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These stories were published Thursday, Sept. 11, 2003, in Vol. 3, No. 180
Jo Stuart
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Campaign scandal equated to money laundering
Villalobos group asks U.S. to investigate Pacheco
By the A.M. Costa Rica staff

A group of Villalobos creditors has asked the U.S. government to investigate President Abel Pacheco for possible crimes under the USA Patriot Act.

The group, acting as the Class Action Center, also names 10 other leading Costa Rican politicians who may be guilty of crimes, according to a letter sent to John Ashcroft, U.S. attorney general, and others.

The letter is signed by Jack Caine, the local representative of the center which seeks to engage Costa Rica into binding arbitration to recover money creditors lost when the Villalobos firm folded.

Caine dated his letter Sept. 11. He said in an e-mail seeking support:

"We chose that date because part of the petition requests that the U.S. government investigate President Pacheco and his campaign for activities that may be considered crimes under the U.S. Patriot and money laundering acts. 

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"Financial terrorism is what this administration has been doing to over 6,000 investors and their families since July 2002 and there are some very interesting provisions under these U.S. laws that Mr. Pacheco and his group may not find very amusing."

President Pacheco is at the center of a storm over the way his campaign was financed, and secret accounts and donations are coming to light. The president said that he was not involved in that part of the campaign.

Caine always has been considered level-headed and he is not known for some of the antics and rhetoric in which other frustrated creditors have engaged.

Caine’s goal is to get a number of U.S. citizens who are creditors to sign the petition, and he has set up a Web page where the petition is available for electronic distribution. 

In a summary, Caine specifies these points:

1. Halt of negotiations with Costa Rica by the United States on the topic of a Central American free trade agreement.

2. Review by the United States of existing international agreements with Costa Rica to see if Costa Rica has slipped in extra provisions that were not in the original accord. Caine says Costa Rica has done this at least with other countries.

3  Investigate President Pacheco and his campaign/administration for crimes under the U.S. Patriot and money laundering acts.

4. Name President Pacheco persona non grata until he has apologized to the American people for his comments that they were fools to invest in Costa Rica.

5. Ask the United States to invoke certain legal statutes that would force Costa Rica to negotiate with  Caine’s group.

In addition to Ashcroft, the chief U.S. policeman, Caine directed his letter and petition to Colin Powell, secretary of State; Tom Ridge, secretary of Homeland Security; and U.S. Trade Representative Robert Zoellick.

Says Caine in the letter:

"How can we negotiate with the Costa Rican government when: 

"Their entire top leadership, including the president, vice president, minister of the presidency, and the foreign affairs and commerce ministers, is being investigated for the laundering of illegal campaign donations from dubious foreign sources.

"They give lip service to anti-corruption but are really apart of the corruption.

"They have a history of not living up to the spirit of the agreements in force, let alone the letter of an agreement, and look for unilateral ways of changing the agreement or to even renegotiate before the ink has even dried.

"They refuse to open up their telecommunications market to competition.

"Human rights violations are on the increase."

Caine also contends that Costa Rica does not 

A.M. Costa Rica file photo
President Abel Pacheco

have the infrastructure to protect U.S. investment and lists the many high-interest firms that  have folded over the last year. He estimated the loss to creditors at about $2.5 billion, although he notes he does not have exact figures.

The high-interest firm operated by Luis Enrique and Oswaldo Villalobos closed up last Oct. 14 after a police raid July 4, 2002. Oswaldo Villalobos now is in custody, but Luis Enrique Villalobos is an international fugitive sought on money laundering and fraud allegations. The firm paid creditors about 3 percent per month.

Caine’s organization asserts that Costa Rica was negligent in not supervising the Villalobos operation and, therefore, should enter into arbitration to pay back creditors what they lost.

In the petition, Caine talks about Pacheco’s acceptance of donations from Abdul Waked of Panamá and said that Waked is under investigation by U.S. authorities. The man operates duty-free shops at airports in Latin America. 

Caine also notes that Rolando Araya, Pacheco’s presidential opponent of the Partido Liberación Nacional also took money from Waked.

Caine also names Pacheco’s wife, Leila Rodriguez, as being among those top politicians being investigated here. Also listed were officials of Pacheco’s party, the Partido Unidad Social Cristiana.

Caine also notes the possible relationship among Pacheco, Vinir financial, which cashed some Pacheco campaign checks, and Marc Harris, the former fugitive now facing U.S. indictments for money laundering and tax evasion. Vinicio Esquivel, operator of Vinir S.A., associated with Harris when both were in Managua this year.

"Is there any connection of money laundering between President Pacheco, Vinir Financial, Marc Harris or Abdul Waked as defined by crimes under the U.S. Money Laundering Act," Caine asks in the petition, additionally asking should not the negotiations for a Central American free trade treaty be stopped until such questions can be answered?

Caine also said he wants to know if any money from the Pacheco campaign is hidden in U.S. bank accounts. that would bring the situation under U.S. jurisdiction.

Caine documents his allegation of human rights abuses by a private defamation case brought by a former Costa Rican diplomat against a La Nación reporter and also the unsolved murder of radio host Parmenio Medina. 

And he also discusses at length the recent arrest of Dr. Matt Shirzad, a chiropractor who has been a gadfly to investigators and judges in the Villalobos case. Shirzad was arrested Aug. 22 on allegations that he threatened officials.  Caine stresses that the chiropractor was handcuffed with his hands behind his back despite telling officers that he has a recent elbow operation.

Caine also suggests that prosecutors either killed or did not give adequate care to Roy Taylor, the operator of The Vault high-interest investment firm who, police said, shot himself in his company headquarters after being placed under arrest.

The petition has 67 footnotes and an index of individual and terms.

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Bush promises that U.S. will never forget Sept. 11
By the A.M. Costa Rica wire services

WASHINGTON, D.C. — President Bush leads the world today in solemn ceremonies marking the second anniversary of the Sept. 11, 2001, terrorist attacks on the United States. 

It will be a day for remembering the victims, and the horrific events of a September morning that dawned clear and bright.

Four hijacked planes were turned into missiles on that day, slamming into the two tallest buildings in New York City, the Pentagon, and a Pennsylvania field.

About 3,000 people died. And etched forever in the nation's conscience is the sight of crumbling buildings and twisted metal, the sound of screaming men, women and children, and the stench of smoldering ash and death. 

"The memories of Sept. 11 will never leave us. We will not forget the burning towers and the last phone calls and the smoke over Arlington," said Bush. 

On the eve of the second anniversary of the attacks, President Bush talked about the meaning of that day that changed America. He spoke of families left behind, valiant rescue teams, and terrorists with no regard for innocent life. "And we will never forget the servants of evil who plotted the attack," he said. "And we will never forget those who rejoiced at our grief and our mourning."

The president spoke Wednesday at an FBI facility in Quantico, Virginia, a short helicopter ride from the White House. He hosted a screening of a documentary on the downed World Trade Center 

Service here is at 9:30 a.m.

By the A.M. Costa Rica staff

The second anniversary of the terrorist attack in New York and Washington will be marked here today at 9:30 a.m. with a memorial service.

The ceremony will be at the Parque Once de Setiembre, which is near the Costa Rican-
American Chamber of Commerce Building and the Centro Cultural Costarricense-
Norteamericano in Sabana Norte.

towers after his return. And he plans to stay in Washington throughout Thursday's commemorative events, preferring instead for the focus to be on the victims and their families.

Bush will attend a prayer service, and lead a moment of silence at the White House at 8:46 a.m., the exact time when the first hijacked plane hit the World Trade Center north tower. In the afternoon, he will travel to a military hospital in Washington for private visits with soldiers wounded in Iraq and Afghanistan.

Secretary of Defense Donald Rumsfeld will preside over a wreath laying and other commemorative events at Arlington National Cemetery and the Pentagon. Vice President Dick Cheney will represent the White House in New York, but will not attend a ceremony at the site of the downed twin towers at the request of city officials, who said the extra security would inconvenience the victim's families. 

Sanctions handed out
for human trafficking

By the A.M. Costa Rica wire services

WASHINGTON, D.C. — The United States Wednesday said it will impose sanctions on Burma, North Korea and Cuba for failing to do enough to combat human trafficking. Sudan and Liberia were also cited for insufficient efforts to deal with the problem but penalties against them were waived. 

The sanctions will have little or no practical effect on Burma, North Korea and Cuba, which already face a variety of penalties from the United States. 

And officials here instead highlighted what they say have been "significant steps" by 10 other countries to fight human trafficking and avoid sanctions, after having been listed as deficient by the State Department earlier this year. 

In its annual report on trafficking in persons issued in June, the State Department said 15 countries had made no significant efforts to combat the problem and were to face U.S. penalties starting Oct. 1. 

But in a statement Wednesday, the White House said that Secretary of State Colin Powell has decided that ten of them Belize, Bosnia and Herzegovina, the Dominican Republic, Georgia, Greece, Haiti, Kazakhstan, Suriname, Turkey and Uzbekistan had taken remedial measures and would avoid sanctions. 

State Department spokesman Richard Boucher said that left five countries in the so-called "third tier" of deficient performers under the U.S. trafficking Victims Protection Act approved by Congress in 2000. 

"The president, acting on the recommendations of the secretary, determined that sanctions will be imposed on Burma, Cuba and North Korea," he said. "While Liberia and Sudan are also subject to sanctions, the President determined that certain multi-lateral assistance for these two countries would promote the purposes of the act or is otherwise in our national interests. So he's made the appropriate determinations so some multilateral assistance can continue." 

Boucher said humanitarian aid to the two African countries would continue, as would aid that helps support a settlement of the Sudanese civil war. 

Under the act of Congress, the administration is required to report each year on human trafficking world-wide and to place individual countries in one of three categories depending on their level of effort in dealing with the problem. 

This was the first year that sanctions were imposed against the "third-tier" countries, requiring an end to most forms of non-humanitarian U.S. aid to the violators. 

Powell says hemisphere
is most vital to U.S.

Special to A.M. Costa Rica

WASHINGTON, D.C. — The United States must support efforts throughout the Western Hemisphere to bolster democracy so that the region's democratic governments can meet the expectations of their people, says Secretary of State Colin Powell.

In remarks at the swearing-in ceremony Tuesday for Roger Noriega, assistant secretary of State for Western Hemisphere affairs Powell emphasized the importance of the hemisphere to the United States. Noriega was officially sworn in July 31, but Powell's comments were at a ceremony that was held to salute Noriega's new position.

"There is no region on earth that is more important to the American people than the Western Hemisphere," Powell said. "The Western Hemisphere is the key to our democracy, our security and our prosperity."

Powell stressed that "all of our aspirations rest on the security of our hemisphere," thus placing Noriega on the front lines of the global war on terrorism.

In addition to leading efforts to curb terrorism and other criminal activities in the Americas, Powell indicated that Noriega would work to promote the prosperity needed to sustain democracy by advocating for trade, investment and sound fiscal reforms in the region.

Powell said the Free Trade Area of the Americas and other trade agreements will bolster democracy and political stability in the region, but warned that more must be done to shore up support for democracy.

Powell said that men and women in the Americas want to see results of democracy in their pocketbooks and in their ability to build a better future for their children. According to Powell, the challenge facing the region's governments is clear. "They must meet their people's just expectations for a better future. That is what democracy promised," he said.

Mining firm gets
financial boost

By the A.M. Costa Rica staff

Vannessa Ventures Ltd. reports that it has negotiated a $5.4 million placement of a stock deal that will be used, in part, for its open pit mine in northern Costa Rica.

The company said it has sold 13.5 million units in a private placement. Each unit includes one share of common stock and a warrant that entitles the holder to purchase an additional share for 45 cents. Each unit was sold for 40 cents.

In addition to Costa Rica, the company said the money would be used for exploration in Guyana and Venezuela as well as for working capital.

The company’s concession in northern Costa Rica has been shut down by the Pacheco administration and the company is fighting the government in court.

The Candian company’s Costa Rica subsidiary, Infinito S.A., has plans to leach gold at the Crucitas project near the San Juan River. The firm already has at least $28 million in the project. Environmentalists object to the use of cyanide to leach the precious metal.

Lightning strike
kills Heredia girl, 9

By the A.M. Costa Rica staff

A 9-year-old girl died Wednesday when the tree under which she was standing with friends suffered a lightning strike.

The death took place in Los Lagos de Heredia.  The girl was identified as Ana Brenes. Three playmates, ages 2 to 7, suffered injuries. All were playing in a vacant lot when the lightning struck a nearby tree.


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What others are doing about the Villalobos case
By the A.M. Costa Rica staff

The bulk of those who gave money to the Villalobos brothers seem to be either playing a waiting game or have just written off the loss in the face of a long criminal investigation here. But  there are at least seven distinct  ways other creditors are handling their problem.

1. Some creditors have hired investigators to seek out Luis Enrique Villalobos Camacho on the assumption that, once confronted, the fugitive financier will pay back money that he owes. Curiously, few people seem to blame Oswaldo Villalobos, the other brother, who is in custody here and described by the Judicial Investigating Organization as also a key figure in the operation.

2. Others, number unknown, have contracted with Jim Peck, a former investigator from Arizona and commission salesman for The Vault. Peck, a Villalobos creditor himself, said June 12 that he had set up an "Operation Recovery Task Force" to find Luis Enrique Villalobos and force him to pay back money owed to those who join the task force. He predicted quick success, but nothing has been heard from him since and he has not responded to e-mail messages.

3. About 600 creditors have hired lawyers and filed complaints with judicial officials here. These creditors seem to be content to await the outcome of the Villalobos investigation. Lawyers say a few more creditors join this group each month.

4. Enough creditors joined United Concerned Citizens and Residents of Costa Rica to come up with $100,000 to hire José Miguel Villalobos Umaña, a lawyer, last February. José Villalobos spoke of mysterious forces behind the July 4, 2002, raid on the Villalobos operation and promised to expose them. Lately he has been showing up on late night Costa Rican talk television. The stated purpose is to frustrate the criminal investigation so Luis Enrique Villalobos can return home and pay off his creditors. José Villalobos seems to be at least working on a friendly basis with lawyers for Oswaldo Villalobos. Part of the plan seems to be in bringing pressure on President Abel Pacheco.

5. Other creditors are kicking in $500 apiece to join the Class Action Center and its efforts to engage 

the government of Costa Rica in international arbitration. Jack Caine, the center’s representative here, says that Costa Rica entered into international treaties that forces it to accept arbitration of losses suffered by investors of a number of other countries, including Canada and the United States. He claims Costa Rica was negligent in allowing the Villalobos operation to continue. Frequently Caine makes it clear that his approach does not depend on any guilt or innocence of the Villalobos brothers or any resolution of the investigation.

6. Some investors are petitioning the United States to apply pressure to Costa Rica under a variety of international agreements. These investors argue that the money frozen by investigators and judges is not Villalobos money but money held by the Villalobos for them. They rely on some sections of U.S. law designed to punish Cuba for confiscating U.S. property in the 1950s.

7. A few creditors known to this newspaper have filed criminal complaints in the United States against the Villalobos operation reasoning that Luis Enrique Villalobos and his agents accepted money from U.S. citizens at U.S. banks and therefore committed a host of violations of U.S. securities law.

Some creditors are involved in two or more of these strategies.

No creditor seems to be following another obvious route: trying to find out exactly what it was that the Villalobos Brothers did with the money to generate a 3 percent a month return to creditors. Some have insisted that Luis Enrique Villalobos was an international financial genius involved in factoring corporate short-term debt.

Typically such factoring operations charge from 1 to 3 percent a month in the United States and leave a broad trail with court actions against slow payers and the filing of security agreements to insure the loans.

No trace of such a factoring operation has been found. But neither has evidence been found linking the Villalobos brothers to a number of money laundering and drug empires that have been brought down elsewhere in the world over the last 11 months.

General Hill says Colombia is at crucial juncture
Special to A.M. Costa Rica

WASHINGTON, D.C. — Colombia is at a critical juncture in its efforts against the nation's illegal armed groups and the United States must not falter in its support of these efforts, says Gen. James Hill, commander of U.S. Southern Command.

In remarks Wednesday to the Center for Strategic and International Studies, Hill emphasized the importance of Colombia and Latin America to the United States — strategically, economically and culturally.

He said that the primary threat in Latin America continues to come from Colombia's three illegal armed groups: the Revolutionary Armed Forces of Colombia (known by its Spanish acronym FARC), the National Liberation Army (ELN), and the United Self-Defense Forces (AUC). Hill noted that all these groups are on the State Department's list of foreign terrorist organizations, and argued that as the United States pursues a global war on terrorism, it must also stay the course in the Western Hemisphere, particularly in Colombia.

"We must not falter at this critical juncture, or the problem will surely grow beyond Colombia and further undermine a fragile region," he said. "With our country heavily engaged in troubled spots of the world, we can ill afford failed states populated by narco-terrorists and international terrorists just to our south."

Hill, who has traveled to Colombia 16 times in the past year, identified the nation as a "test bed" of U.S. resolve and expressed guarded optimism about Colombian President Alvaro Uribe's efforts to establish security and stability.

"President Uribe is a man of vision, principle and substance," the general said. "He is inculcating his government and his armed forces with an aggressive spirit. Almost single-handedly, he is willing the Colombian people into believing they can win the war against the narco-terrorists and end the violence."

Hill cautioned that despite the drive and progress of the Uribe administration, more time will be needed to accomplish the enormous task ahead. In the meantime, he urged Americans to "exercise patience and maintain steadfast support."

U.S. support is not operational, Hill noted, but instead includes training assistance so that Colombians can address their terrorist threat themselves. "We have a vested interest in the outcome," he explained, "but this is a Colombian fight."

To better prepare Colombia for this fight, Uribe has increased the size and effectiveness of the military, raised taxes, and implemented reforms that have generated momentum against the criminals.

"President Uribe's determination and vision have galvanized the will of the Colombian people and the armed forces to defeat the narco-terrorists and to establish security and stability," Hill said. "There is a sense of momentum, commitment and hope as the Colombian people struggle to save their country."

As U.S. training and support begin to yield results in Colombia, Hill implored U.S. officials to stay the course. "President Uribe won't let the Colombian people or his military lose their resolve," he said. "We must not lose ours."

Cancun World Trade confab has feeling of necessity
By the A.M. Costa Rica wires services

CANCUN, México — During the five-day meeting, along the white sand beaches of this popular Mexican resort, representatives from nations rich and poor will seek compromise not so much to reach a definite agreement, but to keep the process of seeking an agreement alive. 

This meeting comes nearly two years after the round of discussions that began at Doha, Qatar, with an eye towards forging a comprehensive, multilateral agreement by the end of 2004. 

But participating nations have failed to meet deadlines, along the way, and remain deeply divided over such issues as agricultural subsidies and reduction of tariffs. There has been a stalemate over the agriculture question, because poor nations say they cannot compete with farmers in rich nations, who receive billions of dollars in subsidies. 

At the same time, high tariffs in Japan, Europe and the United States keep out many goods from developing nations. Economists note, poor nations also limit their own access to food through high tariffs and limit trade with each other, through various restrictions. 

The World Bank estimates a significant reduction in trade barriers, worldwide, would increase global income by as much as $520 billion a year, with over half of these gains going to poor nations. But a failure to make progress here in Cancun could derail the whole globalization process. 

Secretary-General Supachai Panitchpakdi of the World Trade Organization says, if the Cancun summit fails, it will take a heavy toll on the world economy and result in job losses worldwide. 

A glimmer of hope was provided, in recent days, with an agreement to allow the sale of generic drugs in poor nations beset by health crises, such as AIDS. In addition, the United States and the European Union agreed to present a joint proposal on opening their agricultural markets. 

A few kilometers away from the convention center where this event is being held, tens of thousands of anti-globalization protesters have gathered.

Groups ranging from European and American labor unions to environmental groups and Mexican peasant organizations have come to condemn the World Trade Organization and free trade. 

But the meetings are being held on a spit of land separated from the mainland, except for two narrow causeways that are being blocked by police during the duration of the event. Nonetheless some groups have planned marches and the potential for clashes with police remains a concern.

This meeting is considered crucial to the future of the World Trade Organization because so many thorny issues have been left unresolved in previous meetings. 

With a self-imposed deadline of Jan. 1, 2005, the officials gathered here realize that they must do something or risk a collapse in the process. In his opening remarks, Secretary-General Panitchpakdi put it to them squarely. "We should learn from the past and face the reality that we cannot keep postponing decisions even if they are sometimes difficult," he said. "There comes a time when rhetoric has to be backed by action."

 There was action of a different sort in the middle of the opening address. About two dozen representatives of non-governmental organizations stood in silent protest holding signs condemning the World Trade organization as undemocratic and anti-development. The protesters chanted as they voluntarily left the hall.

The demonstration resulted in no disruption of the opening ceremony, but in his address Mexican President Vicente Fox said that those outside the negotiating process who have a different point of view should be given some consideration.

Fox said the World Trade Organization has failed so far in its promise to the world's poorest people. "It is imperative to work out a global strategy that includes competition and efficiency and equality of opportunity," he said.

 Over the next five days the 146 ministers gathered here in Cancun will be trying to at least come to partial agreement on such issues as agriculture, trade barriers, international investment rules and other vexing issues.

Bush aides say end of Cuban embargo is unwise
Special to A.M. Costa Rica

WASHINGTON, D.C. —  The Bush administration has reiterated its opposition to any lifting of the four-decade-old U.S. trade embargo on Cuba.

In decrying a Sept. 9 vote by the U.S. House of Representatives to ease the embargo, State Department spokesman Richard Boucher said that such action, if enacted into law, would provide "material benefit to a regime which only six months ago undertook the most significant act of political repression in the Americas in a decade." Thus, lifting the embargo "strikes us as deeply unwise," Boucher said Wednesday.

Boucher was referring to Cuban dictator Fidel Castro's crackdown on dissidents earlier in 2003, in which more than 75 people were jailed. Castro's crackdown received world-wide condemnation.

White House Press Secretary Scott McClellan also said Wednesday that President Bush's position on keeping the embargo in place "remains unchanged." Bush is "strongly committed" to the 

embargo on Cuba, until Cuba allows freedom of elections and speech, and releases all political prisoners, said McClellan.

Despite Cuba's crackdown on dissidents, House lawmakers approved three amendments to ease the U.S. embargo on Cuba. 

One vote was to withhold funding to enforce a U.S. travel ban on Cuba, another to relax restrictions on remittances that Cubans in the United States send to their relatives back home, while a third vote would prevent the Bush administration from restricting "people-to-people" travel exchanges to the Caribbean island nation.

A similar vote on the measures may come up in the U.S. Senate. But Bush has promised to veto any bill that eases the embargo.

The White House Office of Management and Budget  said in a "Statement of Administration Policy" Sept. 4 that "it is essential to maintain sanctions and travel restrictions to deny economic resources to the brutal Castro regime."

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