[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).