[House Document 106-305]
[From the U.S. Government Publishing Office]



                                     

106th Congress, 
2d Session - - - - - - - - - - - - House Document 106-305


 
    SIX MONTH PERIODIC REPORT ON SIGNIFICANT NARCOTICS TRAFFICKERS 
                         CENTERED IN COLOMBIA

                               __________

                                MESSAGE

                                  FROM

                   THE PRESIDENT OF THE UNITED STATES

                              TRANSMITTING

 A SIX MONTH PERIODIC REPORT ON 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)




  October 30, 2000.--Message and accompanying papers referred to the 
     Committee on International Relations and ordered to be printed
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, October 30, 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 (the 
``Order''). 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). Sanctions imposed against 
significant narcotics traffickers centered in Colombia pursuant 
to Executive Order 12978 are separate from, and independent of, 
sanctions imposed pursuant to the Foreign Narcotics Kingpin 
Sanctions Act (Pub. L. 106-120, Title VIII). This report covers 
sanctions imposed and persons named as specially designated 
narcotics traffickers pursuant to Executive Order 12978, but 
does not cover those persons identified pursuant to the Foreign 
Narcotics Kingpin Designation Act, who are addressed in a 
separate report as provided in that Act.
    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 and interests 
in property that are or hereafter come within the United 
States, or that are or hereafter come within the possession or 
control of U.S. persons, in which there is any interest of four 
individuals named as significant foreign narcotics traffickers. 
These traffickers, two of whom are now deceased, were listed in 
the Annex to the Order and identified as principals in the so-
called Cali drug cartel centered in Colombia. 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 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 
U.S. 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 the Order. 
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 changesto 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 
entries for four individuals previously listed as SDNTs were 
removed from appendix A because 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 the Order. 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 Order.
    3. On March 29, 2000 (65 Fed. Reg. 17590, April 4, 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 two of the leaders of Colombia's North 
Valle drug cartel, Ivan and Julio Fabio Urdinola Grajales, who 
have been determined to play a significant role in 
international narcotics trafficking centered in Colombia, and 
six 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.
    On June 1, 2000, OFAC announced the removal of two 
individuals previously listed as SDNTs because OFAC had 
determined that the two individuals no longer met the criteria 
for designation as SDNTs. These changes to the previous list 
brought it to a total of 524 businesses and individuals.
    On August 18, 2000, OFAC expanded the SDNT list beyond the 
Cali cartel for the third time by adding the names of Arcangel 
de Jesus Henao Montoya, a leader of one of the most powerful 
drug trafficking groups that comprise Colombia's North Valle 
drug cartel, and Juan Carlos Ramirez Abadia, who have been 
determined to play a significant role in international 
narcotics trafficking centered in Colombia, and five associated 
businesses and one individual acting as fronts for the North 
Valle cartel. These changes to the previous SDNT list brought 
it to a total of532 (comprised of nine principals, 220 
entities, and 303 individuals) with whom financial and business 
dealings are prohibited and whose assets are blocked under the Order. 
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.
    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 September 6, 2000, 
seven financial transactions totaling more than $203,000 were 
reported to OFAC as having been blocked. These funds will 
remain in that status pending investigation by OFAC. As of 
September 6, 2000, OFAC had issued 18 specific licenses 
pursuant to the Order since the inception of the program. These 
licenses were issued in accordance with established Treasury 
policy authorizing the completion of pre-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 220 business entities designated as SDNTs as of September 
6, 2000, nearly 60, with an estimated aggregate income of more 
than $230 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 
corporatestructures. 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 500 SDNT accounts, affecting more than 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 periods of violations 
are being aggressively pursued. Since the last report, OFAC has 
collected no civil monetary penalties but is continuing to 
process three cases for violations of the Regulations.
    7. The expenses incurred by the Federal Government in the 
six-month period from April 21, through October 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 $570,000. 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. This data 
does not reflect certain costs of operations by the 
intelligence and law enforcement communities.
    8. Executive Order 12978 provides this Administration with 
a tool for combating 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).

                                
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