[Congressional Record (Bound Edition), Volume 146 (2000), Part 17]
[Senate]
[Pages 24839-24840]
[From the U.S. Government Publishing Office, www.gpo.gov]



REPORT ON THE NATIONAL EMERGENCY WITH RESPECT TO SIGNIFICANT NARCOTICS 
  TRAFFICKERS CENTERED IN COLOMBIA--MESSAGE FROM THE PRESIDENT--PM 136

  The PRESIDING OFFICER laid before the Senate the following message 
from the President of the United States, together with an accompanying 
report; which was referred to the Committee on Banking, Housing, and 
Urban Affairs.

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 26, 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 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 
     decreased, 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 service 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 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 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

[[Page 24840]]

     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 of 532 (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 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 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 reports 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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