[House Document 106-56]
[From the U.S. Government Publishing Office]




106th Congress, 1st Session - - - - - - - - - - - - House Document 106-56
_________________________________________________________________________

 
 6-MONTH PERIODIC REPORT ON NARCOTICS TRAFFICKERS CENTERED IN COLOMBIA

                               __________

                                MESSAGE

                                  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 3, 1999.--Message and accompanying papers referred to the Committee 
          on International Relations and ordered to be printed
                               __________

               U.S. GOVERNMENT PRINTING OFFICE
69-011                WASHINGTON : 1999





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 3, 1999.

 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 No. 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, to: (a) play a significant 
role in international narcotics trafficking centered in 
Colombia; or (b) 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 prohibition 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 
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 name of one of the leaders of the Colombian 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 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 1995 Executive Order.
    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, more 
than ten computer bulletin boards and two 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.
    Since October 21, 1998, OFAC has blocked $25,000 resulting 
from two financial transactions in violation of IEEPA and the 
Regulations involving property in which a SDNT had an interest.
    4. As of February 17, 1999, OFAC had issued twelve specific 
licenses pursuant to Executive Order No. 12978. 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 
entities in Colombia (currently under the control of the 
Colombian government) for services provided to the U.S. company 
in connection with occupation by that company of office space 
and business activities in Colombia.
    5. The narcotics trafficking sanctions have had a 
significant impact on the Colombia 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, including one criminal 
investigation, and new reports of violations are being 
aggressively pursued. Since the last report, OFAC has collected 
one civil penalty in the amount of approximately $1,900 from a 
U.S. company for violations of the Regulations involving the 
transportation and dealing in goods in which an SDNT had an 
interest. A second case is under civil penalty processing.
    6. The expenses incurred by the Federal Government for the 
six-month period from October 21, 1998, through April 20, 1999, 
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 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 combating the actions of significant foreign 
narcotics traffickers centered in Columbia 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 to prevent United States 
persons from engaging in any commercial dealings with them, 
their front companies, and their agents. Executive Order 12978 
demonstrates the United States' commitment to end the damage 
that such traffickers inflict on society in the United States 
and abroad.
    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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