[House Document 105-336]
[From the U.S. Government Publishing Office]




105th Congress, 2d Session - - - - - - - - - House Document No. 105-336


 
DEVELOPMENTS CONCERNING NATIONAL EMERGENCY WITH NARCOTICS TRAFFICKERS 
                              IN COLOMBIA

                               __________

                             COMMUNICATION

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              TRANSMITTING

A REPORT ON DEVELOPMENTS CONCERNING THE NATIONAL EMERGENCY WITH RESPECT 
  TO SIGNIFICANT NARCOTICS TRAFFICKERS CENTERED IN COLOMBIA THAT WAS 
DECLARED IN EXECUTIVE ORDER NO. 12978 OF OCTOBER 21, 1995, PURSUANT TO 
                           50 U.S.C. 1703(c)




    December 17, 1998.--Referred to the Committee on International 
                  Relations and ordered to be printed

                               --------

                    U.S. GOVERNMENT PRINTING OFFICE                    
69-011                     WASHINGTON : 1998



                                           The White House,
                                  Washington, DC, October 21, 1998.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: I hereby report to the Congress on the 
developments since my last report concerning the national 
emergency with respect to significant narcotics traffickers 
centered in Colombia that was declared in Executive Order 12978 
of October 21, 1995. This report is submitted pursuant to 
section 401(c) of the National Emergencies Act, 50 U.S.C. 
1641(c), and section 204(c) of the International Emergency 
Economic Powers Act (IEEPA), 50 U.S.C. 1703(c).
    1. On October 21, 1995, I signed Executive Order 12978, 
``Blocking Assets and Prohibiting Transactions with Significant 
Narcotics Traffickers'' (the ``Order'') (60 Fed. Reg. 54579, 
October 24, 1995). The Order blocks all property subject to 
U.S. jurisdiction in which there is any interest of four 
significant foreign narcotics traffickers, one of whom is now 
deceased, who were principals in the so-called Cali drug cartel 
centered in Colombia. These persons are listed in the annex to 
the Order. The Order also blocks the property and interests in 
property of foreign persons determined by the Secretary of the 
Treasury, in consultation with the Attorney General and the 
Secretary of State, (a) to play a significant role in 
international narcotics trafficking centered in Colombia or (b) 
to materially assist in or provide financial or technological 
support for, or goods or services in support of, the narcotics 
trafficking activities of persons designated in or pursuant to 
the Order. In addition, the Order blocks all property and 
interests in property, subject to U.S. jurisdiction, of persons 
determined by the Secretary of the Treasury, in consultation 
with the Attorney General and the Secretary of State, to be 
owned or controlled by, or to act for or on behalf of, persons 
designated in or pursuant to the Order (collectively 
``Specially Designated Narcotics Traffickers'' or ``SDNTs'').
    The Order further prohibits any transaction or dealing by a 
United States person or within the United States in property or 
interests in property of SDNTs, and any transaction that evades 
or avoids, has the purpose of evading or avoiding, or attempts 
to violate, the prohibitions contained in the Order. 
Designations of foreign persons blocked pursuant to the Order 
are effective upon the date of determination by the Director of 
the Department of the Treasury's Office of Foreign Assets 
Control (OFAC) acting under authority delegated by the 
Secretary of the Treasury. Public notice of blocking is 
effective upon the date of filing with the Federal Register, or 
upon prior actual notice.
    2. On October 24, 1995, the Department of the Treasury 
issued a notice containing 76 additional names of persons 
determined to meet the criteria set forth in Executive Order 
12978 (60 Fed. Reg. 54582, October 24, 1995). Additional 
notices expanding and updating the list of SDNTs were published 
on November 29, 1995 (60 Fed. Reg. 61288), March 8, 1996 (61 
Fed. Reg. 9523), and January 21, 1997 (62 Fed. Reg. 2903).
    Effective February 28, 1997, OFAC issued the Narcotics 
Trafficking Sanctions Regulations (``NTSR'' or the 
``Regulations''), 31 C.F.R. Part 536, to further implement my 
declaration of a national emergency and imposition of sanctions 
against significant foreign narcotics traffickers centered in 
Colombia (62 Fed. Reg. 9959, March 5, 1997).
    On April 17, 1997 (62 Fed. Reg. 19500, April 22, 1997), 
July 30, 1997 (62 Fed. Reg. 41850, August 4, 1997), September 
9, 1997 (62 Fed. Reg. 48177, September 15, 1997), and June 1, 
1998 (63 Fed. Reg. 29608, June 1, 1998), OFAC amended 
appendices A and B to 31 C.F.R. chapter V, revising information 
concerning individuals and entities who have been determined to 
play a significant role in international narcotics trafficking 
centered in Colombia or have been determined to be owned or 
controlled by, or to act for or on behalf of, or to be acting 
as fronts for the Cali cartel in Colombia.
    On May 27, 1998 (63 Fed. Reg. 28896, May 27, 1998), OFAC 
amended appendices A and B to 31 C.F.R. chapter V, by expanding 
the list for the first time beyond the Cali cartel by adding 
the names of one of the leaders of Colombia's North Coast 
cartel, Julio Ceasar Nasser David, who has been determined to 
play a significant role in international narcotics trafficking 
centered in Colombia, and 14 associated businesses and 4 
individuals acting as fronts for the North Coast cartel. Also 
added were six companies and one individual that have been 
determined to be owned or controlled by, or to act for or on 
behalf of, or to be acting as fronts for the Cali cartel in 
Colombia. These actions are part of the ongoing interagency 
implementation of Executive Order 12978 of October 21, 1995. 
These changes to the previous SDNT list brought it to a total 
of 451 businesses and individuals with whom financial and 
business dealings are prohibited and whose assets are blocked 
under the Order. A copy of the amendment is attached to this 
report.
    3. OFAC has disseminated and routinely updated details of 
this program to the financial, securities, and international 
trade communities by both electronic and conventional media. In 
addition to bulletins to banking institutions via the Federal 
Reserve System and the Clearing House Interbank Payments System 
(CHIPS), individual notices were provided to all relevant State 
and Federal regulatory agencies, automated clearing houses, and 
State and independent banking associations across the country. 
OFAC contacted all major securities industry associations and 
regulators. It posted electronic notices on the Internet and 
over 10 computer bulletin boards and 2 fax-on-demand services, 
and provided the same material to the U.S. Embassy in Bogota 
for distribution to U.S. companies operating in Colombia.
    4. As of September 4, 1998, OFAC had issued 11 specific 
licenses pursuant to Executive Order 12978. These licenses were 
issued in accordance with established Department of the 
Treasury policy authorizing the completion of presanctions 
transactions, the provision of legal services to and payment of 
fees for representation of SDNTs in proceedings within the 
United States arising from the imposition of sanctions, and 
certain administrative transactions. In addition, a license was 
issued to authorize a U.S. company in Colombia to make certain 
payments to two SDNT entities in Colombia (currently under the 
control of the Colombian government) for services provided to 
the U.S. company in connection with the U.S. company's 
occupation of office space and business activities in Colombia.
    5. The narcotics trafficking sanctions have had a 
significant impact on the Colombian drug cartels. Of the 154 
business entities designated as SDNTs as of September 4, 1998, 
44, with an estimated aggregate income of more than $210 
million, had been liquidated or were in the process of 
liquidation. As a result of OFAC designations, Colombian banks 
have closed nearly 400 SDNT accounts, affecting nearly 200 
SDNTs. One of the largest SDNT commercial entities, a discount 
drugstore with an annual income exceeding $136 million, has 
been reduced to operating on a cash basis. These specific 
results augment the less quantifiable but significant impact of 
denying the designated individuals and entities of the Cartel 
access to U.S. financial and commercial facilities.
    Various enforcement actions carried over from prior 
reporting periods are continuing and new reports of violations 
are being aggressively pursued. One criminal investigation is 
ongoing and a second, not presented for prosecution, was 
referred for civil penalty action, bringing the total of 
referrals since my last report to five.
    6. The expenses incurred by the Federal Government in the 
6-month period from April 21 through October 20, 1998, that are 
directly attributable to the exercise of powers and authorities 
conferred by the declaration of the national emergency with 
respect to Significant Narcotics Traffickers are estimated at 
approximately $600,000. Personnel costs were largely centered 
in the Department of the Treasury (particularly in the Office 
of Foreign Assets Control, the U.S. Customs Service, and the 
Office of the General Counsel), the Department of Justice, and 
the Department of State. These data do not reflect certain 
costs of operations by the intelligence and law enforcement 
communities.
    7. Executive Order 12978 provides this Administration with 
a tool for combatting the actions of significant foreign 
narcotics traffickers centered in Colombia and the violence, 
corruption, and harm that they cause in the United States and 
abroad. The Order is designed to deny these traffickers the 
benefit of any assets subject to the jurisdiction of the United 
States and to prevent United States persons from engaging in 
any commercial dealings with the traffickers, their front 
companies, or their agents. Executive Order 12978 demonstrates 
the United States commitment to end the damage that such 
traffickers inflict upon society in the United States and 
abroad.
    The magnitude and scope of the problem in Colombia--perhaps 
the most pivotal country of all in terms of the world's cocaine 
trade--are extremely grave. I shall continue to exercise the 
powers at my disposal to apply economic sanctions against 
significant foreign narcotics traffickers as long as these 
measures are appropriate and will continue to report 
periodically to the Congress on significant developments 
pursuant to 50 U.S.C. 1703(c).
            Sincerely,
                                                William J. Clinton.

                                
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