Otto Reich and the Honduran Coup D’Etat: The Provocateur, his Protege, and the Toppling of a President – Part Two

arcadiaOtto Reich and the Honduran Coup D’Etat: The Provocateur, his Protégé and the Toppling of a President (Part Two)

By Machetera*

(continued from Part One)

The Circling Sharks

“What is going to happen in this country if the government no longer receives the important revenues that are going to be generated through Hondutel?  We’ve come to this company with one mission from President Manuel Zelaya Rosales: We have to go out and defend this company, because they want to eat it like sharks, and that’s what we’re doing, defending it tooth and nail and only with the collaboration of certain friends who are opening this kind of space for us.”

– Marcelo Chimirri, Hondutel Director, September 13, 2007 (From an interview conducted 5 days after Arcadia’s corruption accusations were first reported.)

Arcadia would wage its “grey traffic” crusade in Honduras from September 2007 until the present.  Carmona-Borjas first targeted the Rosenthal media family, but his focus and passion quickly began to shift to the fertile territory offered by Marcelo Chimirri Castro, Hondutel’s director.

chimIf you were to look for the colorful personification of a character from a Latin telenovela, it would be hard to find a better candidate than Marcelo Chimirri.  Born in Sicily to an Italian father and Honduran mother who later returned to Honduras, he bears a passing resemblance to Antonio Banderas and has a fondness for thoroughbred horses, luxury vehicles, Harley Davidsons and beautiful women.  He did appear in Arcadia’s original report, in a deeply slanderous way: “despite having been considered innocent, [Chimirri] remains the object of attention by the Honduran chim2attorney general for the death of his ex-girlfriend Yadira Miguel Mejia, and for threats and aggressive behavior toward journalists.”  Another man was convicted for that crime, and there are no indications new evidence exists, yet Arcadia had no qualms about trying to connect him to a brutal murder.  Chimirri is also the nephew of Zelaya’s wife, Xiomara Castro.

Like Zelaya, he is plainspoken, and appears to have a sense of humor.  After many months of being hounded by Carmona-Borjas, Chimirri finally told El Heraldo that the reason Carmona-Borjas could not stop talking about him was that he was fatally attracted to him.

Arcadia’s contacts within the Honduran justice system may have been unusual but they were trivial compared with its connections to the U.S. Justice Department and Immigration and Customs Enforcement.  Carmona-Borjas informed La Prensa that two small U.S. telecom companies who had interconnection contracts with Hondutel had transferred $70,000 to the bank account of a business owned by Chimirri: Inversiones Chicas, or Inverchicas (Little Investments), and helpfully supplied the dates of the transfers and the bank account number.   The newspaper had no questions about how Carmona-Borjas would have come by such specific information, which Chimirri denied, explaining that Inverchicas had long since closed by the time of the supposed transfers.

Carmona-Borjas insisted that Chimirri had overseen not only the grey traffic diversion, which he claimed had robbed Hondutel of some $48 million dollars, but also that the payments to Inverchicas were indicative of a bribe of some kind.

Micheletti, who at that time presided over the Honduran Congress and had held Chimirri’s important position as director of Hondutel in the late 1990’s, weighed in early on Carmona-Borjas’s accusations.   “Those responsible for grey traffic deserve to go to jail, just like any other criminal,” he said.

The Cobra Raid and the Wiretapping

It wasn’t long before Arcadia’s whispering campaign bore fruit, and in early November, 2007, the state-sponsored Cobra paramilitary force launched  cb3dramatic and violent raids on Hondutel’s offices, as well as Chimirri’s home.  Chimirri said guns had been pointed at his children’s heads.  A year and a half later, TeleSUR’s president, Andrés Izarra, would identify the Cobra squadron as the force responsible for monitoring and threatening TeleSUR journalists reporting on the aftermath of the coup, that is, until they were thrown out of the country.

The justification for the raid was that Chimirri was accused of “abuse of authority, illegal weapons possession, and revelation of secrets.”  Zelaya was furious about it, and called it a brutal assault on Chimirri’s family, that better belonged in a terror film, and said that a simple citation summoning the Hondutel officials to court would have sufficed.

A couple of weeks earlier, on October 22, President Zelaya had filed a complaint for telephone espionage, after his phone was illegally tapped without his knowledge and he was taped speaking to subordinates, including Chimirri, about strategies to control hostile press coverage and emerging problems with Micheletti. Two other Hondutel employees were charged with participation in the wiretapping: Oscar Danilo Santos, and Luis Alejandro Arriaga.

Arcadia helpfully posted the criminally obtained recordings on YouTube.

The Mounting Accusations

The U.S. Embassy in Tegucigalpa didn’t wait for the case against Chimirri to work its way through the Honduran courts.  On January 24, 2008 it announced that Chimirri was no longer allowed to enter the United States, because of his links to “serious cases of public corruption.”  With an Italian passport, Chimirri had never needed a visa but now even that would not get him through U.S. customs.  Visas had always been a Reich specialty.

Then the dead bodies showed up.  On Friday, February 8, four people were found dead inside a truck with Guatemalan license plates, under a bridge.  They had been shot and later set on fire.

Again, Carmona-Borjas surged forward with an explanation.  Two of the bodies were Guatemalan, a third was unidentifiable, and the last was said to have been a computer technician by the name of Alejandro Laprade Rodriguez.  According to Carmona-Borjas, Laprade had come to Washington on March 27, 2007 to deliver a 49 minute tape recording which he claimed was proof of an extortion attempt by Hondutel employees.  Laprade claimed that they had raided his business for no reason whatsoever and demanded $100,000 so as not to be hauled directly to jail.  This too was posted by Arcadia to YouTube.

The fact that the crime scene looked very much like a drug deal comygone bad was for Carmona-Borjas only proof of the opposite and he insisted it was all a big show. Having no ability to oblige Carmona-Borjas to come to Honduras, and with Carmona-Borjas, (like his mentor) refusing to come anyway because of what he called “the prevailing climate of insecurity in the country,” the Public Prosecutor who was responsible for investigating the supposed extortion spoke of going to Washington to interview Carmona-Borjas.

By the end of March, La Prensa published a report that said that forensic specialists had positively ID’d one of the burned bodies as Laprade, with 21 matches between the teeth of one of the cadavers, and a mold that Laprade’s dentist happened to have on hand.  But several days later, the head of the Honduran Police Detective Force (DGIC), Francisco Murillo Lopez, said not so fast.  “A dental analysis is credible when 75 points coincide,” not 21, he said, “and when it is done by a dental forensic specialist…As a police detective I respect the position of the Public Ministry, but I believe that this case ought to be examined further and as a detective, I have my doubts,” he added.  He also asked to see the preliminary DNA results for all four cadavers.

Carmona-Borjas shot back, dismissing Murillo’s comments and throwing some new information into the mix.  He claimed that just days before Laprade was murdered, he had called Carmona-Borjas again, claiming this time to have a tape of Marcelo Chimirri confessing his involvement in grey traffic.  Unfortunately, Laprade’s computer expertise did not appear to extend to YouTube uploads, and Carmona-Borjas did not have a copy of the tape because he claimed that Laprade had been looking for a way to deliver it to him without raising suspicion, when he disappeared.

With his fondness for the collective pronoun combined with strategic insinuation, Carmona-Borjas said, “We told him that he should be extremely careful considering that…Marcelo Chimirri had been linked at one time between 1997 and 1998 to the crime against the young girl, Yadira Mejia.” After that, he said, he did not hear from Laprade again.  The tape has never been proven to exist.

Over the summer and fall of 2008, Carmona-Borjas would continue to stalk Chimirri, but he also began to turn up the heat against Arcadia’s real target.  At the end of July, he reportedly presented a formal complaint against President Zelaya, at the Honduran embassy in Washington, accusing him of acting against the legal order in Honduras and against democratic principles.  It was a shot across the bow.

Real Corruption of No Interest Whatsoever to Arcadia

Suddenly, at the beginning of April, 2008, the tension between the Public Prosecutor’s office (Public Ministry, in Honduras) and the DSCN5977National Congress erupted into something extraordinary. Four prosecutors began a hunger strike on April 6, which they held on the ground floor of the National Congress building.  The motive for the strike had its origins in 14 records of supposed corruption involving “well known figures, influential in the country’s political and economic sector” which had been shelved for years without any follow-up or investigation, let alone public revelation of their names.

As the hunger strike continued, it gained sympathizers and by the time a month had gone by, 22 additional people from a wide variety of organizations had joined the original four prosecutors, among them two priests and the evangelical Pastor Evelio Reyes.

After Pastor Reyes interceded, the Honduran Congress named a commission to mediate, consisting of Ramón Custodio, the commissioner for Human Rights and the executive secretary of the National Anti-Corruption Council, Juan Ferrera.  The fasting prosecutors rejected the idea of mediation.  Both Ferrera and Custodio went on to support the illegal coup government of Roberto Micheletti the following year.

Micheletti’s own proposal for resolving the standoff involved bringing the complaint to the Organization of American DSCN6022States (OAS); a proposal that was also rejected by the prosecutors, who insisted that the problem be addressed in Honduras.  The prosecutors were also demanding that the current Attorney General, Leonidas Rosa Bautista and the Assistant Attorney General, Omar Cerna, step down, for having engaged in illegal activities.

President Zelaya supported the group, visiting them at the National Congress and also asking that Cerna resign, saying “The real problem in Honduras is that the law is not applied to those who break it.”

The Honduran press and those allied with the Attorney General characterized the strike as an attempt by the president to replace the AG and his assistant with people from his own Liberal Party, rather than the National Party that the two belonged to.  The prosecutors rejected this, insisting that they simply wanted an investigation into the reasons for the Public Ministry’s weakness, and a review of the cases of organized crime, corruption and environmental and human rights abuses which had never been punished.

Cerna refused to resign, saying that it would be a terrible precedent, and in a refrain that would come to be repeated by the putschists a year later, added that his decision to reject the president’s request, was really a “strengthening of institutions and democracy [in Honduras].”

For his part, the astonishingly arrogant Rosa Bautista denied that he had done anything improper, and anyway, if he had, he had done it while in private practice as a trial lawyer, and not as an administrator.  Therefore, Decree 49-2008, lrbwhich was passed by the Congress the previous year to provide sanctions for administrative offenses did not apply to him.  Furthermore, he said that people were confusing the issue, that he was actually more like a judge, not a run of the mill administrator, and as a sort-of-judge, he was subject to the Supreme Court rather than the National Congress.  He threatened to go to the Inter-American Commission on Human Rights to ask that precautionary measures be taken to guarantee his freedoms as well as the freedoms of the Public Ministry.

Despite his declarations, the public demonstrations in support of the hunger strikers were clearly beginning to unnerve Rosa Bautista, and he began traveling in cars provided by the Secretary of Defense.  “If the people’s protests for the benefit of the media had taken place within the framework of the Constitution, something would have been done a long time ago,” he said.  “But these threats to the peace, to the freedom of the press, the demonstrations, the irresponsible accusations of everyone…we should return to peace and tranquility.”

It ought to have been a prime opportunity for the anti-corruption crusader from Washington to weigh in, and finally Carmona-Borjas did.  He was convinced the whole hunger strike was nothing but theatre and accused the hunger strikers of lounging on comfortable Coleman brand camping mattresses, sustaining themselves with energy drinks, energy bars and Evian.  Why all the fuss over a few corruption cases when there was grey traffic to be dealt with and Chimirri on the loose?

Carmona-Borjas directed most of his wrath at Pastor Reyes however, an interesting choice considering that DSC_0077Reyes came out in support of the coup a year later, but like many sectors in Honduras, the evangelical’s relation to politics is complicated and cannot be distilled into a simple right-wing/left-wing narrative.  No stranger himself to the charms of an expensive suit, Carmona-Borjas lashed out in a radio “debate” at the pastor for his luxurious attire worth “hundreds of thousands of dollars” (sic) and gold Rolex.

In return, Reyes delivered what must have been a far more cutting insult to Carmona-Borjas.  He had never heard of him.

A month and a half after it began, the hunger strike ended, when a commission of congressional representatives was named to investigate Rosa Bautista and Cerna.  The commission went nowhere.  One of the four original hunger strikers, Jari Dixon Herrera, said that the commission’s report “did not surprise us much, it’s what they were going to do [all along], they were never going to allow those cases to be reviewed.”  Referring to Rosa Bautista and Cerna, he added, “Nor were they going to allow their best two workers inside the Public Ministry to be exposed, seeing as they’ve protected so many.”


In April of 2009, Arcadia’s accusations against Hondutel finally gained traction when a $2 million fine was leveled by the U.S. federal court for the Southern District of Florida miamicourtagainst Latinode, a telecom company that was fined under the Foreign Corrupt Practices Act (FCPA) for supposedly paying more than a million dollars in bribes to “third parties” that were then to pass “some or all of those funds” to Hondutel employees in order to receive a discount on their interconnection rates. (IDT on the other hand was sanctioned by the FCC in the Haitian telecom case, but no FCPA case has ever been brought against it.)

Latinode had been under investigation by the FBI and the Miami office of U.S. Immigration & Customs Enforcement (ICE).  According to the Department of Justice (DOJ) news release on the settlement, Latinode also bribed officials in Yemen to receive interconnection discounts.  DOJ said that Latinode received interconnection discounts between 2004 and 2007, and that the payments were meant to eventually go to five Hondutel employees.  The “intended payment recipients” were not named, but the “deputy general manager (who later became the general manager)” could only be Chimirri.

Hondutel denied it, and said that an internal audit performed between January 1, 2005 and December 31, 2007 had revealed discrepancies in Latinode’s traffic that eventually reached $4.6 million dollars owed to Hondutel.  Paying a $2 million fine (over a three year period, according to DOJ) in Miami and shutting Latinode down was therefore a no-brainer, especially for eLandia, the Coral Gables telecom firm that had paid $25 million to purchase Latinode in 2007.

But the DOJ news release had another curious note.  It said “The resolution of the criminal investigation of Latinode reflects, in large part, the actions of Latinode’s corporate parent, eLandia International Inc. (eLandia), in disclosing potential FCPA violations to the Department of Justice after eLandia’s acquisition of Latinode and post-closing discovery of the improper payments. “

Similarly to Arcadia, the made-in-Washington front group, the Latinode case has the flavor of a made-in-Miami event.  Despite the DOJ English language press release, neither Arcadia nor the Latinode case are very important for U.S. consumption, yet they are playing significant political roles in Honduras.  Although the DOJ’s settlement with Latinode does not prove the guilt of any Hondutel employee, that is exactly how Arcadia and the coup government have interpreted it, and spread it through the media.  When Chimirri and other officials of the Zelaya administration were arrested on July 2, 2009, the sole evidence cited by the pro-coup press relates to the Latinode accusations made public by the U.S. court settlement.  The same federal court in Miami tried the Cuban Five case and the recent “suitcase scandal” case, demonstrating that the DOJ there is not above politicizing events in order to serve hard-right foreign policy objectives in Latin America.

The New Third Reich

“[This] huge network of people who are going after communications, not just in Honduras but in Central America – the same who achieved their objective in Guatemala, El Salvador and Nicaragua where they managed to totally privatize the telecommunications sector without a single benefit to the people…So they already have a perfectly planned out scheme through which they are taking over all telecoms in Central America.”

– Marcelo Chimirri, September 13, 2007 interview

Emerging from the shadows, Reich could not resist the opportunity to comment on the Miami case: “President Zelaya 89853_21has allowed or encouraged these kinds of practices and now we’ll see that he’s behind this as well,” he told Miami’s El Nuevo Herald.  He also referenced Chimirri for the first time in the U.S. press, casually mentioning the family connection (to the Zelayas) and the fact that he’d been accused in Honduras of a series of illegal acts in regard to his management of Hondutel contracts.  He did not mention Chimirri’s accuser.

For Zelaya, it was the last straw.  Two members of his cabinet as well as his personal secretary were sent to the U.S. to hire legal counsel to sue Reich for defamation. The secretary, Enrique Reina, said that Reich was upset because Hondutel had cancelled the interconnection contract of a firm he represented.

Carmona-Borjas weighed in, repeating his accusation to the Honduran media that Zelaya had acted “unconstitutionally.”

Zelaya would have little time to press the case.  Two months later he was awoken by the Cobra paramilitary force which shot its way into his house and put him on a plane to Costa Rica, still wearing his pajamas.

In his strange non-denial op-ed for the Miami Herald, Reich taunted Zelaya, claiming that a little thing like a coup d’etat was no reason for him not to proceed with his defamation lawsuit, and in floating the accusations against Chimirri, inflated the amount of missing Hondutel funds from $48 to $100 million.

The CAFTA Link

The explanation for the wild price inflation may have less to do with Reich’s penchant for hyperbole than it does with CAFTA, the Central American Free Trade Agreement.  The pressure to privatize Hondutel did not materialize until CAFTA was implemented.  It is a key piece of the neoliberal puzzle, even expanding multinational corporations’ rights in Central America to include the ability to sue for 17“lost” or “future” profits under a clause that protects companies from “measures equivalent to expropriation.” (CAFTA-DR Treaty, Article 10.7)

CAFTA clearly states that legitimate state actions such as the enacting of environmental and consumer protection laws, may trigger Article 10.7 and allow U.S. corporations to sue signatory countries for all of the money that they might have made otherwise.  Illegitimate government actions such as corruption are therefore definitely covered, and mere accusations of corruption could provide the fulcrum to pressure governments into settling in the secret tribunals of ICSID, the World Bank’s arbitration court. But that may not be necessary, since Reich is a self-proclaimed expert in handling “anti-corruption activities, political risk analysis and non-litigious dispute settlement” for US multinationals in Latin America.  His backdoor expertise can make it so that multinationals never have to publicly make these immoral and reputation-damaging arguments.

Given Reich’s telecom ties, not to mention those of the Cormac Group and AP on TV Fox's Democratsthose of Hillary Clinton’s friend, Lanny Davis,  who set up a press and congressional lobbying tour in Washington for the Honduran coup regime, the possibility of a future lawsuit of this type cannot be discounted. CAFTA’s rules regarding such lawsuits are broader than NAFTA’s infamous Chapter 11, and such threats are already being utilized by multinationals to pressure the cash-strapped governments of El Salvador and Guatemala into handing over millions.

The Aftermath

Reich admitted to having engaged in “pointing to Zelaya as the enabler of the corruption in Honduras” and added, “had I really been the ‘architect’ of Zelaya’s removal, I would had (sic) advised that he be charged with the almost 20 crimes with which the Honduran Judiciary has now charged him, and be arrested by civilian authorities.  I would have urged that the constitutional process be followed: the elevation to the presidency of the next-in-line, President of the Congress Roberto Micheletti, and the continuation of the electoral process, culminating in a November election.”

Except for omitting the part about flying the president to Costa Rica, this was how the coup played out, to the letter, although Reich coyly insisted these events unfolded “without my involvement.”

To La Prensa in Honduras, Reich once again denied any legal association with Arcadia.  “I’m not a member of the Arcadia Foundation.  I know the Arcadia Foundation very well and the work it has done.”  It was exactly the kind of statement he could have made 25 years earlier about Citizens For America.

For his part, Carmona-Borjas fulminated to what was left of the Honduran press about how kicking TeleSUR out of Honduras was not really restricting anyone’s freedom of expression, adding jabs at CNN en Español for not completely ignoring demonstrations in support of Zelaya, and of course, his pet target, Chimirri.

In Honduras, with Zelaya safely out of the way, the new putschist leaders would crank up the witch hunt, nabbing Chimirri and other Zelaya officials post-haste and sending them directly to the national penitentiary, but not without personally introducing Carmona-Borjas at a pro-coup rally and commending him for being the first to incriminate Hondutel and thanking him for Chimirri’s arrest.

An order was issued to Interpol for the capture of the Hondutel employees implicated in the Latinode case: Jorge Alberto Rosa, Julio Daniel Flores, and Oscar Danilo Santos.  Charges were also concocted against Rixi Moncada, who was one of the people Zelaya had earlier sent to Miami to hire the firm to sue Reich, and who would play a visible role at the mediation talks with Oscar Arias, arranged by Hillary Clinton.  Rebeca Santos, and Aristides Mejía, formerly associated with the state electric company were also targeted.

Although Arcadia’s role was unreported and therefore unknown outside Honduras, the Venezuelans and Hondurans understood it completely.  Ambassador Chaderton promised to forward a dossier on the matter to the U.S. mission to the OAS, and in an interview with La Jornada following his remarks to the OAS, Chaderton said they had “absolutely no doubts about it.”

In Latin America, there are many more important state companies to be targeted for privatization, and if not, many more leftist leaders who remain to be convinced or toppled.  Meanwhile in Washington, the Arcadia Foundation still exists, like a sleeper cell, awaiting its master’s voice.

* With additional reporting by Revolter.

7 responses to “Otto Reich and the Honduran Coup D’Etat: The Provocateur, his Protege, and the Toppling of a President – Part Two

  1. this article is excellent. thank you machetera.

  2. thank you for this, epic work

  3. You know, Otto Reich is the very sort of person they used to hang in Germany, right after World War II. Nowadays, he gets off without even a slap on the wrist.

    Astonishing, really.

  4. An outstanding and essential two articles Machetera. Thanks!

  5. Great stuff, thanks for the hard work.

  6. Good job in trying to peel the onion. Sure, you pointed out some actors, but you were imprecise in their roles. You completely disregarded all the other aspects of Zelaya’s ultra-corrupt government. You did not even mention the purpose of his illegal referendum, with the ultimate goal of rewriting the Constitution according to his interests.

    Please mention how Zelaya has followed every order of Hugo Chavez, almost like a puppet. Furthermore, you should report on how Zelaya was heading to become a Chavez style dictator by means of using the State mechanisms to kill democracy. Next time you should also point out how the recipe for perpetual power provided by Chavez has worked for Evo in Bolivia, Correa in Ecuador, and how it’s getting materialized in Nicaragua with Ortega. It is also luring others such as Lugo in Paraguay and Fernandez in Argentina. Not to mention Arias in Costa Rica who is already proposing rewriting the Constitution.
    You are missing the big picture: how the club of Latin American presidents in power has shifted “left” (that sort of profitable fake left fueled by petrodollars and drug-trafficking dollars).

    The succession in power in Honduras was more than an intent of a multinational to take control of Hondutel (ja,ja). It was about preventing Chavez to add another piece in the puzzle for his Hemispherical domination. I am not surprised that Otto Reich was involved, however the motives were the ones I just laid out. I am sure it is fun for him to pick on Chimirri and send him and others to prison, but the truth is that he is against the remnants of communism, pseudo-communism, and Chavista socialism.

    • “…how Zelaya was heading to become a Chavez style dictator by means of using the State mechanisms to kill democracy.” You mean the ballot where ordinary Hondurans could VOTE on whether or not the Honduran constitution could be re-written to allow someone to put their name on another ballot where Hondurans would VOTE on it again? Yeah, that’s a recipe for perpetual power, all right. Power of the people.

      As far as mentions of what you call Zelaya’s puppet-like behavior, there are plenty of those to be found in the corporate media. Have you also written to the New York Times, Washington Post, Wall St. Journal, etc., to ask why they have not mentioned Otto Reich’s role in the Honduran coup? Why does Machetera have to do all the work?

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