[Public Papers of the Presidents of the United States: William J. Clinton (1998, Book II)]
[October 21, 1998]
[Pages 1831-1833]
[From the U.S. Government Publishing Office www.gpo.gov]



Letter to Congressional Leaders Reporting on the National Emergency With 
Respect to Significant Narcotics Traffickers Centered in Colombia
October 21, 1998

Dear Mr. Speaker:  (Dear Mr. President:)
    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, 
one of whom is now deceased, who were principals in the so-called Cali 
drug cartel centered in Colombia. These persons 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) to 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'').

[[Page 1832]]

    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 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 my 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 names of one of the 
leaders of Colombia's North Coast cartel, Julio Ceasar Nasser David, who 
has been determined to play a significant role in international 
narcotics trafficking centered in Colombia, and 14 associated businesses 
and 4 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 
Order. A copy of the amendment is attached to this report.
    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 and over 10 computer bulletin boards and 2 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.
    4. As of September 4, 1998, OFAC had issued 11 specific licenses 
pursuant to Executive Order 12978. These licenses were issued in 
accordance with established Department of the Treasury policy 
authorizing the completion of presanctions transactions, the provision 
of legal services to and payment of 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 the U.S. company's occupation of office space 
and business activities in Colombia.

[[Page 1833]]

    5. The narcotics trafficking sanctions have had a significant impact 
on the Colombian 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 and new reports of violations are being 
aggressively pursued. One criminal investigation is ongoing and a 
second, not presented for prosecution, was referred for civil penalty 
action, bringing the total of referrals since my last report to five.
    6. The expenses incurred by the Federal Government in the 6-month 
period from April 21 through October 20, 1998, 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 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.
    7. Executive Order 12978 provides this Administration with a tool 
for combatting the actions of significant foreign narcotics traffickers 
centered in Colombia and the 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 the traffickers, their front companies, 
or their agents. Executive Order 12978 demonstrates the United States 
commitment to end the damage that such traffickers inflict upon society 
in the United States and abroad.
    The magnitude and scope 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 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).
        Sincerely,

                                                      William J. Clinton

Note: Identical letters were sent to Newt Gingrich, Speaker of the House 
of Representatives, and Albert Gore, Jr., President of the Senate. This 
letter was released by the Office of the Press Secretary on October 22.