincidentally were in the neighborhood 
where the boats landed.

"We're not in a position to wage a battle against this kind of 
enterprise," said Vasquez, who said money laundering and other 
illegal financial transactions are increasingly intertwined with the 
narcotics trade. "The criminals are on the vanguard of technology, 
and we don't even have access to the Internet in our offices. If we 
have cellphones, it's because we buy them with our own money."

The 20 Paraguayan prosecutors in the region have two trucks available 
to use. Vasquez just happened to have access to one the other day, 
and she was able to arrest eight people involved in the transit of 
the marijuana. Catching them was pure luck, she suggested.

U.S. Treasury officials have held workshops in the region to 
encourage more banking sector involvement in regional efforts against 
money laundering. The Department of Homeland Security's immigration 
office last week sent a team to Argentina to implement a 
"trade-transparency unit" -- a team that will collect and analyze 
trade data and search for irregularities that could suggest money 
laundering -- and will equip a similar unit in Paraguay in September.

Meanwhile, the State Department this year helped draft stricter 
anti-money-laundering legislation that was passed by Argentina's 
congress. The U.S. Embassy's legal adviser in Asuncion, Paraguay has 
held training courses during the past year for investigators and 
prosecutors in charge of combating possible terrorism links, 
according to the Justice Department.

Glaser said it is the links to Hezbollah and other radical groups 
that "concern us most."

U.S. officials cite a smuggling case in March in which 19 people were 
charged in Detroit for allegedly operating an international ring that 
illegally moved cigarettes through Paraguay and Brazil. The 
indictment alleged that profits were funneled to Hezbollah.

Additionally, in 2004 U.S. officials designated a businessman 
operating in Ciudad del Este a terrorist, saying he was a Hezbollah 
treasurer. The man, Assad Ahmad Barakat, operated a successful 
import-export business as a front for Hezbollah cells, the Treasury 
Department alleged.

Despite those charges, local prosecutors said that compiling evidence 
for such cases continues to be exceedingly difficult because they 
can't get close to the large Arab immigrant community that resides in 
the tri-border area, a group that numbers about 30,000 and that U.S. 
officials believe includes a minority of merchants who are financing 
groups involved with terrorism.

Neither local police nor prosecutors have a single Arabic speaker or 
translator, officials here said, fueling a climate rich in suspicion 
but lacking in evidence.

"They speak only their own language and they don't let others into 
that world," said Vasquez. "We suspect they are getting more involved 
in narco-trafficking, but it's difficult to really know because they 
are so closed off from us."

Samir Jebai, a Lebanese immigrant who is one of this city's most 
prominent businessmen, said that description doesn't fit him.

He is thoroughly connected as head of a prominent business 
association and has contacts in the highest levels of Paraguay's 
government. In addition, according to a Congressional Research 
Service report, his brother-in-law was among those arrested as part 
of Barakat's ring.

Jebai said that some years ago, when he decided it was time to help 
his adopted country, he called then-Education Minister Nicanor Duarte 
- -- now Paraguay's president -- and told him he was going to build 
schools for the poor.

Jebai, who deals in watches, said he has been falsely labeled a 
terrorist in the local media, which he considers a libelous charge 
circulated by his commercial competitors. The suspicions of money 
laundering, he said, are exaggerated, and he offered an alternative 
explanation for the undocumented transfer of large amounts of cash: 
tax evasion.

In ordering a shipment of $200,000 worth of goods, he said, an 
importer might create a counterfeit invoice valuing the shipment at 
$50,000 to pay fewer duties. Then when the supplier was paid, 
investigators would find that $150,000 remained unaccounted for. It 
was a widespread practice until about six months ago, he said, before 
officials began more extensive checks of importers' invoices.

"Before, there was a lot more bribery with officials to avoid paying 
taxes," said Jebai, who also said he has seen a massive drop-off in 
counterfeit goods in recent years. "And the counterfeit products have 
disappeared 90 percent. Maybe 95 percent."

A trip to one of two warehouses where agents collect three to four 
tons of confiscated goods from the markets each week offers an 
instant corrective to that notion. The cardboard boxes are bursting 
open with pirated CDs and DVDs, PlayStation games, shoes, Hello Kitty 
dolls and watches. The air smells like tobacco, from thousands of 
cartons of phony Marlboros.

To get to his waiting truck from the warehouse last week, federal 
prosecutor Jorge Moura had to climb over disorderly boxes of CDs 
cluttering a doorway. On the road outside, he spotted a 
Mercedes-Benz, which he said reminded him of one of the biggest 
obstacles standing in the way of the current crackdown on 
trade-related crimes here.

"I can't afford a Mercedes on my income, because it's only about $700 
a month," he said, nodding toward the car. "But there are a lot of 
people around here who can. In every sector. They are getting a lot 
of extra income." 
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MAP posted-by: Richard Lake