[House Document 106-232]
[From the U.S. Government Publishing Office]
106th Congress, 2d Session - - - - - - - - - - - House Document 106-232
SIX MONTH PERIODIC REPORT WITH RESPECT TO 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)
May 2, 2000.--Message and accompanying papers referred to the Committee
on International Relations and ordered to be printed
__________
U.S. GOVERNMENT PRINTING OFFICE
79-011 WASHINGTON : 2000
To the Congress of the United States:
As required by 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), I
transmit herewith a 6-month periodic report on the national
emergency with respect to significant narcotics traffickers
centered in Colombia that was declared in Executive Order 12978
of October 21, 1995.
William J. Clinton.
The White House, May 2, 2000.
President's Periodic Report on the National Emergency With Respect to
Significant Narcotics Traffickers Centered in Colombia
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, two of whom are now
deceased, who were principals in the so-called Cali drug cartel
centered in Colombia. These four principals 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) materially to 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 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 the
President's 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 the
appendices 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 the appendices to 31 C.F.R. chapter V, by expanding the
list for the first time beyond the Cali cartel by adding the
name of one of the leaders of Colombia's North Coast cartel,
Julio Cesar Nasser David, who has been determined to play a
significant role in international narcotics trafficking
centered in Colombia, and 14 associated businesses and four
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 changes to the previous SDNT list brought it to
a total of 451 businesses and individuals.
On June 25, 1999, OFAC amended the appendices to 31 C.F.R.
chapter V by adding the names of eight individuals and 41
business entities acting as fronts for the Cali or North Coast
cartels and supplementary information concerning 44 individuals
already on the list (64 Fed. Reg. 34984, June 30, 1999). The
entities for four individuals previously listed as SDNTs were
removed from appendix A because of OFAC had determined that
these individuals no longer meet the criteria for designation
as SDNTs. These actions were part of the ongoing interagency
implementation of Executive Order 12978 of October 21, 1995.
The addition of these 41 business entities and eight
individuals to appendix A (and the removal of four individuals)
brought the total number of SDNTs to 496 (comprised of five
principals, 195 entities, and 296 individuals) with whom
financial and business dealings are prohibited and whose assets
are blocked under the 1995 Executive Order.
3. On April 4, 2000 (65 Fed. Reg. 17590, April 5, 2000),
OFAC amended the appendices to 31 C.F.R. chapter V, by
expanding the SDNT list beyond the Cali cartel for the second
time by adding the names of the leaders of Colombia's North
Valle drug cartel, Ivan and Julio Fabio Urdinola Grajales, who
have been determined to play a significant rule in
international narcotics trafficking centered in Colombia, and 6
associated businesses and two individuals acting as fronts for
the North Valle cartel. Also added were 14 companies and 7
individuals that have been determined to be owned or controlled
by, or to act for or on behalf of, the Cali cartel in Colombia.
The entry for one individual previously listed as an SDNT was
removed from appendix A because OFAC had determined that the
individual no longer met the criteria for designation as an
SDNT. These changes to the previous SDNT list brought it to a
total of 526 businesses and individuals. The list of SDNTs now
includes kingpins, associates and businesses from Colombia's
Cali, North Valle and north Coast drug cartels. The SDNT list
will continue to be expanded to include additional drug
trafficking organizations centered in Colombia and their
fronts. A copy of the amendment is attacked to this report.
4. 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
numerous computer bulletin boards, 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.
5. During the reporting period, as of February 29, 2000,
OFAC had blocked two financial transactions totaling more than
$101,000. As of February 29, 2000, OFAC has issued 14 specific
licenses pursuant to Executive Order 12978 since the inception
of the program. These licenses were issued in accordance with
established Treasury policy authorizing the completion ofpre-
sanctions transactions, the receipt of payment of legal 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-owned 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.
6. The narcotics trafficking sanctions have had a
significant impact on the Colombian drug cartels. SDNTs have
been forced out of business or are suffering financially. Of
the 215 business entities designated as SDNTs as of February
22, 2000, nearly 50, with an estimated aggregate income of more
than $210 million, had been liquidated or were in the process
of liquidation. Some SDNT companies have attempted to continue
to operate through changes in their company names and/or
corporate structures. OFAC has placed a total of 27 of these
successor companies on the SDNT list under their new company
names.
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. Another large SDNT
commercial entity, a supermarket with an annual income
exceeding $32 million, entered liquidation in November 1998
despite changing its name to evade the sanctions. An SDNT
professional soccer team was forced to reject an invitation to
play in the United States, two of its directors resigned, and
the team now suffers restrictions affecting its business
negotiations, loans, and banking operations. An SDNT radio
station has had difficulty in getting advertisers since its
inclusion on the SDNT list. These specific results augment the
less quantifiable but significant impact of denying the
designated individuals and entities of the Colombian drug
cartels 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. Since the latest report, OFAC
has collected no civil monetary penalties but is continuing to
process two cases for violations of the Regulations.
7. The expenses incurred by the federal government in the
six-month period from October 21, 1999, through April 20, 2000,
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 $590,000. 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.
8. Executive Order 12978 provides this Administration with
a tool for combatting the actions of significant foreign
narcotics traffickers centered in Colombia and the unparalleled
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 the benefit of trade with
the United States by preventing U.S. persons from engaging in
any commercial dealings with them, their front companies, and
their agents. Executive Order 12978 and its associated SDNT
list demonstrate the United States' commitment to end the
damage that such traffickers wreak upon society in the United
States and abroad. The SDNT list will continue to be expanded
to include additional Colombian drug trafficking organizations
and their fronts.
The magnitude and the dimension 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 and their violent and corrupting activities 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).