After the United States indicted one of Honduras’ most powerful families for money laundering, conventional wisdom suggests that other corrupt elites might fear they could be next. However, sources consulted by InSight Crime say this logic does not always prevail amongst the Central American clans believed to have ties with organized crime.
In October, the US shocked Honduras — and the region — when it unveiled the accusation against Jaime Rosenthal, his son Yani Rosenthal, his nephew Yankel Rosenthal, and family company lawyer Andres Acosta Garcia.
Yankel Rosenthal is in custody in a US jail; Yani is presumably in custody as well. The US may issue an arrest warrant for the other two at any moment, and they could be extradited, if they are captured.
In an unprecedented move, the US Treasury also sanctioned the Rosenthal’s bank, Continental — among other family companies — which the Honduras government liquidated just days later.
The charges are the first of their kind against such high-level elites in Central America. With dozens of companies ranging from agro-business to insurance, the Rosenthal family is one of Central America’s wealthiest. They are also major power brokers for Honduras’ chief political opposition, the Liberal Party.
The vagueness of the indictment (pdf) and the broad jurisdiction of the US courts leaves many other businesses open to similar charges. The accusation says the following:
The defendants…in an offense involving and affecting interstate and foreign commerce, knowing that the property involved in certain financial transactions represented the proceeds of some form of unlawful activity, would and did conduct and attempt to conduct such financial transactions which in fact involved the proceeds specified unlawful activity.
In other words, the family had prior knowledge that the money they were moving into their businesses came from activities related to “narcotics” and corruption.
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The obvious defense for the Rosenthals is to say they had no prior knowledge of this. And that is exactly what Jaime Rosenthal and his daughter Patricia said in June 2015, when InSight Crime asked them about what was then speculation. The Rosenthals also argued that they lacked the resources needed to adequately scrutinize their clients and cut off those linked to suspicious activities.
Still, the indictment could also be interpreted as a threat to other elites linked to organized crime networks in the region.
“I think the Rosenthal family situation is very delicate and will impact the future of Honduras economy in various respects,” Eduardo Facusse, the former president of Honduras’ most powerful business association (known by its Spanish acronym COHEP), told InSight Crime in an e-mail exchange.
Several analysts and elites consulted by InSight Crime view the Rosenthal probe as more of a one-time event, rather than representing the beginning of a string of investigations against Central American power brokers linked to organized crime.
Michael Shifter, the president of Washington-based policy center the Inter-American Dialogue — an organization that works closely with elites across the region — agrees.
“It is a precedent that total impunity may be coming to an end,” Shifter said.
However, Shifter and others say that not all of Central America’s elites will react the same way. Shifter noted that some may argue that the US is being hypocritical, given the US position on cases of corruption and money laundering within its own borders — such as major banks being given a relatively light slap on the wrist for laundering drug cartel money.
“Whatever the truth is, there will be elite sectors that will see this as a double standard and that will be the way they will interpret it,” said Shifter. “The US can’t solve its own problem — they will see it in this light.”
US frustration over lack of progress against crime and corruption in Central America has been building. To cite just one example, the US is a staunch backer of the United Nations-backed International Commission Against Impunity in Guatemala (Comision Internacional Contra la Impunidad en Guatemala – CICIG). Alongside Guatemala’s Attorney General’s Office, the CICIG helped force the resignation of the president and the vice president in a corruption case.
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“I don’t think there will be any more cases like this soon. But the message is clear.” |
Still, several analysts and elites consulted by InSight Crime view the Rosenthal probe as more of a one-time event, rather than representing the beginning of a string of investigations against Central American power brokers linked to organized crime.
Hugo Noe Pino, the Honduras representative of ICEFI, a think tank focused on fiscal issues in the region, says that other businesses are feeling “more secure” because they believe the US will not continue to upset the precarious economic balance in the region. The actions against the Rosenthal clan could leave thousands unemployed and cut as much as three percent of Honduras’ gross domestic product, Noe Pino said.
“This could have a multiplier effect, part of which the US did not anticipate,” Noe Pino explained. “So I don’t think there will be any more cases like this soon. But the message is clear.”
Still, where some see chaos, others see opportunity. Dionisio Gutierrez, the head of Multi Inversiones — most famous for its Pollo Campero fast food chain — who has faced public recriminations himself from political enemies, said the region could benefit from international pressure.
“I see the awakening in Guatemala with the help of CICIG and the awakening in Honduras and El Salvador as long awaited great opportunities,” he told InSight Crime in an e-mail. “This region needs rule of law and painful consequences for all of those who have committed crimes, broken the law or abused the democratic system. But this has to be done without an ideological agenda and without all the prejudices that have made Central America a very convoluted and tortuous region.”
However, there are few precedents that suggest Central America’s elites will seek equal treatment of the type that Gutierrez is suggesting. To be sure, Noe Pino sees a slightly different scenario in which other elites will take advantage of the US and Honduras action against the Rosenthals for their own gain.
“This is a strong blow against the Rosenthals, and at least part of the economic elite may try to fan the flames of that fire,” he said.
In the meantime, the US case against the Rosenthals continues to accrue victims. While their assets were frozen, crocodiles on a leather-making farm owned by the family reportedly went hungry.