Otto Reich: Corruption and Abuse of Power Infest Honduras Presidential Race

November 15, 2012 1:24 pm5 commentsViews: 18

Source: Fox News Latino

During the recently concluded U.S. presidential campaign, many Latin American journalists and academics asked why Latin America was hardly mentioned. Although Gov. Romney did mention the region in each of the three debates, the question deserves a more complete answer. This region is far too important to the U.S. to be ignored so widely by U.S. political leaders. Why is it?

One of the many reasons is that Latin America does not present its best face to the world and is therefore not taken seriously. The image of these countries that Americans too often see is that of a caricature: that of a clownish demagogue, or a boisterous “caudillo” dressed in the combat fatigues he might have worn had he ever seen combat; or of an incessant talker in enamored with the sound of his or her voice; and in some cases someone who combines many of the above characteristics.

Seldom do serious, wise, or even honest faces symbolize the rich continent to our South. Is it any wonder then, that senior policy-makers in the U.S. Government have difficulty focusing on this region?  It is especially hard when those policy-makers have access to information that documents the abuse of power, moral degradation and illicit enrichment in which many foreign “leaders” engage.

When U.S. audiences watch the occasional television report about this region, or read press accounts, which are the Latin American faces that stare back?  Frequently, those of an emaciated Fidel Castro of Cuba; a garrulous Hugo Chavez of Venezuela; an eccentric Evo Morales of Bolivia; a rabid Rafael Correa of Ecuador; and a devious Cristina Kirchner of Argentina. Those come to mind, at least to the few observers that even know what those characters look like.

Besides being dishonest and dangerous (for example, all the above preside over rampantly corrupt governments and some have close ties with Iran, regional terrorist groups or organized crime) these rulers have something else in common: they were all originally elected in votes that were relatively free and fair. We must ask how is it possible that otherwise intelligent constituencies choose so poorly? One reason is that they lack in balanced information about their candidates and leaders. In Latin America the press is frequently afraid of reporting negative material about powerful people running for office (for good reason, since scores of honest reporters have been and continue to be killed while investigating wrongdoing).

This well-founded media fear may result in the election of yet another candidate with a disturbing past: Yani Rosenthal Hidalgo, a candidate for President in the Liberal Party primaries in Honduras. Rosenthal was Minister of the Presidency (a kind of Super Cabinet Secretary and Presidential “fixer”) under a previous elected schemer, Mel Zelaya, who was removed from office in 2009 for violating the Constitution, by a unanimous vote of the Supreme Court of Honduras. Zelaya’s acolyte, Mr Rosenthal, apparently intends to take Zelaya’s place. If Mr. Rosenthal’s political background is insufficient to disqualify him from office, his illicit business activities should.

Mr. Rosenthal is the scion of what is alleged to be the richest family in Honduras. The family conglomerate, Grupo Continental, owns some of the leading companies in Honduras: banks, insurance, engineering and construction, newspapers, television, cable TV, cement alligator skins, coffee growing, free zone assembly plants, food packing, sugar, residential developments, bananas, cattle and sheep breeding and cacao, among others.

The family, especially Yani, is the object of pending judicial charges and investigations that run practically the entire gamut of their business activities. For example:

Since 2007, the Rosenthal telecommunications firm Cable Color has been accused by Honduran and international authorities of illegal use of its telephone lines for “grey traffic.”  Grey traffic is the false reporting of international long distance calls as domestic calls, thus avoiding additional charges associated with international calls, such as payment for the use of underwater cables, of international taxes paid to the foreign governments where the calls originate or terminate, etc. In Honduras, international traffic is controlled by the public telephone company, Hondutel, which is – or would be if were operated honestly and efficiently – the single largest source of revenue to the state.

In 2007 then-President Manuel (Mel) Zelaya, whom Yani Rosenthal was serving as Cabinet Minister at the time, appointed the First Lady’s nephew, Marcelo Chimirri, as General Manager of Hondutel. Chimirri so looted Hondutel’s treasury that he was indicted for corruption and abuse of power and eventually arrested (but only after his uncle and protector Zelaya was removed from office, of course).

Even in a country with a long history of high-level corruption, Chimirri and Zelaya’s avarice was unprecedented. In order to hide the plundering of Hondutel through the use of grey traffic by companies owned by their allies such as the Rosenthals, Chimirri and Zelaya designed a cynical smoke screen reminiscent of the famous order “round up the usual suspects” in the movie Casablanca.

To divert attention from the real culprits while making it appear that they were enforcing the law, Zelaya’s associates ordered Hondutel officials to raid the offices of over 50 small telecom companies that most often were not, and in some cases were, involved in grey traffic, confiscated their equipment and arbitrarily detained their executives. These firms had very few telephone lines, and none even approximated the hundreds of lines of Cable Color. Yet, Cable Color‘s offices were never raided. The reason was obvious; Chimirri, Zelaya and Yani knew the real culprit in the diversion of Hondutel profits was Yani’s own company, Cable Color.

That company still owes Hondutel the local currency equivalent of $259,044 for the use of submarine telephone cables. This figure is a pittance, however, in relation to the $5 Million per month – half its earnings – that Hondutel’s income dropped under Chimirri’s “management” because of the grey traffic scheme.

There are many Rosenthal companies that owe the Honduran treasury for fines. For example, Cementos del Norte (cement) owes $1,770,269. The Rosenthal newspaper firm, Editorial Honduras, owes $4,046,330 that it “refuses to pay” to the government.

A pending lawsuit accuses members of the Board of Banco Continental and members of the board of the Rosenthal newspaper Tiempo (Editorial Honduras) of the crime of “infidencia,” or using the newspaper to publish confidential information to the detriment of official investigations of the National Banking and Insurance Commission. Moreover, the newspaper’s labor union has complained that the Rosenthals refuse to pay their “labor obligations” (equivalent to employees benefits in the U.S.).

Those are just some examples. A more comprehensive list of transgressions, corruption and abuse of power by the Rosenthal family, whose heir now seeks Honduras’ top office, is too long for a newspaper article.

The reason I am writing this article is because I was asked to do so by some honest persons I know in Honduras. When I inquired why they did not do so themselves, they frankly admitted that they are afraid. They point to cases such as a murder in 2007 of a telephone company owner, Alejandro Laprade, that threatened to blow the whistle on the Hondutel grey traffic scheme, from which the Rosenthal family prospered, but which in turn focused the attention of the country on out-of-control Zelaya corruption and led to his downfall.

Fearful voters do not always make the best choices. Sometimes they need a little help from friends that live in countries with a free press.

Otto Reich is a former U.S. Ambassador to Venezuela, Assistant Secretary of State for Western Hemisphere Affairs and Senior Staff member of the National Security Council. He heads his own international government relations firm in Washington, DC.  


  • Arandi

    Please make a quick translation into Spanish!

  • ansermeanserme

    Take the “info” as provided within the above article with a grain of salt.The author Otto Reich is conservative and his writing here is almost reminiscent of McCarthyistic rhetoric. This type of cowboy unprofessional journalism it is full of use innuendos while pre-qulalifying the information by words like “alleged,”pending” judicial charges or “accused”, leads one to wonder the true intentions of the author or the author’s ulterior motives. Honduras is inundated with corruption which results in articles like this which are suspicious by their origin of baseless accusations. Having lived in Honduras during the ousting of President Zalaya it was known that the US was pressured to remove Zelaya as the Honduran President wanted to increase the minimum wage. Hillary Clinton knew of the ouster of the President and there have been many articles written stating that his removal was orchestrated by the C.I.A., afterall with all of the aid that the US provides Honduras every move is carefully scrutinized the most obvious being a supposed Coup d Etat. Zelaya’s move to increase the minimum wage would have cost the Plantations lead by Chiquita,and others with a history of oppressive war like economic tactics to realize profits at the expense of their workers who are kept at slave wages, Clearly under a mandate by the lobyists and principals of capitalism the US would rather maintain a status quo in Honduras rather than suffering the loss of profits at the hands of a concerned leader like Zelaya.

  • Fem42

    I wonder if the author actually did some research before making such accusations. He links Rosenthal to Mel Zelaya’s government, but does not mention that he retired from the government in December 2007 because he realized Zelaya’s intentions. Did he try to contact the Rosenthals or any of the goverment entity’s such as DEI (IRS) to see if they have paid any of “alleged” fines? This article seems to be an attack directly from the opposition, not by some “scared” citizen.

  • Honduran Outraged

    I live in Honduras, and all this information es truth. The family Rosenthal are very harmful and destructive for the national economy. Are guilty of having people in poverty in this country. And worst of all they want to conitnue to harm the nation.

  • anotherhonduran

    Well done Mr. Reich, in Honduras are many stories to tell the world, indeed, it is there where reality challenge fiction, you don’t know it is real, you think all is coming froma fictional writting of a great author. Well what you have said here is real, unfortunately this family is not the only family doing this kind of business and the alleged crimes are not the more serious ones. It may be good to research a little bit more, one huge article can come out of all the narco-dollars that is being laundred in Honduras right now, that’s not a secret, nor they make an effort to hide it, it is something most people in banking and business know in Honduras. Latest figures (alleged off course), are talking of 35 Billion dollars left behind by the drug “business” in a tiny country with only 6 billion in annual budget. Now the question is where is all that money and what do they do with it? Well, there is where the laundry business take place, lots of people know who and where is doing this job and from who that money comes from. Greedy is a word this people know very well. You opened a pandora box, Mr Reich, well now it may be more that a journalistic job to become a moral one, keep digging and whlie I agree in your comments, it is important for you to understand that this is not the only family trying hard to make great business as the expenses of the honduran people, keep digging…