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Otto Reich and the Honduran Coup D’Etat: The Provocateur, his Protege, and the Toppling of a President


The very same day that the coup d’etat in Honduras began, in an emergency session of the Organization of American States (OAS) in Washington D.C., Roy Chaderton, the Venezuelan ambassador to the OAS, spoke with a simmering fury as he looked directly at Hector Morales, the U.S. Ambassador to the OAS.

“There’s a person who’s been very important within U.S. diplomacy, one who has re-connected with old friends and colleagues and helped encourage the coup perpetrators,” he said.

“The gentleman’s name is Otto Reich, former Assistant Secretary of State for Western Hemisphere Affairs during the government of George [W.] Bush. We in Venezuela have suffered this man, as the U.S. Ambassador in Venezuela, as an interventionist, we suffered him later in his position as Assistant Secretary of State…we had the First Reich, later, the Second Reich, now unfortunately we’re facing the Third Reich, moving within the Latin American ambit through an NGO [non-governmental organization], to fan the flames of the coup.”

Following Chaderton’s furious denunciation, Reich penned a strange non mea-culpa opinion piece which the Miami Herald obligingly printed, complete with Reich’s deliberate misspellings of Chaderton’s name.  He said that he was not the coup’s “architect,” which is quite some distance from a total denial.

arcadiaShortly thereafter, news reports began to circulate about an unusual guest making the rounds in Tegucigalpa.  He had checked into the Plaza Libertador Hotel under the pseudonym Armando Valladares, and was seen making frequent visits to the Presidential Palace and the National Congress. Armando Valladares was the Cuban prisoner who faked paralysis to gain worldwide support for his release, and went on to become chairman of a CIA-linked non-profit front group in New York: the Human Rights Foundation, until he resigned this July, angry that the Foundation had not supported the coup.  The man traveling under his name was actually Robert Carmona-Borjas, Reich’s protégé and the notorious figurehead for yet another “non-profit” front group: the Arcadia Foundation.  This was the NGO Chaderton was talking about.  Until now, a detailed summary of Arcadia’s activities in Honduras has not been reported outside Latin America.

The story that emerged outside Honduras about Zelaya’s insistence on holding a public opinion poll being the trigger for the coup is only a partial one, because the effort to undermine Zelaya was proceeding on several tracks in the years leading up to the coup.  A whispering campaign about corruption was one of them. Juiced with Reich’s contacts at the highest levels of the U.S. government, the Arcadia Foundation coordinated a farcically one-sided media campaign against the Honduran state telephone company, Hondutel, in order to create the public perception, similar to the accusations made some years ago against Haiti’s deposed president, Jean Bertrand Aristide, that Zelaya’s government was hopelessly corrupt from the top on down, and that Zelaya was unfit for the presidency.

Reich’s history in U.S./Latin American relations is a repellent one.  He has worked tirelessly in support of the U.S. economic blockade of Cuba, helped the anti-Cuban terrorist Orlando Bosch find shelter in the United States, and produced domestic anti-Sandinista propaganda for the Reagan White House, reichthrough the State Department Office of Public Diplomacy for Latin America.  In that post, he worked with a non-profit front group called Citizens for America to spread that propaganda throughout the U.S. press.  He came to his final State Department post under such a cloud of controversy due to these activities and so many others just like them, that Bush II was forced to install him through a one-year recess appointment in 2001, in order to avoid a Congressional confirmation process that was likely to fail, not to mention dredge up unpleasant reminders.  Once installed, Reich busied himself supporting the unsuccessful 2002 coup against Hugo Chávez in Venezuela and the successful 2004 coup against Jean Bertrand Aristide in Haiti.

Carmona-Borjas is a Venezuelan attorney who drafted the Carmona decree, named not for himself but for Pedro Carmona, to whom he bears no evident relation.  Pedro Carmona seized power in Venezuela during the two days of the unsuccessful 2002 coup d’etat against Hugo Chávez. The Carmona decree was the document that dissolved the Constitution,rcb2 the Congress and all other democratic institutions in Venezuela during those two days.  Following his involvement in the failed coup, Carmona-Borjas sought and easily received political asylum in the United States.

Just as there were remarkable similarities in the kidnapping of President Aristide in 2004 in Haiti, and President Zelaya in Honduras, both being put on planes with the shades drawn and flown to unannounced destinations, there were similarities in the use of telecom as a propaganda tool to turn public opinion against them and set the groundwork for them to be prematurely removed from office, and once out, kept out.

A Brief History of Washington’s Relationship to Telecom

From a neoliberal political point of view there are two advantages to a propaganda offensive centered upon telecom corruption.  The first is obvious. If telecom corruption can be tied directly to a leader who is not following Washington’s agenda, it promotes public support for the leader’s removal.  The second is a little less obvious, but equally as important.  It promotes the argument that telecom companies under state control really ought not to be, especially in underdeveloped countries, and would be better off privatized.

To make that argument, one must of course ignore the abundant evidence of telecom corruption in the United States, where men like Bernie Ebbers and Joseph Nacchio, who became telecom kingpins thanks to privatization (called “deregulation” in the U.S.) are serving federal prison terms for accounting fraud and insider trading.  The fact is that telecom, as an essential service in the modern world, has always been a kind of money printing press, and the fight over state control vs. private control is all about who gets to control the switch, and what will be done with the profits.

ITT, which owned the Cuban phone company at the time of the revolution in 1959, was the first foreign owned property to be nationalized in Cuba, in 1961.  In 1973, ITT was so fearful of repeating the experience in Chile that John McCone, a board member and former allende2CIA man promised Henry Kissinger a million dollars to prevent Salvador Allende’s election.  According to the U.S. Ambassador to Chile at the time, Edward Korry, ITT did pay $500,000 to a member of the compensation committee for expropriated properties in Chile, until Allende found out about the payments and nixed the compensation entirely.

In Venezuela in 2007, privatization was also reversed, and Verizon was paid $572 million for its share in the Venezuelan phone company, Cantv. This sent chills down the spine of every U.S. politician and telecom executive or consultant (like Reich) invested in expanding telecom privatization extra-territorially.  And the chill was bipartisan.  Democrats as well as Republicans had benefited equally from global privatization of the telecom mint.

As someone who counted AT&T and Bell Atlantic (Verizon) among his former (acknowledged) clients and a proven antipathy for leftist governments, Reich had plenty of motive.  A front group disguised as a foundation would provide the opportunity.

A Brief History of Washington Front Groups

Political front groups are a relatively recent Washington phenomenon, at least on an overt basis.  The CIA of course, has been in the front group business since its inception.  But during the Reagan years, public front groups with pleasant names and non-profit status began to flourish.  The National Endowment for Democracy (NED), is the largest federally funded non-profit front group, set up to funnel enormous amounts of money to the International Republican Institute (IRI) and the National Democratic Institute (NDI).  Allan Weinstein, one of the NED’s founders, said “A lot of what we [NED] do today was done covertly 25 years ago by the CIA.”  The NED was formed in 1983, the same year as the corporate funded non-profit Citizens For America, which received contributions from Northrup, Shell Oil, Chase Manhattan and a variety of right-wing tycoons to drive its anti-communist agenda.

The IRI and NDI provide money and resources to foreign groups working in support of U.S. foreign policy, which basically means that in non-capitalist countries or those with non-capitalist leanings, they fund whoever is in opposition.  The corporate supported non-profit front group on the other hand usually has a domestic agenda and is above all, a propaganda tool, used to facilitate favorable press coverage that in turn drives policy.  Relatively unencumbered by burdensome government reporting requirements, they are quite a bit more agile and can be comparatively opaque, both useful qualities in the propaganda business.  In Latin America, where the press is highly concentrated in the hands of a small oligarchy, the front group provides a unique opportunity.  When an oligarchy is eager to topple a leftist president, a front group can be a third-party source of useful allegations which can be printed without question, as well as a distanced, albeit fake, source of comment on reaction to those allegations, adding fuel to the fire.  It’s a kind of self-licking ice-cream cone, and it is exactly the role Arcadia has played in Honduras.

The one thing this type of front group must be certain to do is file for non-profit status in the U.S.  They therefore must make at least a passing effort to put together a plausible board of directors and a credible mission statement, and comply with tax and other public disclosure requirements.  The Arcadia Foundation has the mission statement – a rambling treatise on democracy and civil society, but little else.  Carmona-Borjas shares billing at the group with Betty Bigombe, a Ugandan World Bank consultant who appears to have lent Arcadia nothing beyond her name.  Although Carmona-Borjas has insisted the group’s activities are entirely legal, he has concealed the documents he is required to make available to any member of the public upon request and is reportedly hostile to those who ask to see them.

Both Reich and Carmona-Borjas have denied Reich’s connection to the group, but a legal connection would have been both unnecessary and inconvenient.  Reich could have worked the same way with Arcadia as he did with “Citizens For America,” without being legally tied to the group, and based on the available evidence it seems likely that this is exactly what he did.

The Launch

In the fall of 2007, the El Universal newspaper in Mexico printed a story based on a report it had received from the Arcadia Foundation. Interestingly, the report itself is not available at the Arcadia website, but there are clues to its contents and objectives in the newspaper stories which followed.

The report evidently contained allegations about corruption in the Honduran phone company, peppered with innuendo, a Reich trademark. It claimed that income to Honduras’s phone company, Hondutel, had declined by nearly 50% between 2005 and 2006.  Out of the dozens, if not hundreds of companies involved in Honduran telecom, Arcadia exclusively targeted one: Cable Color, a company owned by the wealthy and influential Honduran family, the Rosenthals, for diverting calls away from Hondutel, thereby depriving the phone company of revenue.

It was an old horse that had seen service once before, in Haiti, against Aristide.

Interconnection and the Haiti Case

All international telecom traffic is subject to interconnection fees with the phone company in the country where the call is terminated.  These interconnection fees are split 50/50 between the company sending the call and the company receiving the call so that they are only paid if there is an excess of traffic in one direction or another.

With underdeveloped countries such as Honduras or Haiti, there is an overwhelming excess of one-way traffic as a result of emigrants to the U.S. or tcm4other Western countries calling their families back home.  It is precisely in these extremely poor countries, where the telephone company has not been privatized, that interconnection settlements represent a vital source of revenue to the state.  Until recently, the Federal Communications Commission (FCC) intervened on behalf of the multiple carriers who’d emerged as a result of privatization (deregulation) in the United States, to negotiate interconnection rates with other countries that would apply equally to all carriers.  In 2004 the FCC’s intervention began to be phased out, and since 2006 it has vanished entirely except for a short list of countries that does not include Haiti or Honduras.

During the fixed-rate years, some U.S. companies still tried to get a better deal regardless, and while state owned companies such as Haiti’s Teleco and Honduras’s Hondutel were free to offer lower interconnection rates than those set by the FCC, they were supposed to be offering them equally to all carriers, not just a privileged few, so as not to make a mockery of the FCC’s system. If payments from the U.S. carrier were involved in securing the discount it would also be a violation of the U.S. Foreign Corrupt Practices Act (FCPA).

This appears to be what occurred with IDT, a New Jersey telecom company that negotiated a special rate to interconnect with Haiti’s Teleco.  The FCC’s rate at the time was supposed to be 23 cents per minute for connections to Haiti, but IDT negotiated and received a contract for 9 cents a minute.  When a former IDT employee claimed that part of that fee was a kickback to Aristide, the anti-Aristide lobby went crazy.

The Wall Street Journal’s Mary Anastasia O’Grady, followed by Lucy Komisar writing for another non-profit front group sponsored by a Haitian oligarch, the Haiti Democracy Project, claimed that jbaAristide knew of and personally benefited from the kickback.  Before, corruption allegations against Aristide had tended to be confined to equally unproven insinuations about profiting from drug trafficking, such as those Reich provided to O’Grady when he sat down with her for an interview in 2002.

None of the defamatory allegations about Aristide’s involvement in any of the schemes could be proven, and a much publicized court case brought against Aristide by the Haitian (U.S.) puppet government was quietly shelved.  But proving the case was secondary to floating the allegations, both as a propaganda tactic against Aristide, and political intimidation of his supporters in the U.S. Congress.

Grey Traffic

In Honduras, Arcadia had no “whistleblower” to rely on, like Michael Jewett, the ex-IDT employee who originally smeared Aristide and whose wrongful dismissal case provided much of the fuel for O’Grady’s and Komisar’s strident accusations.  Carmona-Borjas would have to be a little more creative.  The report he fed El Universal claimed that the Rosenthal’s company, Cable Color, had diverted the incoming international calls and turned them into “grey traffic.”

Grey traffic means that a call is being diverted to an Internet (IP) network rather than a switched one. Voice over IP (VoIP) which is essentially telecom over a broadband connection works this way – Skype and Vonage are both well-known varieties of this kind of service.

Theoretically, an internet service provider (ISP) could purchase lines from a regular phone company like Hondutel, but then use those lines to sell cheap international phone calls to its own customers, providing international phone service at a vastly discounted rate.  This is said to be an exploding practice in Africa.  The only problem with it is that it is usually illegal for an ISP to offer such a service – when phone calls are handled this way, the state or incumbent telephone company, quite naturally, prefers to make an interconnection agreement with whoever is buying the lines for voice purposes, so as not to completely lose out on the revenue.

Carmona-Borjas wasn’t claiming that Cable Color was ending up with the termination fees, as this would have been impossible.  He just mentioned Hondutel’s traffic decline, pointed to Cable Color, said “grey traffic” and left the rest to the reader’s imagination. And he threw in a few extra details.

yr“According to the report,” said El Universal, “the Cable Color business is owned by the prominent Rosenthal family, with strong political and financial interests, and according to the document, is presently headed by Jaime Rosenthal, proprietor of the El Tiempo newpaper, the television Channel 11, and father of Yani Rosenthal, a presidential minister and someone who is considered in Honduras to be a potential presidential candidate.”

The report was likely fed first to the Mexican paper rather than the Honduran papers, because with the exception of El Tiempo, all are owned by Zelaya’s bitter opponents, the Canahuati Larach family, (Roberto Micheletti, the president of the Honduran National Congress, who would later rise to dictator in the 2009 coup, owns La Tribuna) and the self-interest in publishing such a report was a bit too obvious.  Once the story had been safely floated in Mexico however, El Heraldo, La Prensa and La Tribuna were delighted to run with it and over the next two years, would go on to print Carmona-Borjas’s allegations whenever they surfaced (with frequency), always describing him as the “Vice President of an NGO based in Washington” and raising no questions whatsoever about his funding or other “anti-corruption” projects.

Jaime Rosenthal sent a letter to El Universal which said that the Arcadia report had been “planted” by someone “interested in divulging in Honduras what couldn’t [be published] or wasn’t convenient to publish directly within [Honduras itself].”  Rosenthal pointed out that the decline in Hondutel’s revenues between 2005 and 2006 was directly attributable to the end of its monopoly on terminating international calls, which disappeared on December 31, 2005, when Hondutel opened contracts with two international cellphone service providers. International calls were valued at 16 U.S. cents per minute, he said, “but wireless providers don’t pay anything to Hondutel.”

In a subsequent radio debate between Carmona-Borjas and the Rosenthals, they also explained that Cable Color was in the business of selling phone lines to ISPs and whenever it found that the ISPs were illegally repackaging the service as telephone service rather than internet service, without the benefit of an interconnection agreement, it notified Hondutel, whose responsibility it was to take action.

Arcadia vs. Rosenthal

In that radio debate on September 12, 2007, Yani Rosenthal asked why, if Otto Reich had nothing to do with the Arcadia Foundation, his name had appeared on the foundation’s website until September 10th, and was then erased on September 11th?  Carmona-Borjas initially avoided answering the question, insisting that the Foundation was legally set up within the United States and it had nothing against Yani personally – “…caramba! We congratulate him [on his campaign] and wish him the best…” returning to his accusation that Cable Color had 340 lines connected to Hondutel that were causing great losses for the phone company because they were being used for grey traffic.

Yani responded: “… yesterday when Mr. Roberto Carmona spoke with Channel 5, he said unequivocally that the honorable Otto Reich, whom he respects and deeply admires for being a fighter for democratic principles in the region had nothing to do with the Arcadia Foundation.  These were his words, here you can see what he said last night on Channel 5 and here I’m showing you Arcadia’s website until September 10, where Otto Reich appeared.  And then I show you that here, on September 11, the erasure of the list of the Arcadia Foundation’s members begins and also the report here that Robert Carmona himself signed and sent to Hondutel on July 14, 2006 was also copied to Ambassador Otto Reich.  So, if Mr. Carmona will lie so shamelessly and obviously on something as simple as this where the lie can so easily be seen, what else will he lie about?….I can also show you communication between Cable Color and Hondutel, and how Cable Color cooperated with Hondutel so that Cable Color’s clients who dedicated themselves to this [illegal grey traffic] operation were punished.  And Hondutel even knows about it, there were two businesses who had these numbers and their equipment was confiscated…”

Carmona-Borjas insisted again that Arcadia had nothing whatsoever to do with Reich, qualifying the statement by adding, “from a legal point of view,” and said that any columns that appeared at the Arcadia website were not even necessarily related to Arcadia, which was really more or less an open bulletin board, where even Rosenthal could express his ideas if he wished.  (The only media reports on the Arcadia site then, and now, are those generated by Carmona-Borjas.)

The Rosenthals said they’d been forced to go to the U.S. Embassy in Tegucigalpa to explain the situation, since Carmona-Borjas, a Venezuelan/U.S. citizen, had so helpfully gone there first, supplying the Embassy with a copy of his Arcadia report.

Rasel Tomé, the president of the Honduran telecom regulatory authority CONATEL, joined in, adding that there were no complaints on record at CONATEL against Hondutel or Cable Color for grey traffic, to which Carmona-Borjas repeated that grey traffic was the only possible explanation for such a serious decline in revenue, insinuating that Tomé’s position was based on the fact that he had been the Rosenthal’s attorney for many years.

Tomé would find later find himself the focus of Carmona-Borjas’s unique contacts within the Honduran justice system, when shortly before the coup d’etat tomeon June 28, 2009, he was ordered not to leave the country as a result of an investigation prompted by Carmona-Borjas and a business called Eldi, that had complained that Tomé, along with two other commissioners had illegally granted the license for television channel 12 to the Rosenthals, rather than Eldi.

The previous fall, Carmona-Borjas also filed a complaint at the Public Ministry against Tomé for illegal enrichment, based on the fact that he believed Tomé’s advertising campaign for a seat in the National Congress was so massive that Tomé could not possibly have afforded it.

In yet another radio debate, Tomé called Carmona-Borjas “an international blackmailer, a mercenary, who was being investigated for money laundering and was paid by powerful groups.” Tomé was running for Congress under the Micheletti wing of the Liberal Party.

The Circling Sharks

“What is going to happen in this country if the government no longer receives the important revenues that are going to be generated through Hondutel?  We’ve come to this company with one mission from President Manuel Zelaya Rosales: We have to go out and defend this company, because they want to eat it like sharks, and that’s what we’re doing, defending it tooth and nail and only with the collaboration of certain friends who are opening this kind of space for us.”

- Marcelo Chimirri, Hondutel Director, September 13, 2007 (From an interview conducted 5 days after Arcadia’s corruption accusations were first reported.)

Arcadia would wage its “grey traffic” crusade in Honduras from September 2007 until the present.  Carmona-Borjas first targeted the Rosenthal media family, but his focus and passion quickly began to shift to the fertile territory offered by Marcelo Chimirri Castro, Hondutel’s director.

chimIf you were to look for the colorful personification of a character from a Latin telenovela, it would be hard to find a better candidate than Marcelo Chimirri.  Born in Sicily to an Italian father and Honduran mother who later returned to Honduras, he bears a passing resemblance to Antonio Banderas and has a fondness for thoroughbred horses, luxury vehicles, Harley Davidsons and beautiful women.  He did appear in Arcadia’s original report, in a deeply slanderous way: “despite having been considered innocent, [Chimirri] remains the object of attention by the Honduran chim2attorney general for the death of his ex-girlfriend Yadira Miguel Mejia, and for threats and aggressive behavior toward journalists.”  Another man was convicted for that crime, and there are no indications new evidence exists, yet Arcadia had no qualms about trying to connect him to a brutal murder.  Chimirri is also the nephew of Zelaya’s wife, Xiomara Castro.

Like Zelaya, he is plainspoken, and appears to have a sense of humor.  After many months of being hounded by Carmona-Borjas, Chimirri finally told El Heraldo that the reason Carmona-Borjas could not stop talking about him was that he was fatally attracted to him.

Arcadia’s contacts within the Honduran justice system may have been unusual but they were trivial compared with its connections to the U.S. Justice Department and Immigration and Customs Enforcement.  Carmona-Borjas informed La Prensa that two small U.S. telecom companies who had interconnection contracts with Hondutel had transferred $70,000 to the bank account of a business owned by Chimirri: Inversiones Chicas, or Inverchicas (Little Investments), and helpfully supplied the dates of the transfers and the bank account number.   The newspaper had no questions about how Carmona-Borjas would have come by such specific information, which Chimirri denied, explaining that Inverchicas had long since closed by the time of the supposed transfers.

Carmona-Borjas insisted that Chimirri had overseen not only the grey traffic diversion, which he claimed had robbed Hondutel of some $48 million dollars, but also that the payments to Inverchicas were indicative of a bribe of some kind.

Micheletti, who at that time presided over the Honduran Congress and had held Chimirri’s important position as director of Hondutel in the late 1990’s, weighed in early on Carmona-Borjas’s accusations.   “Those responsible for grey traffic deserve to go to jail, just like any other criminal,” he said.

The Cobra Raid and the Wiretapping

It wasn’t long before Arcadia’s whispering campaign bore fruit, and in early November, 2007, the state-sponsored Cobra paramilitary force launched  cb3dramatic and violent raids on Hondutel’s offices, as well as Chimirri’s home.  Chimirri said guns had been pointed at his children’s heads.  A year and a half later, TeleSUR’s president, Andrés Izarra, would identify the Cobra squadron as the force responsible for monitoring and threatening TeleSUR journalists reporting on the aftermath of the coup, that is, until they were thrown out of the country.

The justification for the raid was that Chimirri was accused of “abuse of authority, illegal weapons possession, and revelation of secrets.”  Zelaya was furious about it, and called it a brutal assault on Chimirri’s family, that better belonged in a terror film, and said that a simple citation summoning the Hondutel officials to court would have sufficed.

A couple of weeks earlier, on October 22, President Zelaya had filed a complaint for telephone espionage, after his phone was illegally tapped without his knowledge and he was taped speaking to subordinates, including Chimirri, about strategies to control hostile press coverage and emerging problems with Micheletti. Two other Hondutel employees were charged with participation in the wiretapping: Oscar Danilo Santos, and Luis Alejandro Arriaga.

Arcadia helpfully posted the criminally obtained recordings on YouTube.

The Mounting Accusations

The U.S. Embassy in Tegucigalpa didn’t wait for the case against Chimirri to work its way through the Honduran courts.  On January 24, 2008 it announced that Chimirri was no longer allowed to enter the United States, because of his links to “serious cases of public corruption.”  With an Italian passport, Chimirri had never needed a visa but now even that would not get him through U.S. customs.  Visas had always been a Reich specialty.

Then the dead bodies showed up.  On Friday, February 8, four people were found dead inside a truck with Guatemalan license plates, under a bridge.  They had been shot and later set on fire.

Again, Carmona-Borjas surged forward with an explanation.  Two of the bodies were Guatemalan, a third was unidentifiable, and the last was said to have been a computer technician by the name of Alejandro Laprade Rodriguez.  According to Carmona-Borjas, Laprade had come to Washington on March 27, 2007 to deliver a 49 minute tape recording which he claimed was proof of an extortion attempt by Hondutel employees.  Laprade claimed that they had raided his business for no reason whatsoever and demanded $100,000 so as not to be hauled directly to jail.  This too was posted by Arcadia to YouTube.

The fact that the crime scene looked very much like a drug deal comygone bad was for Carmona-Borjas only proof of the opposite and he insisted it was all a big show. Having no ability to oblige Carmona-Borjas to come to Honduras, and with Carmona-Borjas, (like his mentor) refusing to come anyway because of what he called “the prevailing climate of insecurity in the country,” the Public Prosecutor who was responsible for investigating the supposed extortion spoke of going to Washington to interview Carmona-Borjas.

By the end of March, La Prensa published a report that said that forensic specialists had positively ID’d one of the burned bodies as Laprade, with 21 matches between the teeth of one of the cadavers, and a mold that Laprade’s dentist happened to have on hand.  But several days later, the head of the Honduran Police Detective Force (DGIC), Francisco Murillo Lopez, said not so fast.  “A dental analysis is credible when 75 points coincide,” not 21, he said, “and when it is done by a dental forensic specialist…As a police detective I respect the position of the Public Ministry, but I believe that this case ought to be examined further and as a detective, I have my doubts,” he added.  He also asked to see the preliminary DNA results for all four cadavers.

Carmona-Borjas shot back, dismissing Murillo’s comments and throwing some new information into the mix.  He claimed that just days before Laprade was murdered, he had called Carmona-Borjas again, claiming this time to have a tape of Marcelo Chimirri confessing his involvement in grey traffic.  Unfortunately, Laprade’s computer expertise did not appear to extend to YouTube uploads, and Carmona-Borjas did not have a copy of the tape because he claimed that Laprade had been looking for a way to deliver it to him without raising suspicion, when he disappeared.

With his fondness for the collective pronoun combined with strategic insinuation, Carmona-Borjas said, “We told him that he should be extremely careful considering that…Marcelo Chimirri had been linked at one time between 1997 and 1998 to the crime against the young girl, Yadira Mejia.” After that, he said, he did not hear from Laprade again.  The tape has never been proven to exist.

Over the summer and fall of 2008, Carmona-Borjas would continue to stalk Chimirri, but he also began to turn up the heat against Arcadia’s real target.  At the end of July, he reportedly presented a formal complaint against President Zelaya, at the Honduran embassy in Washington, accusing him of acting against the legal order in Honduras and against democratic principles.  It was a shot across the bow.

Real Corruption of No Interest Whatsoever to Arcadia

Suddenly, at the beginning of April, 2008, the tension between the Public Prosecutor’s office (Public Ministry, in Honduras) and the DSCN5977National Congress erupted into something extraordinary. Four prosecutors began a hunger strike on April 6, which they held on the ground floor of the National Congress building.  The motive for the strike had its origins in 14 records of supposed corruption involving “well known figures, influential in the country’s political and economic sector” which had been shelved for years without any follow-up or investigation, let alone public revelation of their names.

As the hunger strike continued, it gained sympathizers and by the time a month had gone by, 22 additional people from a wide variety of organizations had joined the original four prosecutors, among them two priests and the evangelical Pastor Evelio Reyes.

After Pastor Reyes interceded, the Honduran Congress named a commission to mediate, consisting of Ramón Custodio, the commissioner for Human Rights and the executive secretary of the National Anti-Corruption Council, Juan Ferrera.  The fasting prosecutors rejected the idea of mediation.  Both Ferrera and Custodio went on to support the illegal coup government of Roberto Micheletti the following year.

Micheletti’s own proposal for resolving the standoff involved bringing the complaint to the Organization of American DSCN6022States (OAS); a proposal that was also rejected by the prosecutors, who insisted that the problem be addressed in Honduras.  The prosecutors were also demanding that the current Attorney General, Leonidas Rosa Bautista and the Assistant Attorney General, Omar Cerna, step down, for having engaged in illegal activities.

President Zelaya supported the group, visiting them at the National Congress and also asking that Cerna resign, saying “The real problem in Honduras is that the law is not applied to those who break it.”

The Honduran press and those allied with the Attorney General characterized the strike as an attempt by the president to replace the AG and his assistant with people from his own Liberal Party, rather than the National Party that the two belonged to.  The prosecutors rejected this, insisting that they simply wanted an investigation into the reasons for the Public Ministry’s weakness, and a review of the cases of organized crime, corruption and environmental and human rights abuses which had never been punished.

Cerna refused to resign, saying that it would be a terrible precedent, and in a refrain that would come to be repeated by the putschists a year later, added that his decision to reject the president’s request, was really a “strengthening of institutions and democracy [in Honduras].”

For his part, the astonishingly arrogant Rosa Bautista denied that he had done anything improper, and anyway, if he had, he had done it while in private practice as a trial lawyer, and not as an administrator.  Therefore, Decree 49-2008, lrbwhich was passed by the Congress the previous year to provide sanctions for administrative offenses did not apply to him.  Furthermore, he said that people were confusing the issue, that he was actually more like a judge, not a run of the mill administrator, and as a sort-of-judge, he was subject to the Supreme Court rather than the National Congress.  He threatened to go to the Inter-American Commission on Human Rights to ask that precautionary measures be taken to guarantee his freedoms as well as the freedoms of the Public Ministry.

Despite his declarations, the public demonstrations in support of the hunger strikers were clearly beginning to unnerve Rosa Bautista, and he began traveling in cars provided by the Secretary of Defense.  “If the people’s protests for the benefit of the media had taken place within the framework of the Constitution, something would have been done a long time ago,” he said.  “But these threats to the peace, to the freedom of the press, the demonstrations, the irresponsible accusations of everyone…we should return to peace and tranquility.”

It ought to have been a prime opportunity for the anti-corruption crusader from Washington to weigh in, and finally Carmona-Borjas did.  He was convinced the whole hunger strike was nothing but theatre and accused the hunger strikers of lounging on comfortable Coleman brand camping mattresses, sustaining themselves with energy drinks, energy bars and Evian.  Why all the fuss over a few corruption cases when there was grey traffic to be dealt with and Chimirri on the loose?

Carmona-Borjas directed most of his wrath at Pastor Reyes however, an interesting choice considering that DSC_0077Reyes came out in support of the coup a year later, but like many sectors in Honduras, the evangelical’s relation to politics is complicated and cannot be distilled into a simple right-wing/left-wing narrative.  No stranger himself to the charms of an expensive suit, Carmona-Borjas lashed out in a radio “debate” at the pastor for his luxurious attire worth “hundreds of thousands of dollars” (sic) and gold Rolex.

In return, Reyes delivered what must have been a far more cutting insult to Carmona-Borjas.  He had never heard of him.

A month and a half after it began, the hunger strike ended, when a commission of congressional representatives was named to investigate Rosa Bautista and Cerna.  The commission went nowhere.  One of the four original hunger strikers, Jari Dixon Herrera, said that the commission’s report “did not surprise us much, it’s what they were going to do [all along], they were never going to allow those cases to be reviewed.”  Referring to Rosa Bautista and Cerna, he added, “Nor were they going to allow their best two workers inside the Public Ministry to be exposed, seeing as they’ve protected so many.”


In April of 2009, Arcadia’s accusations against Hondutel finally gained traction when a $2 million fine was leveled by the U.S. federal court for the Southern District of Florida miamicourtagainst Latinode, a telecom company that was fined under the Foreign Corrupt Practices Act (FCPA) for supposedly paying more than a million dollars in bribes to “third parties” that were then to pass “some or all of those funds” to Hondutel employees in order to receive a discount on their interconnection rates. (IDT on the other hand was sanctioned by the FCC in the Haitian telecom case, but no FCPA case has ever been brought against it.)

Latinode had been under investigation by the FBI and the Miami office of U.S. Immigration & Customs Enforcement (ICE).  According to the Department of Justice (DOJ) news release on the settlement, Latinode also bribed officials in Yemen to receive interconnection discounts.  DOJ said that Latinode received interconnection discounts between 2004 and 2007, and that the payments were meant to eventually go to five Hondutel employees.  The "intended payment recipients" were not named, but the “deputy general manager (who later became the general manager)” could only be Chimirri.

Hondutel denied it, and said that an internal audit performed between January 1, 2005 and December 31, 2007 had revealed discrepancies in Latinode’s traffic that eventually reached $4.6 million dollars owed to Hondutel.  Paying a $2 million fine (over a three year period, according to DOJ) in Miami and shutting Latinode down was therefore a no-brainer, especially for eLandia, the Coral Gables telecom firm that had paid $25 million to purchase Latinode in 2007.

But the DOJ news release had another curious note.  It said “The resolution of the criminal investigation of Latinode reflects, in large part, the actions of Latinode's corporate parent, eLandia International Inc. (eLandia), in disclosing potential FCPA violations to the Department of Justice after eLandia's acquisition of Latinode and post-closing discovery of the improper payments. “

Similarly to Arcadia, the made-in-Washington front group, the Latinode case has the flavor of a made-in-Miami event.  Despite the DOJ English language press release, neither Arcadia nor the Latinode case are very important for U.S. consumption, yet they are playing significant political roles in Honduras.  Although the DOJ’s settlement with Latinode does not prove the guilt of any Hondutel employee, that is exactly how Arcadia and the coup government have interpreted it, and spread it through the media.  When Chimirri and other officials of the Zelaya administration were arrested on July 2, 2009, the sole evidence cited by the pro-coup press relates to the Latinode accusations made public by the U.S. court settlement.  The same federal court in Miami tried the Cuban Five case and the recent “suitcase scandal” case, demonstrating that the DOJ there is not above politicizing events in order to serve hard-right foreign policy objectives in Latin America.

The New Third Reich

“[This] huge network of people who are going after communications, not just in Honduras but in Central America – the same who achieved their objective in Guatemala, El Salvador and Nicaragua where they managed to totally privatize the telecommunications sector without a single benefit to the people…So they already have a perfectly planned out scheme through which they are taking over all telecoms in Central America.”

- Marcelo Chimirri, September 13, 2007 interview

Otto Reich, the new Third ReichEmerging from the shadows, Reich could not resist the opportunity to comment on the Miami case: “President Zelaya has allowed or encouraged these kinds of practices and now we’ll see that he’s behind this as well,” he told Miami’s El Nuevo Herald.  He also referenced Chimirri for the first time in the U.S. press, casually mentioning the family connection (to the Zelayas) and the fact that he’d been accused in Honduras of a series of illegal acts in regard to his management of Hondutel contracts.  He did not mention Chimirri’s accuser.

For Zelaya, it was the last straw.  Two members of his cabinet as well as his personal secretary were sent to the U.S. to hire legal counsel to sue Reich for defamation. The secretary, Enrique Reina, said that Reich was upset because Hondutel had cancelled the interconnection contract of a firm he represented.

Carmona-Borjas weighed in, repeating his accusation to the Honduran media that Zelaya had acted “unconstitutionally.”

Zelaya would have little time to press the case.  Two months later he was awoken by the Cobra paramilitary force which shot its way into his house and put him on a plane to Costa Rica, still wearing his pajamas.

In his strange non-denial op-ed for the Miami Herald, Reich taunted Zelaya, claiming that a little thing like a coup d’etat was no reason for him not to proceed with his defamation lawsuit, and in floating the accusations against Chimirri, inflated the amount of missing Hondutel funds from $48 to $100 million.

The CAFTA Link

The explanation for the wild price inflation may have less to do with Reich’s penchant for hyperbole than it does with CAFTA, the Central American Free Trade Agreement.  The pressure to privatize Hondutel did not materialize until CAFTA was implemented.  It is a key piece of the neoliberal puzzle, even expanding multinational corporations’ rights in Central America to include the ability to sue for 17“lost” or “future” profits under a clause that protects companies from “measures equivalent to expropriation.” (CAFTA-DR Treaty, Article 10.7)

CAFTA clearly states that legitimate state actions such as the enacting of environmental and consumer protection laws, may trigger Article 10.7 and allow U.S. corporations to sue signatory countries for all of the money that they might have made otherwise.  Illegitimate government actions such as corruption are therefore definitely covered, and mere accusations of corruption could provide the fulcrum to pressure governments into settling in the secret tribunals of ICSID, the World Bank’s arbitration court. But that may not be necessary, since Reich is a self-proclaimed expert in handling “anti-corruption activities, political risk analysis and non-litigious dispute settlement” for US multinationals in Latin America.  His backdoor expertise can make it so that multinationals never have to publicly make these immoral and reputation-damaging arguments.

Given Reich’s telecom ties, not to mention those of the Cormac Group and AP on TV Fox's Democratsthose of Hillary Clinton’s friend, Lanny Davis,  who set up a press and congressional lobbying tour in Washington for the Honduran coup regime, the possibility of a future lawsuit of this type cannot be discounted. CAFTA’s rules regarding such lawsuits are broader than NAFTA’s infamous Chapter 11, and such threats are already being utilized by multinationals to pressure the cash-strapped governments of El Salvador and Guatemala into handing over millions.

The Aftermath

Reich admitted to having engaged in “pointing to Zelaya as the enabler of the corruption in Honduras” and added, “had I really been the ‘architect’ of Zelaya’s removal, I would had (sic) advised that he be charged with the almost 20 crimes with which the Honduran Judiciary has now charged him, and be arrested by civilian authorities.  I would have urged that the constitutional process be followed: the elevation to the presidency of the next-in-line, President of the Congress Roberto Micheletti, and the continuation of the electoral process, culminating in a November election.”

Except for omitting the part about flying the president to Costa Rica, this was how the coup played out, to the letter, although Reich coyly insisted these events unfolded “without my involvement.”

To La Prensa in Honduras, Reich once again denied any legal association with Arcadia.  “I’m not a member of the Arcadia Foundation.  I know the Arcadia Foundation very well and the work it has done.”  It was exactly the kind of statement he could have made 25 years earlier about Citizens For America.

For his part, Carmona-Borjas fulminated to what was left of the Honduran press about how kicking TeleSUR out of Honduras was not really restricting anyone’s freedom of expression, adding jabs at CNN en Español for not completely ignoring demonstrations in support of Zelaya, and of course, his pet target, Chimirri.

In Honduras, with Zelaya safely out of the way, the new putschist leaders would crank up the witch hunt, nabbing Chimirri and other Zelaya officials post-haste and sending them directly to the national penitentiary, but not without personally introducing Carmona-Borjas at a pro-coup rally and commending him for being the first to incriminate Hondutel and thanking him for Chimirri’s arrest.



An order was issued to Interpol for the capture of the Hondutel employees implicated in the Latinode case: Jorge Alberto Rosa, Julio Daniel Flores, and Oscar Danilo Santos.  Charges were also concocted against Rixi Moncada, who was one of the people Zelaya had earlier sent to Miami to hire the firm to sue Reich, and who would play a visible role at the mediation talks with Oscar Arias, arranged by Hillary Clinton.  Rebeca Santos, and Aristides Mejía, formerly associated with the state electric company were also targeted.

Although Arcadia’s role was unreported and therefore unknown outside Honduras, the Venezuelans and Hondurans understood it completely.  Ambassador Chaderton promised to forward a dossier on the matter to the U.S. mission to the OAS, and in an interview with La Jornada following his remarks to the OAS, Chaderton said they had “absolutely no doubts about it.”

In Latin America, there are many more important state companies to be targeted for privatization, and if not, many more leftist leaders who remain to be convinced or toppled.  Meanwhile in Washington, the Arcadia Foundation still exists, like a sleeper cell, awaiting its master’s voice.

* with additional reporting by Revolter


Source: http://machetera.wordpress.com/2009/07/30/otto-reich-and-the-honduran-coup-detat-the-provocateur-his-protege-and-the-toppling-of-a-president-part-one/ and http://machetera.wordpress.com/2009/08/02/otto-reich-and-the-honduran-coup-d%E2%80%99etat-the-provocateur-his-protege-and-the-toppling-of-a-president-%E2%80%93-part-two/

Original article published on July 30 2009

Otto Reich's cartoon by Allan McDonald

About the author

Machetera is a member of Tlaxcala, the network of translators for linguistic diversity. This original article may be reprinted as long as the content remains unaltered, and the source and author are cited.

URL of this article on Tlaxcala: http://www.tlaxcala.es/pp.asp?reference=8275&lg=en

SOUTH OF THE BORDER : 03/08/2009