Table of Contents

“Juan Orlando has all state powers. There is a face of a democracy here in Honduras, but behind it is dictatorship.”
—Austra Bertha Flores López, mother of Berta Cáceres

Several people interviewed for this study echoed this assessment that Honduran President Juan Orlando Hernández is making a strategic effort to consolidate the levers of government power, placing them within his personal grasp. While the means by which he himself may be extracting material gain from this arrangement are difficult to prove, several of them have been persuasively identified. And regardless, a pattern of subjecting institutions to his personal authority—or of ensuring their weakness—is clearly visible. The bulk of the actions or inactions of these agencies has served to facilitate or defend revenue maximization for the principal private-sector network members, or has provided siphoning opportunities for public officials.

National Defense and Security Council

A visible step in the process of consolidation of power was the creation of this powerful and secretive body in 2011. Its stated mission is to design, supervise, and coordinate policy on all matters relating to security, defense, and intelligence, including the appointment and supervision of the director of national intelligence. Made up of the president, the president of Congress, the minister to the presidency, the ministers of defense and security, the chief justice of the Supreme Court, and the attorney general, this council controls all electronic surveillance capabilities and activities, including judicial wiretaps. It also provides the operational command for the interdisciplinary security force, FUSINA. (For more, see the section on military elements on pages 32–35 below.) The mingling of all three branches of government on this council formalizes the violation of the separation of powers that we frequently heard criticized during interviews. Its activities are protected by a law enacted in 2014 establishing broad categories of state secrets.

Congress

The point of capturing a legislative body is to write the rules governing political and economic activity in such a way as to further advantage network members—people who already enjoy disproportionate power in both realms. Integral to that objective is disabling the body’s capacity to serve as an effective check on executive power. In other words, control over a majority of seats in a legislature does not in and of itself constitute “capture” of that body. But if that majority is consistent, election after election, or if ostensibly opposing parties frequently band together to defend network interests, or if internal rules are consistently exploited or violated in such a way as to disable the legislators’ ability to weigh on decisionmaking or exercise nonpartisan control functions at all, then its purpose is subverted.

Just a few minutes contemplating the Palacio Legislativo, the building in downtown Tegucigalpa where the Honduran Congress meets, is instructive regarding the accomplishment of these objectives. The 1950s building, its exterior walls made of dusty glass slats, contains no private offices for the 128 legislators, for example, and only two conference rooms where they can meet in caucus or with constituents. In the chamber, the electronic tally machines frequently malfunction, so when bills come up for a vote, members may not be able to see the score. Everything about the institution indicates its deficit of status, power, and independence.

Beneath the building, however, the contrast is striking: the garage is packed with late-model SUVs, spotlessly black.

Here’s the significance: opposition parties, if they vote together, outnumber the ruling Nationalist Party, and have on occasion thwarted its plans. It is to reduce this likelihood that the Honduran Congress has been weakened, both in its operating procedures and its physical plant.

The president of Congress is firmly in charge of all proceedings. “The ground rules say he decides who speaks and for how long and the agenda,” explains a member of the young Anti-Corruption Party (PAC). At his discretion, the congressional president can also constitute special committees, to which he can divert business, circumventing the formal committee structure. “When there’s a special committee,” comments the PAC member ruefully, “watch out.”67

Prior to his inauguration as president of the country, Hernández served for four years in this leadership post. Under his aegis, the systematic process of creating a favorable legislative climate for network practices ignited. Congress passed numerous laws framing economic rules so as to favor activities dominated by private-sector network members. The calendar in December 2013 and January 2014 (when Hernández was still serving as president of Congress but had been elected president of the country) was particularly full—like a final flourish to this fireworks display.

Some of the key laws from his tenure at the head of Congress are described below in chronological order.

The Public-Private Partnership Law (September 2010)68

Ostensibly responding to a dearth of government funding for public works projects, this law caters to the interests of private-sector network members by allowing businesses to carry out public works projects under highly flexible and nontransparent arrangements, which allow for the capture of some portion of the public moneys invested, as well as the fees, tolls, or profits realized. Successful bidders may also be paid a “service fee” of up to 2 percent of the total project budget. Typically, project financing is held in trust by a bank (especially Ficohsa and to a lesser extent Atlantida, controlled respectively by members of the Atala Faraj and Nasser-Facussé-Barjum, and the Goldstein and Bueso families), which is in charge of project implementation. Because activities are covered by commercial contract, accounts are not available to the public. (For further discussion, please see the sections below on the Coalianza, and banks, pages 35–36.)

Seven months after the passage of this law, then president Porfirio Lobo and foreign minister Mario Canahuati (a leader of one of the Levantine business clans) hosted an investment conference in San Pedro Sula and announced that Honduras was “Open for Business.” At this event, some 160 projects in the sectors of tourism, energy, infrastructure, forestry, and agribusiness were presented to more than 500 potential international investors, along with a package of complementary laws. The measures protected private investment, set conditions for hourly wage labor, and established free trade zones (referred to as “Model Cities”) whose territory would have been effectively removed from government control and placed under a separate tax and judicial system. (Such zones were ruled unconstitutional in 2012.)69

The initiative was crafted to attract an injection of foreign direct investment into Honduras and is believed to have been largely designed by members of the Consejo Hondureño de la Empresa Privada (COHEP), the chamber of commerce dominated by private-sector elements of the ruling network. Conference co-host Canahuati was a past COHEP president.70 There were no public consultations, for example, to help constitute the list of projects to be funded.

It was specifically the businesses belonging to these network members that stood to benefit from the enticements on offer, including low interest rates and tax exemptions, but public-sector network members could also take advantage of the secrecy shrouding the contracts in play to move money away from normal budget scrutiny and the strictures of the public procurement law. A further point of the exercise was to garner the injection of outside capital that businesses needed to complete the pet projects.71 Many of the laws’ benefits apply only to large investments, while a heavier tax burden continues to weigh upon small and medium enterprises.

The Anti-Terrorism Financing Law (December 2010)72

Similar to recently enacted strictures in dozens of countries worldwide,73 this law requires nonprofit organizations to declare any contribution higher than $2,000. The National Commission of Banks and Securities is empowered to act unilaterally against organizations suspected of financial involvement with a group organized for the purpose of committing terrorist acts. A broad definition of that term allows for selective use of this instrument against inconvenient organizations.

Special Law on Wiretapping (December 2011)74

While this law includes apparent safeguards, such as the requirement for a court order before personal communications can be intercepted, interviewees were convinced that the government makes wide use of its significant wiretapping capabilities outside the scope of criminal investigations. At a time when Internet-connected devices are vacuuming up unprecedented quantities of personal information, the implications are significant. Hondurans with an interest in public affairs rarely put anything of substance into writing that is sent electronically, and systematically use encrypted platforms for communication.75 One journalist we met was so frightened about electronic surveillance that he insisted on writing down his answers to our questions rather than speaking out loud. Honduras scholar Adrienne Pine recounted that before launching into a conversation, one of her contacts requires interlocutors not only to turn off their cell phones, but to remove the batteries.76

Special Law of the National Security and Defense Council (December 2011)77

This law establishes the permanent council referred to above, consisting of the president, his minister, the president of Congress, the chief justice of the Supreme Court, the attorney general, and the ministers of security and defense.

Secrecy Law (January 2014)78

While guaranteeing its own access to citizens’ intimate information by way of the 2011 wiretapping law, the government took care to protect itself from any reciprocal scrutiny. This legislation establishes a level of classification for information described in very general terms as likely to produce “undesired institutional effects,” or whose dissemination might be “counter to the effective development of state policy or normal functioning of public sector institutions.”

The law has made it exceedingly difficult for Honduran citizens to obtain information on most government actions, including key public procurement contracts. As one community leader put it, “There is a privatization of information in this country: if you ask who owns a mine or a dam in your village, those facts are private.”79 Among the agencies whose information is considered confidential (not to be released before ten years) are the Supreme Court, the Foreign Affairs and International Cooperation Directorate, the National Migration Institute, the National Registry of People, the Social Security Institute, the Property Institute, the Merchant Marines, and the National Electrical Energy Enterprise (ENEE).80 Any transactions these agencies carry out with private entities are also covered by the law.

Some earlier legislation also fits the pattern above, such as a 1992 agricultural modernization law that allowed for the titling and sale of small parcels of land, previously inalienable. Its effect was to undermine collective ownership traditions and open the way for big businesses to buy up and consolidate tracts of land. A 1998 law to promote tourism afforded generous tax breaks to fast food chains as well as a variety of other network-linked businesses. In 2001, a law transferred swaths of forest land from collective indigenous control to the government, opening the way for large-scale commercial, as well as illegal, logging.81 A 2003 anti-gang law modified the penal code to establish a minimum prison term and fine for leaders of gangs or other groups organized for the purpose of committing crimes.82 Critics charge that its broad terminology has allowed it to be used against land rights activists, and blame it for the sharp increase in incarceration in Honduras in recent years. (See below, pages 31–32.)83 A 2007 renewable energy promotion law inordinately benefited large investors by requiring the government to buy all renewable electricity generated by its private contractees, at a rate 10 percent above the base level set in 2007, among other incentives.

Judiciary

One of the most important bonds that hold kleptocratic structures in place is the delivery of impunity in return for a portion of the cash generated by network activities.84 Such a bargain can only be upheld if the judiciary and its affiliated institutions—or at least some portion of them—serve at the behest of network members. These institutions can then also be weaponized to punish and deter individuals who contest the ruling order.

More blatantly than in many other corrupt countries, Honduras’s justice sector has been retooled to serve as just such an instrument. The changes it has undergone in the past decade reflect an unmistakable pattern. The justice sector is now openly deployed on behalf of private-sector network members as well as the president himself.

Even before the 2009 coup, some legal professionals strenuously contested what they saw as political influence and obstruction of justice within judicial institutions. In April 2008, for example, eight prosecutors—soon joined by dozens of members of civil society—underwent a thirty-eight-day hunger strike, setting up tents in the Legislative Palace, to demand that charges be brought in more than a dozen stalled anti-corruption cases, and that the attorney general be removed and the professional conduct of his office be investigated.85

In the days immediately following the June 2009 coup that toppled Manuel Zelaya, a similar coalition of judges, prosecutors, and civil society activists challenged the legality of its outcome before the Supreme Court. Some of them and others filed a criminal complaint against named members of the military and Congress for their role in the coup. Signatories to the complaint, as well as other judges who took part in public protests or merely expressed concerns about the events, were dismissed, and judicial purges have continued.86

In subsequent years, especially 2011 and 2012, despite substantial corruption within the judicial branch, the Supreme Court stood out as one of the few government institutions that pursued an independent path, challenging a number of legislative initiatives favorable to ruling business interests, such as the bill creating the Model Cities and a police reform bill that the court determined violated officers’ due process rights.87

In December 2012, Congress, under the leadership of its then president Hernández, set up a special committee to investigate the four judges who had voted to strike down the legislation. Based on a report delivered within twenty-four hours, Congress met in a 4:00 a.m. session and voted to remove all four, though the Honduran Constitution stipulates that judges may only leave office in cases of resignation, incapacitating illness, or death. Amid widespread protests, Hernández immediately appointed replacements.88 This series of events was so irregular that it was quickly dubbed the “technical coup.”

Supporters of the earlier corporate/military coup against Manuel Zelaya had rationalized their actions by accusing him of intending to change the constitution in order to run for reelection.89 Ironically, Hernández announced his plans to do just that on November 9, 2016.90 His takedown of the Supreme Court was widely seen as preparation for this step. “We knew that one of the reasons Hernández needed to control the Supreme Court was the reelection issue,” said a PAC member of Congress. And indeed, on April 23, 2015, his handpicked justices struck down the constitutional provision preventing officeholders from running for more than one term.91

Less than a year later, in February 2016, Congress approved the new slate of justices, considered close to Hernández. Libre Party’s Jorge Calix alleged that the going rate for votes in Congress was $10,000,92 and party Chairman Manuel Zelaya filed a legal complaint.93 “They bought even members of the Anti-Corruption Party,” the PAC member lamented, “by way of family members and suspect elections. They worked on it for months ahead of time. And now, one of our biggest sorrows is that we are stuck with this court for the next seven years. Already we saw their first ruling was not to review the decision allowing presidential reelection.”94

In March, the same newly packed Supreme Court invalidated several provisions of the law governing the professional attributes of the judiciary and the structure of its institutions (such as procedures for promotion and removal of judges, which were seen in the profession as guaranteeing its independence).95

But it’s not just at the highest levels of judicial function that legal proceedings are distorted, even bent to network purposes. Journalists, opposition politicians, human rights defenders, and civil society activists opposed to mining or hydroelectric concessions complain of frequent spurious prosecutions.96

Radio and TV Globo Director David Romero Ellner, who broke a major scandal in the public health system in 2015 that led to weeks of mass demonstrations, was prosecuted and convicted for defamation.97 Some see judicial scrutiny of members of Manuel Zelaya’s Libre Party in a similar light.98

A lawyer who specializes in anti-corruption cases says his briefs are regularly rejected on spurious pretexts, “once because the seal at the bottom of the page was halfway over the margin.” He recounts examples of blatant evidence-tampering, for example, when a car stopped by police in traffic proved to have $50,000 in cash aboard, and a phony name was put on the affidavit to protect the well-known driver from scrutiny.99 Even more ostentatiously, the evidence files in the most celebrated case in Honduras, the investigation of the murder of Berta Cáceres, were lost when alleged carjackers stole the vehicle of a judge on the case, who said she had taken them out of court to study at home.100

A pig, representing government officials who have looted huge sums from the public health service (IHSS), flings the epithet “criminal!” at a young protester spraying a slogan on a wall. Behind the pig (outside the frame), education is being flushed down a toilet.

Blatant evidence-tampering seems to be a trademark of today’s kleptocrats. In Moldova, a 2014 vehicle fire sent twelve sacks of documents recording $1 billion in corrupt bank loans up in smoke. In an earlier and even more shocking case, Serbia’s Slobodan Milošević had bodies of victims of his forces’ atrocities in Kosovo dug up and reburied well inside Serbia.101

To ordinary Hondurans, practices like these define injustice. “A government has the right to make any laws it wants,” remarked a small farmer and shopkeeper serving the canoe traffic on the Patuca River in the country’s far east. “But it has to apply them equally. Here they catch the little street delinquents and make them rot in jail, but the big ones? The vice president of Congress who made phony medicine? [See the section on the IHSS scandal, pages 48–50 below.] That’s a crime, she should be in prison. But not only do they go free, they get protection.”102

A retired agriculture professor in Juticalpa points to a similar discrepancy in the treatment of the assets of different Hondurans charged or convicted in the United States. He noted that the Rosenthals—a banking and business family, members of which were indicted in 2015 on money-laundering, narcotics, bribery, and embezzlement charges103—“were expropriated right away because they’re from the opposing party. But other people who have been extradited, like [Juan Ramón Matta] Ballesteros or the son of Pepe [former president Porfirio Lobo] are different. Their families are still enjoying their property.”104 In this case, the differential treatment meted out may reflect either efforts to discipline the network or rivalries among its separate and competing strands.

Police

Some instrument of force is invariably included in kleptocrats’ toolboxes, for intimidating or punishing the most recalcitrant rivals or opponents. In some countries (such as Cameroon), a specialized army unit can play that role. In others (Egypt, Pakistan), the army itself constitutes the principal kleptocratic network. But very often, the police or a special branch within it, together with internal security services whose remit includes spying on the population, provide both muscle and a revenue stream.105 Almost always, some informal armed groups—“thugs,” “insurgents,” or private security guards—also play a role.

In the case of Honduras, police officials at every level consistently serve on behalf of all three elements of the networks. They rarely seem to work in the interests of the ordinary population. Independent access to large sums of money, however, via relationships with trafficking organizations and youth gangs, affords police on the local level some degree of autonomy from top levels of the political hierarchy. Also, U.S. programming, whose stated aims are professionalizing the force and cracking down on violence and drug trafficking, may inhibit some ways of using this instrument. Responding to both of these realities, Hernández has consistently sought to insert the Honduran military, which he may deem more biddable, into domestic security roles that in most democracies are reserved for the police.

That police is a national force divided into two branches operating out of the cities of San Pedro Sula and Tegucigalpa, with regional and departmental headquarters and delegations in 298 municipalities. Numbering between 13,000 and 14,000 men and women (though thousands of those may not actually exist106), the Honduran police force is described by a member of a nongovernmental organization (NGO) that is involved in police reform, Asociación Para una Sociedad Más Justa (ASJ, or Association for a More Just Society), as the “biggest state institution. It has arms, a national coverage, vehicles, and detailed intelligence on the population, including people’s financial information and where they live.”107

“There was a politicization of the police before, during, and after the coup,” judges another ASJ member. “The police were instrumentalized by politicians. Combine that with a nonrigorous selection process—anyone can join—and the glorification of tough practices. The police were converted into an instrument of repression.”108

Even U.S. diplomats—rarely seen as critics of Tegucigalpa—seem to agree with such assessments, which have been widespread inside and outside Honduras for years.109 “There are a disturbing number of indications that police personnel are involved in some crimes,” notes a March 2006 embassy cable, “though such allegations . . . are not unique to this [Zelaya’s] government.” The minister of public security, the cable concluded, “despite his bold statements about police being part of the problem, has yet to take any measures to shake up the corrupt ranks.”110

Three and a half years later, in a cable alerting Washington to dramatically rising violent crime in postcoup Honduras, the U.S. embassy emphasized the “lack of resources . . . corruption and politicization resulting from the 2009 political crisis” as factors contributing to the wave of violence. “Prosecutors,” the cable adds, “do not trust the police to carry out effective investigations of crime, citing cases where police have warned suspects or divulged information to them.” But also, U.S. officials noted, “police have been politicized, defending the de facto regime against those who have taken to the streets to oppose the coup. . . . The Attorney General has initiated a series of politically-motivated prosecutions against President Zelaya and his cabinet members, undermining the Public Ministry’s credibility as an agent for equal justice.”111

The police, in other words, were being used as a weapon to enforce the results of a manifestly illegal coup d’état.

Before the end of that year, the country’s chief counternarcotics official, Julián Arístides González Irías, was slain, an almost textbook case of police enforcement of the integrated network’s financial interests—in this case, its narcotics business. Top police and elected officials and a notorious narcotics trafficking organization allegedly colluded in the murder.112

This was just the most dramatic recent example of the widespread and long-standing evidence that Honduran police, at every echelon, have been actively collaborating with—have essentially been functioning as a part of—the country’s drug cartels,113 even becoming “subordinate” to them, in the view of some at the ASJ. “They would even commit assassinations for them.”114 (For more, see the section on criminal network elements, pages 79–83 below.) Since that time, nothing has transpired to improve the reputation of the Honduran police.

The force is still frequently accused of harassing people opposed to government policies, for example. “It started in 2012,” recounted the head of one community organization that tallies nine suspicious deaths in its ranks in a little over a year. “When we began contesting permits for dams on all the rivers around here and the mayor’s plans to measure off our land into individual parcels, we started getting problems with the police. They’ll stop you, ask who are you, where are you going, what did you eat today. They charge people with sedition, plant drugs on them.”115

Human rights defender Marlene Cruz was charged with aggression against the police.116 Luis Galdamez, another reporter for the dissent-minded Radio Globo, was dragged from his car and beaten, allegedly for a routine traffic violation. In Honduras in Dangerous Times,anthropology and international studies professor James Phillips documents this and other arrests for illogical or trumped-up charges, such as trespassing.117

Beleaguered activists who have turned to the Inter-American Commission on Human Rights joke darkly about one of the remedies it frequently orders—police protection. “The police aren’t giving me protection,” scoffs one. “I need protection from the police!”118

Hondurans in the capital and the countryside complain about the type of street-level shakedowns that are typical of police in most corrupt countries. “The police stop you for anything,” said a private school language teacher. “It’s ‘Pay me, or you get a ticket.’ So either way you pay. They usually ask for 200 lempiras. The ticket is 600.”119 Another sufferer concurred, adding: “Especially if you are hauling cargo. They’ll ask what do you have, where are you going, they’ll demand your documents, find some problem with your vehicle; the whole point is to make the driver give them money.”120

Of greater concern are the reports we heard in interviews of collusion between police and the youth gangs whose depredations it is their job to curb.121 “What worries me most,” said a Western implementer of a street-level anti-gang program, “are neighborhoods where there is a lot of gang-police interaction, where people with gang markings are in and out of police stations, where conversations suddenly change when you walk in the room. Those are the hardest neighborhoods to work in.”122 Recent investigations indicate that more than sixty police officers, including commissioners, were actually on the payroll of the notorious gang MS-13.123

One purpose of this murky relationship, according to many Hondurans, is revenue generation. Extortion—of homeowners, small businesses, and providers and users of public transport, among other victims—developed into a major gang activity beginning around 2012.124 But the general atmosphere of violence and anonymity made it hard to know exactly who was profiting. At the height of the chaos a few years ago, says a professional driver, “everyone was terrified of a call in the night.” Even now, “if someone is shot for not paying extortion money, no one wants to report it, because they’re afraid the police will inform the gang.”125 The anti-gang expert agrees. “The atmosphere of violence allows for more criminality. If someone calls saying ‘I’m MS-13 and I want X amount of money,’ you give it.”126

The resulting confusion can be exploited by the police. “Everyone says it’s gang violence,” remarks the driver, “but no one knows.” For the retired agriculture professor who noted the discrepancy in how laws are enforced against connected versus unconnected people, there is no question: “The police take part of the extortion money,” he affirms.127 “The police are totally involved in extortion,” concurs one of the ASJ members. Commenting on cases the ASJ has investigated and passed to the new police reform commission, he concludes that police “see, advise, protect, and facilitate extortion—to protect family members who are in gangs, and to get money.”128

In other words, though they are known to shake people down for spurious traffic violations just like their counterparts in Nigeria or Uzbekistan or dozens of other corrupt countries, Honduran police can also outsource their extortion activities to gangs. And that relationship may go further: gangs may serve as informal police auxiliaries, “for certain purposes—dirty work,” the retired professor puts it.

Anthropologist Phillips writes, “Sometimes people ask whether there is collusion or even integration between death squad activities and police actions.”129 Indeed, most of those interviewed in Honduras, Western as well as Honduran, suspect the police of participating in a policy of what has sometimes been called “social cleansing”—extrajudicial killings and round-ups or disappearances in tough neighborhoods.130

The impact on Honduran youth is devastating. “The police are integrated into gangs and form part of inter-gang fighting,” the former senior Honduran official whose quote serves as the epigraph for this paper is convinced. “Young people, the best of our country, are being killed at a rate of fifteen or sixteen a day. What can they do? Migrate or die.”

In these ways, a very consistent pattern of police participation with criminal elements of the kleptocratic networks as well as public- and private-sector network members in committing crimes or protecting illicit capture of revenue streams is evident, as is its role in interweaving the networks. This brand of corruption may thus lie at the heart of the recent Central American refugee crisis.131

It is in this context, and in the wake of the 2016 revelations about police involvement in the 2009 murder of the counternarcotics czar, that Hernández announced the establishment of a special commission to reform the police.132 While there is no doubt the force needs reforming, most Honduran interviewees expressed deep doubts about the true objectives or likely effects of this commission.

Consisting of Security Minister Julian Pacheco, former Supreme Court president Vilma Morales (an outspoken advocate of the 2009 coup and a Hernández confidante), Honduran Fellowship of Evangelical Churches President Alberto Solórzano, and the ASJ’s Omar Rivera, it is empowered to “determine [police officers’] suitability for service,” as well as supervise those who are purged from the ranks.133 By late 2016, some 2,100 officers, many of them high-ranking, had been removed from (or had left) their positions out of a total of approximately 14,000,134 while about 2,500 new graduates of the police academy were sworn in.

“Some [of the purged officers] are corrupt, some aren’t corrupt or delinquent, they’re just too old, or they’re mediocre or negligent,” judges one of the ASJ members involved in the effort, who salutes the commission’s results so far. For this faith-based nonprofit, the chance to help guide the process is worth the potential risk of inadvertently serving (and whitewashing) the Hernández administration’s purposes. The ASJ member sees the effort as an opportunity for genuine reform, especially at the street level. “We can get rid of the worst officers, substitute better trained new police, establish a new curriculum, including human rights training; reinforce police capacity with better communications equipment, arms, and vehicles; and create mechanisms for citizens’ oversight.”135

But, though many observers have hailed the efficiency of the purge, others suspect ulterior motives. Some suggest that the leak of documents implicating police leadership in the 2009 assassination scheme was suspiciously convenient for Hernández, who has long sought to establish personal control over Honduran policing. In the view of the lawyer who specializes in anti-corruption cases, the reform process may be allowing Hernández to selectively weed out those officers who are not at his beck and call. “The steps taken against the police have come very fast, and are based on unreliable information. The president is using this commission to protect his faithful people. You can tell which police officers are in favor with the government by the fancy cars they drive.”136

When Hernández was still president of Congress, he spurred legislation creating a specialized organized crime response unit called the TIGRES.137 Though it officially reports to the Security Ministry like ordinary police, this 250-man unit is now under the operational command of the military-led interagency task force, FUSINA. (See below, page 34.) The TIGRES are housed and trained side-by-side with military battalions,138 including, on occasion, by U.S. Special Forces.139 Indeed, given the U.S. preference for partnering with police rather than military units for domestic security, the TIGRES may have been set up and maintained partly for the express purpose of attracting U.S. security assistance.140 TIGRES personnel have been observed at the construction site for the Agua Zarca dam, the project Berta Cáceres was assassinated for opposing.141

Since he became president, Hernández has pursued the transfer of policing function into the hands of the professional military142—implying the army is his preference among the instruments of force available to him. Apart from the creation of a new and favored military police, discussed below, he has further anchored this transformation by appointing an active military officer (who has since resigned his commission) as security minister, with jurisdiction over the police. Current or former military brass also serve as heads of customs and the prison system.

Prisons

Indeed, it is hard to separate concerns about the police from concerns about the penitentiary system, which also falls under the security minister’s purview. Police often serve as prison guards. Honduran jails, which were hit with a steep increase in detainees in 2012 and 2013 (see figure 1), are notorious for inhumane conditions, including overcrowding, violence, filth, uncontrolled self-government by prisoners, corruption, and extortion. Money is ubiquitous, with officials taking a cut for all of the practices they condone, from the outright sale of private cells to inspection-free visits to intra-inmate shakedowns.143 Given the high likelihood that at least some portion of this take is passed further up the chain,144 prison administration must be understood to represent a revenue stream for certain elements of the kleptocratic network.

The sudden 30 percent increase in the number of Hondurans behind bars between 2012 and 2014 is consistent with rumors about social cleansing that the research team kept hearing: reported arbitrary sweeps and detentions in gang neighborhoods. More ominous are widespread suspicions that police or other government officials may take advantage of insalubrious prison conditions to dispose of specific, unwanted detainees. “There has been this kind of event in different prisons,” one observer told us. “There’s a big jail, and suddenly, a big fire. People say there’s an electrical problem, but the cells won’t be opened. Because they want certain people to die.” Reports on the most famous of these prison fires—in 2003, 2004, and 2012—describe volleys of gunfire, and the death of some victims by gunshot wounds.145

Armed Forces

Given the Honduran military’s history often at the center of politics—running the country outright from 1963 through to 1982, and then enjoying significant U.S. patronage during the civil wars in neighboring Nicaragua and El Salvador in the 1980s—it is somewhat misleading to include the armed forces among other clearly subordinate elements of state function that are at the disposition of the country’s interwoven elites. To some extent, the armed forces represent an autonomous bloc.

Nevertheless, almost every report on Honduras or interview with experts inside or outside the country contains information on the increasing use of the Honduran military for purposes other than national defense—more specifically to patrol indigenous communities, to protect land or developments claimed by private-sector network members as their property, to suppress protests against the transfer of such land or natural features into network hands, to curtail the exercise of free speech, and, most broadly (via Hernández’s new Military Police for Public Order, or PMOP from its Spanish name), to assume a wide variety of domestic security and policing roles.

Examples of the inappropriate or repressive use of the army are legion, especially and most recently in connection with the Agua Zarca dam project. The First Engineer Battalion worked on the dam, for example, setting up its premises inside the construction company’s camp perimeter.146 On July 15, 2013, soldiers stationed within the camp opened fire on local protesters, killing one.147 Members of the leading opposition organization were arrested at military checkpoints.148 And one serving and two former military officers are among the eight suspects who have been arrested for Cáceres’s killing. One of them had been appointed chief of army intelligence in 2015. He and another suspect had served in the Honduran special forces.149

One unexpected use of soldiers is (purportedly) to protect and replant Honduran national forests. According to an assessment conducted for the U.S. Agency for International Development (USAID), 100 million lempiras (approximately $4.2 million) per year is allocated for these forest conservation purposes, of which 70 million is transferred to the armed forces.150 On a trip down the Patuca River in the isolated eastern reaches of the country, my sister and colleague on this investigation, Eve Lyman, and I and two Honduran naturalists witnessed soldiers patrolling small, far-flung villages such as Wampusirpi and Bilalmo. Residents told us they were there to protect the woods, but they did not appear to have the vehicles or other specialized equipment required for such duties, and there was no evidence of any effort to curb illegal tree-felling along the river.

But it is through the PMOP that Hernández’s use of the military has had by far the broadest impact, and been the most controversial.

Even in the decades since the end of military rule in 1982, the idea is not new. It was former president Zelaya who first swelled police ranks by assigning military police officers who had completed their service to the civilian force. Still, they then came under police hierarchy and supervision. Hernández, by contrast, has launched the most concerted effort to shift internal security responsibilities to the military since Honduras completed its transition to civilian rule.151

The law creating the PMOP that he pushed through the Congress went into effect in the fall of 2013.152 Now this unit, charged with “maintaining and conserving public order”—especially against gangs and drug traffickers—as well as enforcing the law against terrorist financing, numbers at least 4,000 officers.153 “They are in the personal service of the president,” says a resident of the eastern Olancho Department. “They are acting like gods or kings, instilling fear, not security.”

In January 2015, Hernández tried to amend the constitution to enshrine the PMOP as a permanent element of the Honduran security apparatus. Congress demurred,154 but the issue is now up for popular vote in a 2017 referendum. The ASJ’s lead on police reform issues is confident the unit won’t expand further, that it is mainly “a marketing gimmick,” and that Hernández will be prevented by the United States as well as local civil society from further transfers of policing functions to the military.

Others aren’t so sure. One veteran American advocate of local civil society organizations described what she called a disturbing new phenomenon: small groups of PMOP officers fanning out into the countryside, allying with local retired military personnel, and hiring hitmen to keep tabs on opposition groups.155 Ordinary Hondurans don’t underestimate the PMOP either. “They act like kings,” says the Olancho resident. “People part in front of them. They order people to do this or do that. They take whatever they want. People are really afraid of them—afraid to demonstrate because of tear gas and beatings and imprisonment.”156

One of the two active duty military officers arrested in connection with Cáceres’s murder, Major Mariano Díaz Chávez, was a trainer at the PMOP academy.157

Responsibility for domestic security—and protection of network interests—is further confused, however, via the apparently interchangeable roles of military and police elite units such as the PMOP and the TIGRES and others, and the conduct of joint operations by private security guards or hired civilian toughs together with police or military personnel.158 The ill-defined and overlapping roles of these various units and individuals add to the shroud of impunity protecting them, since they make it hard to pinpoint their official mandates and determine if lines have been violated and by whom.

Hernández has institutionalized this commingling by way of a variety of joint task forces in which soldiers serve side-by-side with police officers, prosecutors, customs agents, intelligence personnel, and other civilian authorities. From about 2010 to 2014, Xatruch, an early such force, held sway over the lush Bajo Aguán valley, where locals protested land grabs by palm oil interests.159 Now, the most active and well-known of these is the National Interagency Task Force (FUSINA), which reports directly to the National Security Council and is under operational command of the military. It reportedly comprises some 6,300 military officers, including the entire PMOP, the TIGRES, plus much of the navy. It can be deployed throughout the country’s territory.160

The Honduran military is thus being utilized for various inappropriate purposes. Apart from deployment to gang-ridden neighborhoods and involvement in counternarcotics, it is an instrument for the consolidation of power, the protection of the private property or business interests of private-sector network members, and intimidation.161

In 2011, Congress passed a special tax levied on some of the key economic sectors held by private-sector elements of the network: financial transactions, profits from fast food and mobile phones and mining exports. The proceeds are earmarked for materiel purchases for the security services. Businesses protested the tax as onerous and opaque.162 U.S. State Department personnel interviewed in July 2016 confirmed that what the department had initially supported as a commitment to improving the security situation proved disappointing in its execution, given nontransparency and indications that funds were being syphoned off for other purposes.163 Honduran interviewees corroborated the murkiness of this tax, including deposit of the funds it generates into numerous accounts in several different banks.

Hernández himself attended military academy as a young adult. The choice may have been no more freighted with meaning than the choice of some American families to send their children to Catholic school: military academies are a relatively inexpensive way to get a decent education and useful contacts. The longer-term service of his brother and confidante Amilcar, who retired as a colonel, is more significant, and cemented a family connection to the armed forces. That and the persistence of Hernández’s efforts in applying the Honduran military to domestic tasks strongly suggest that the army is Hernández’s personal preference among the instruments of force at his disposal.

Coalianza (Comisión Para la Promoción de la Alianza Público-Privada)

A vital stitch knitting together the public- and private-sector skeins of Honduras’s kleptocratic networks is the Coalianza, or the Commission for the Promotion of Public-Private Partnerships. Created in 2010 to further the objectives of the public-private partnerships (PPP) law, the commission’s stated role is to promote, conclude, and oversee contracts whereby private companies execute public works projects ranging from road and port construction to passport delivery and the purchase of medicine for the public health system.

In practice, that means funneling public financing into private contracts via a nontransparent bidding process (if any),164 and typically a trust arrangement managed by a private bank.165 Responsibility for completing and operating the public installation or service is ceded to a technical committee, which may include government officials as well as bank or other private-sector executives. Procurement takes place according to special processes, not those set forth in the general law of public procurement.

Coalianza chooses prospective projects, then coordinates any tender process and enters into the contracts. By this means, the president can personally direct or approve projects, including such terms as tolls to be taken or purchase guarantees. Called by a former cabinet member “a son of Juan Orlando,” the Coalianza operates in close cooperation with the Honduran president. The current finance minister is a former head of the agency.

Coalianza officials resisted the enactment of a 2014 reform that marginally increased supervision, including the creation of a new Fiscal Contingency Unit that reports to the finance ministry (SEFIN), which is supposed to examine risks and develop mitigation strategies and to rule on the suitability of a given concept for this type of public-private partnership arrangement. But according to a 2015 Inter-American Development Bank (IDB) report, “in practice SEFIN has not yet built up the capacity to examine and authorize PPP proposals . . . even now that it has the main role in the approval flow.”166 As is frequently the case in such documents, the question is left open as to whether the government is even seeking to build up such capacity, or whether the deficit is deliberate.

Similar confusion reigns with respect to the inclusion (or not) of Coalianza projects within the overall national budgetary processes, as well as independent financial monitoring. “The constitutional responsibility for performing this task falls within the Comptroller and Auditor General in Honduras, yet the institutional capacity to oversee the PPP portfolio is shallow,” reports the IDB. “For example, no guidelines for auditing infrastructure projects under the PPP model have been issued by the Auditor General.”167

To date, neither the Supreme Court of Accounts, nor the Finance Ministry, nor the Banking and Securities Commission has published an audit of a single Coalianza project.168 Contracts are made available to the public only after signature, and even then only partially.

Indeed, according to one interviewee, a member of Congress who has been researching these arrangements in an effort to exercise constitutional oversight, their primary purpose is to “hide money from the budget and from the public procurement law and associated oversight.”169

The confusion may enable not just bank executives but also public officials on the technical committee to extract undue benefits, according to the member of Congress. Some bankers have reportedly expressed reluctance to continue taking on such projects, given the conduct witnessed on the seventeen currently contracted.170 The implication is that government officials, as well as their private-sector partners, are exploiting these off-budget expenditures for personal gain while the bank retains statutory responsibility for any wrongdoing—such as violations of international money-laundering provisions.

The Honduran government may guarantee loans taken out in support of such projects, thus assuming institutional risk and compounding debt, although that engagement of state reputation does not benefit from normal government oversight procedures.171 International development financing is applied to these projects too, providing a potential additional windfall for their managers. According to an economist for one of the main regional development banks, even these rather lenient institutions are uneasy. “The World Bank, us, even the IMF are always trying to push the Honduran government to reduce the role of trust funds. But they don’t want to.”172

ENEE (Empresa Nacional de Energia Electrica)

It may seem odd to include an electricity company in a list of state agencies bent to the services of a country’s kleptocratic network. But when the financial situation of that enterprise is so catastrophic as to block the government’s qualification for international loans;173 when senior management positions are filled by close relatives of influential politicians;174 and when the enterprise seems to do business exclusively with families at the core of the kleptocratic network’s private-sector segment, then the attention is warranted. The Honduran electricity sector, moreover, has attracted many of the network’s external enablers,175 and given rise to protracted conflicts between kleptocratic elites and rural populations. The energy sector generates both a key revenue stream for the network and a significant threat to the environment.

In 2013, the national electricity enterprise, ENEE, was hemorrhaging money at a record rate of more than 20 million lempiras, or approximately $1.3 million, per day. The annual total, nearly 9.6 billion lempiras, or roughly $477 million, was about 2.5 percent of GDP.176 International lenders (also known as international financial institutions, or IFIs) clamored for reform of the power sector. But most of the changes they demanded concerned the structure of the enterprise, rather than outcomes that demonstrated repair of its weaknesses. The IFIs wanted ENEE privatized (though that reality is typically masked by the bland terminology of “structural reform”). A December 2014 IMF press release about the fund’s approval of nearly $190 million in low-interest financing, for example, noted that “structural reforms are expected to play a crucial role in supporting fiscal consolidation and improving growth prospects. The program comprises reforms in the electricity sector, including ENEE.” Elsewhere, the IMF was explicit that such reforms should “foster competition in the electricity sector.”177

The Honduran government began breaking ENEE apart in 2014, with a view toward inviting in private capital. The enterprise has been split into three entities with responsibility respectively for power generation, transmission, and distribution. The ongoing privatization process is to be managed via one of the Coalianza’s trust funds, held as usual by Bancos Ficohsa and Atlantida.178

It was not so much this transformation, however, as falling oil prices—and 2,000 layoffs out of a total workforce of 5,000179—that helped bring ENEE’s operating losses down by some 180 million lempiras by 2015, or about $30 million, approximately 1.9 percent of the total.180 But, though the enterprise is on very slightly better financial footing, and though the catastrophic electricity outages that plagued the region in the early 1990s have not recurred, blackouts remain common,181 and rural areas are underserved.182 According to some experts, as much as 15 percent of the Honduran population has no access to electricity.183

That’s why, explained Giovanni Ayestas of UEPER (a unit of ENEE in charge of large generation projects) in an interview in his office in the summer of 2016, government plans call for a significant expansion of Honduras’s generation capacity. He was clicking through PowerPoint slides as he made the argument. But the numbers on the screen did not support the policy choice. Current electricity production, Ayestas acknowledged, exceeds demand. Honduras even exports approximately 1 percent of its power.

The most startling figure, however, was the one for leakages: fully 30 percent of Honduras’s current disappears through faulty lines and connections and customer theft.184 Yet, rather than launch a nationwide campaign to renovate materiel; tighten connections; and identify disabled meters, unauthorized hook-ups, or connivance with favored businesses, the government has rushed to sign contracts with private companies for more generation capacity.185

ENEE has long relied largely on private generation for the electricity it sells to customers, producing only about one-third of the country’s total supply itself. And this outsourcing has generated significant rents for private-sector network members for more than two decades.

In the early 1990s, crippling shortages throughout the region prompted a fifteen-year state of emergency, under whose terms ENEE granted generous contracts to well-connected industrialists who built oil- and coal-fired power plants. Indeed, it was the renegotiation of some of those contracts that helped reduce the enterprise’s deficit after 2014.186

The 2007 law promoting renewable energy was aimed at shifting sourcing away from these costly fossil fuel plants. However, its terms were even kinder to the private electricity generators (largely the same people) than the 1994 legislation. Renewable generators enjoy a 10 percent premium over market rates, guaranteed annual increases on those higher prices, a variety of tax breaks (including dispensation from income and sales tax), as well as a $0.03-per-kilowatt-hour (kWh) bonus for the first 300 megawatts from projects that went online by July 31, 2015.187

These terms are locked in for the life of the contract—typically at least twenty years—at a time when solar energy prices are falling as much as 10 percent per year.188 “The private producers enjoy undue benefits,” says Ramon Romero, who has studied the interconnection between what he calls electrical elites and political power-brokers.189 “They get a higher price than thermal [fossil fuel] plants, without any reasonable justification. The inputs are cheaper.”190 By way of comparison, coal-fired electricity averages between $0.07 and $0.09 per kWh, while the government-guaranteed prices for solar are about double, at slightly above $0.15 per kWh, not including the 3 cent bonus.191

It was in this context that Congress enacted a law restructuring ENEE, changing the contracting framework, and establishing a new regulatory agency charged with supervising an open bidding process, approving contracts, and publishing a list of energy production companies. But according to several experts, an odd delay occurred between submission of the bill to Congress, its passage, and its entry into force in July 2014. (Almost a year after that, the regulatory agency was still not up and running.)192

During that unusual lapse, ENEE signed at least thirty of the old, no-bid sweetheart contracts, totaling an estimated 400 megawatts of renewable electricity.193 Beneficiaries were none other than members of the same families that had enjoyed the overpriced fossil fuel contracts the government was renegotiating with the help of the Inter-American Development Bank, families at the heart of the private-sector element of the Honduran kleptocracy: the Facussés, the Kafies, the Larashes, the Nassers (who are allied to the Facussés by marriage).194 Indeed, the timing of the two developments suggests that the excessively generous terms for renewables may have served as a sweetener to facilitate renegotiation of the older fossil fuel contracts. In the case of both types of electricity generation, the contract terms are so liberal as to constitute a direct transfer of public funds into the pockets of private-sector network members. (See also the section on private-sector control of the energy industry, pages 70–73 below.)

In this context, international pressure to reduce or end electricity subsidies may be misguided. It obliges poor customers—many of whom may not be subject to income or other taxes—to directly finance private generators’ excessive profits.

These developments rubbed even some of ENEE’s own officials the wrong way. Ayestas’s resentment was palpable when he referred to the government’s “weak bargaining position” in these negotiations. “The concessions set a lower limit below which the price cannot fall; but it can rise. By law and by contract, the state is required to buy all the renewable energy they produce,” whether or not the grid even has the capacity to carry it. “It is an expensive, nontransparent market.”195

Oddly, given the sector’s advantages and the high costs of these contracts, ENEE did not seek to make its own investments in solar electricity generation. It abandoned that segment of the market, instead choosing to commit to large, expensive, and technically and environmentally questionable hydropower projects.196

As Seen From the River

One notorious example is a project that UEPER’s Giovanni Ayestas and his colleague Lourdes Sagastume touted: a controversial dam across one of Honduras’s last remaining wild rivers. As the details below demonstrate, the practices by which this project was midwifed, in the teeth of local residents’ vociferous objections, not to mention those of experts in hydrological and environmental science, demonstrate a consistent pattern that is replicated in similar contexts throughout Honduras.197

Twining for some 300 miles between steep, once lushly forested banks that settle into tropical floodplains near the Caribbean Sea, the Patuca River is the Amazon of Central America.

Plans to dam it have repeatedly been launched and financing documents signed, but then ultimately scrapped.198 Undaunted, some months after the 2009 coup, the Honduran government turned to China, agreeing to a series of terms for construction of a dam upstream of the original site by hydropower giant Sinohydro, to be paid for with loans from China’s Export-Import Bank and the Industrial and Commercial Bank of China.199 Banco Atlantida reportedly backed loans to ENEE for purchase of land to be expropriated.200 Protests that had blocked earlier plans continued; the financing proved difficult to secure; and work on the project kept stalling and restarting.201

At the end of 2012, for example, officials at the Inter-American Development Bank (IDB) sent a stern letter to ENEE, regarding the project’s likely environmental and social impacts. An environmental assessment conducted by the Honduran government and completed in 2008, said the IDB letter, was “so weak that we could not even envision starting to study [the dam] seriously.” So the development bank ordered and paid for a separate examination, conducted by a competent outside contractor.

The verdict of that IDB-financed independent study was categorical. “The Project is not in compliance with our Safeguards; as you will see in the report there are many critical gaps and some are very hard to correct given the stage of the Project.” On the basis of these findings, the IDB refused to pay even for assessments of the other sites on the river that the Honduran government hopes to dam in the future, after Patuca III is complete.202

The Patuca River and the Patuca III worksite, July 2016.

In other words, the Honduran environment ministry had failed to exercise its most basic oversight role, and had served instead as a rubber stamp for a manifestly problematic project. It had proved to be a classic example of a state institution that is deliberately hollowed out. (See below, pages 52–54.)

The voluminous IDB analysis of Patuca III uncovered significant likely impacts, especially downstream of the dam, a zone neither the Honduran evaluation nor ENEE’s mitigation plans address. According to the study, “thirty-eight towns [apart from the three of direct impact] will experience collateral effects, especially of a socio-economic nature. Some affected areas can be rehabilitated by suitable interventions, but the majority . . . will experience a permanent change in the use of the land.” These impacts include changes in the flow of the river, “which in turn affects the terrestrial fauna in a significant manner,” as well as water quality and sedimentation. The report also mentions the likelihood the dam will impede use of the river as a transportation artery by local communities, deforestation due to migration into the zone, changes to flooding patterns upon which local agriculture depends, and threats to dozens of registered endangered species, including lizards, turtles, crocodiles, and migratory fish.203

The lawyer cited above, a member of the Anti-Corruption Bar, knows the area well, because he fought U.S. packaging companies’ purchase of timber extracted here for years.204 In his view, the dam will do “incredible damage.” The river, moreover, is physically unsuitable for electricity generation, he says: “The Patuca doesn’t have rapids. It is a slow river with only a 3 to 4 percent slope. The water spreads out laterally; it doesn’t build up the kind of pressure the turbines will need.”205

Nevertheless, during our visit to the site in summer 2016, massive cranes could be seen completing the dam wall. Reports and photographs sent later by Honduran members of the team indicate the work was accelerating in the second half of the year.

Apart from its unequivocal denunciation of the environment ministry’s lack of “any enforcement mechanism to ensure the [project] meets environmental mitigation measures,” one of the IDB assessment’s main criticisms of ENEE’s plans was the lack of proper consultation with local communities, which had been actively and consistently opposed to damming the river for two decades.

The International Labor Organization’s Indigenous and Tribal Peoples Convention, of which Honduras is a signatory, takes pains to recognize “the special importance for the cultures and spiritual values of the peoples concerned of their relationship with [their] lands or territories.” Indigenous peoples’ rights to “participate in the use, management, and conservation of these resources,” it states, shall be “specially safeguarded.” And in the (presumably exceptional) case “in which the State retains the ownership” of resources, “governments shall . . . consult these peoples, with a view to ascertaining whether and to what degree their interests would be prejudiced, before undertaking or permitting . . . the exploration or exploitation of such resources. . . . The Peoples concerned shall wherever possible participate in the benefits of such activities, and shall receive fair compensation for any damages.”206

Boats awaiting their loads, Arenas Blancas, July 2016.

We spent five days traveling the Patuca River by the only mode of transportation available, a traditional wooden boat, long and blunt-nosed, stopping to interview residents both upstream and downstream of the worksite, and discovered not a single person who favored the project.

Upstream landowners, who are now being flooded out by the reservoir, camped in front of the ENEE offices in Tegucigalpa in 2015.207 But the first local our team flagged down by the side of the road told us how that effort had turned out. A small farmer, he approached us astride a bay mare, her foal trotting behind, and his attitude typified the resignation we encountered everywhere: “The rich people were offered a higher price for their land, so they agreed,” he commented. “We didn’t want to sell, but we were backed into a corner by los grandes.”208 The anti-corruption lawyer later confirmed the farmer’s story: “Most of the land was effectively stolen, because many of the people who went to Tegucigalpa to protest were the large landowners who don’t even live in the area.” Offered a higher price, he told us, the absentee landlords abandoned the protest, stranding the local farmers.209 (But protests sparked off again in late 2016, forcing a twenty-six-day stoppage in the work.210)

Tawahka children, leaning over the porch of their house-on-stilts in Krautara, July 2016.

A teacher, whose ninety-six-year-old father was born in the well-tended house where we met, said he was never invited to contribute to the decisionmaking process. “We were told the project is a project of the government; it’s going to happen this way. They didn’t ask our views; we were told this has to happen because it’s a necessity. They said it’s a government development project.”211

“Development for whom?” shot back a neighbor who had joined the conversation on the porch of the small community upstream of the dam, Las Planchas. “Is it development for local communities, or for industries in Juticalpa and Tegucigalpa and Nicaragua?”

All interviewees recounted the same one-way communication during the few meetings that were organized. “The government people just stated: ‘It’s a program of the state,’” said a woman. “‘If it helps the people or not, it will be done. Even if people oppose it, it’s going to happen.’ That’s what we understand.”212

Avelino Betancourt, the mayor of Nueva Palestina, the village immediately downstream of the dam, was told “local governments can’t oppose” the project because it is of national importance. Under the renewable electricity law, his staff pointed out, no tax is paid to the municipality. “They brought a document showing they are excused from local taxes. They don’t even have their own ambulances, they use ours!” Mayor Betancourt said he has repeatedly sought, but been unable to obtain, a meeting with government officials to discuss the dam’s impact on his constituents or other development projects that might be implemented to offset the harm.213

Further downstream, in areas clearly covered by the ILO convention on indigenous and tribal peoples, residents told of outright deceit. “They would hold meetings, and we signed an attendance sheet,” recalled a resident of the village of Krautara, inhabited by Tawahka indigenous people, already squeezed nearly to the point of extinction by deforestation and unregulated migration into their traditional lands. “Then later they said those signatures signified our approval.”214 Two more days’ boat-ride downriver, in Bilalmo, in Miskito territory, a man recalled the first such meeting two years ago. “They offered us rice seed, and told us to sign for it. When they called another meeting the next year, and our representatives said we hadn’t been consulted, the commission showed them those signatures and said yes we had.”215

Evidence was overwhelming that only a cursory box-checking exercise had been undertaken, not a genuine effort to fulfill legal obligations to obtain community input and consent based on a thorough understanding of the project’s implications.

Far from consent, there were widespread fears of calamitous impacts to an entire way of life.

“The river is the road for all of our communities” noted one of the beleaguered Tawahkas. “Already the effect is immense. Soon our boats won’t be able to move in summer.”216 The owner of a small restaurant serving beans and fried plantains near the worksite agreed: “They say it is progress and will be good for other parts of the country. But it is a barbarism to nature. It will affect navigation a lot, especially in winter. There won’t be enough water.”217

Deforestation along the Patuca River, July 2016.

“We won’t be able to catch fish or turtles as the river gets low,” worried another Krautara resident. “We’re going to lose a whole part of our life.”218 The Miskito, a people who cultivate the flat lands even further downstream toward the Patuca’s delta, expressed similar concerns about their traditional practices, which depend on seasonal high water and sediment deposits. And then there were the repeated fears of a catastrophic accident: “If that dam breaks, there will be flooding worse than during Hurricane Mitch,” predicted one woman.219

New roads carved out of the forest to facilitate construction have accelerated an ongoing land-grab that has deforested this landscape—all of which constitutes a protected natural reserve. The destruction spools out for miles: trees hacked down with machetes, their ragged stumps protruding from denuded hillsides like broken teeth, charred remains of burned boughs littering the slopes. Where most trees on a patch of ground have been felled, the others die, leaving the once rich tapestry of vines and orchids and air plants draped from their limbs like dusty cobwebs. Lime-green, deathly silent pasture grass takes over.

Thus, ironically, a project that is touted as “renewable”—whose partial objective is to garner carbon credits—is in fact generating significant carbon emissions via forest destruction and decomposition.220

UEPER’s Ayestas dismissed the Tawahkas’ and Miskitos’ anguished concerns about deforestation: “Indigenous communities don’t want to protect the woods; they just want to get in on the business,” he contended. Indeed, he and his colleague Sagastume touted the community relations drive they were piloting with Patuca III as “different from anything done before, public or private.”

“We helped residents establish title to their land,” boasted Sagastume, “so they received a more just compensation.” But, she conceded, the payments had stopped “because the state didn’t have the money.”

Plans—not yet implemented—call for meeting residents of nineteen villages arrayed in an outer ring around the future reservoir to diagnose development challenges and remedies. “The government wanted a loan for all these mitigation projects,” but China had only offered to fund the dam itself, and the current budget deficit does not allow for such expenditures, Sagastume relayed. As for the communities located downstream of the dam? “Our focus area is the upstream communities. It’s up to Avelino Betancourt to work on development issues downstream.”221 That’s the same Mayor Betancourt who for several years has been unable to obtain a meeting with any government official to discuss dam impacts on his community and how to mitigate them.

In other words, ENEE is railroading communities that will be drastically affected, in order to build a substandard dam that menaces irreplaceable natural environments while contributing to climate change.

And to what end? Above all others, the desired aim seems to be cash generation. After an enthusiastic mention of the carbon credits Patuca III is meant to garner, Sagastume and Ayestas turned to a further objective: reaping income by way of exports into the increasingly integrated Central American electricity market.

The Sistema de Interconexión Eléctrica de los Países de América Central, or SIEPAC, is an initiative to link the power grids and associated legal frameworks of six Central American countries (omitting only Belize). The stated aim is to address periodic local shortages by enabling countries to purchase electricity from their neighbors.

Typical houses, middle Patuca River, July 2016.

“We believe that integration is the key to the development of this region,” an official at one of the development banks that has contributed loans to the scheme told us. “In particular the road system, and SIEPAC.” Though the transmission lines are largely joined up, he reported, legal and regulatory frameworks are yet to be harmonized.222

SIEPAC is run by a Panama-registered, Costa Rica–based entity, Empresa Propietaria de la RED, a consortium of private (one-quarter) and public (three-quarters) companies from the six member countries plus Colombia, Mexico, and Spain.223 It is these external partners that compound many Hondurans’ concerns that SIEPAC may be yet another cash cow for well-connected interests.

Told they have to sacrifice their land or their way of life for the greater good of Honduras so their compatriots can enjoy electricity, many Patuca III victims expressed fears that the dam will instead do precisely what the UEPER officials said it is supposed to do: increase the volume of electricity that Honduras exports. And not just to nearby Nicaragua, as mentioned by the resident of Las Planchas during our evening discussion on his neighbor’s porch. Honduran electricity could well go to feed power-hungry markets and industries beyond Central America’s borders, with any profits accruing either to the notoriously corrupt ENEE, or, once it is privatized, to its shareholders and other SIEPAC consortium members. Rural Hondurans interviewed for this study fear they will be left, again, in the dark.224

In final twists to the Patuca III story, the Honduran National Anti-Corruption Council announced in September 2016 that it had discovered price-padding and other malfeasance worth more than 121 million lempiras ($5.2 million) by high-ranking ENEE officials in the contracts for building and maintaining the camp that houses the project’s Chinese engineers and construction workers.225 (Officials named in the reports had left ENEE between 2012 and 2015.226) As of January 2017, investigations were still under way.227 Six months later, testimony in the New York trial of an accused drug kingpin indicated that UEPER contracted with a company belonging to the Cachiros drug cartel for other infrastructure associated with this dam.228

Analysis of failed development infrastructure projects (“white elephants”)—of which large dams are a prime example—suggests they may not be designed to function efficiently on behalf of their stated beneficiaries at all. Their actual function may be precisely to provide opportunities for malfeasance of this kind.229 (For further discussion of the electricity market, see pages 70–73 below.)

IHSS (Instituto Hondureño de Seguridad Social)

The story that aired on Globo TV on May 8, 2015, would hardly have won points for technical artistry. Balding and dressed in a casual denim shirt, the reporter practically shouted into the microphone. B-roll footage of hospital waiting rooms, ambulances, and buildings sporting the IHSS logo ran on a loop.230 But the revelations David Romero Ellner unveiled in the segment were explosive. No less than 7 billion lempiras (about $297 million) had been siphoned out of the national healthcare system, of which at least 3 million may have wound up in the coffers of President Hernández’s Nationalist party, where they had helped finance his 2014 presidential election campaign.231 Globo’s cameras zoomed in on some of the canceled checks as Romero recited the numbers.

Honduras erupted. The realization that the notoriously indebted public health system232—wracked by shortages of medicine for months233—was the target of systematic embezzlement at such a scale, and for such blatant purposes, galvanized even corruption-inured Hondurans. Adding to the anguish, as many as 3,000 people may have died ingesting useless or dangerous compounds they thought were medicine, or due to corruption-linked shortages or other system dysfunctions.234

In evening marches, protesters dressed in doctor’s whites and carrying torches clogged the streets of Tegucigalpa.235 Throughout June and July, the demonstrations continued in the capital and at least a dozen other cities nationwide, as well as in Miami and Washington, DC. Signs and banners blared the bare facts: “L7,300,000,000 Robados! 2,800 Muertos!” (7.3 billion lempiras stolen; 2,800 dead). Demonstrators demanded the resignation of President Hernández and the establishment of an internationally backed investigation and prosecution commission along the lines of the Comisión Internacional Contra la Impunidad en Guatemala(CICIG) that was indicting officials in the neighboring country.

In the not-too-distant past, the IHSS (the Honduran Social Security Institute) had been known for providing a reputable standard of medical care to Hondurans employed in the formal economy, who contributed to the system monthly on a sliding scale. But according to interviewees we asked, the quality of care had been declining and the price increasing for a number of years. By 2013, equipment, staff, and supply shortages were capturing the attention of patients and healthcare professionals.

In 2014, the first major revelations about the causes of these shortages were made public. An investigation by the National Anti-Corruption Council (CNA) and the public prosecutor (ministerio publico)discovered that some 600 million lempiras per month were bleeding away in fraud and corruption.236 At the heart of the scheme was a chocolate-box assortment of procurement frauds, including unjustified purchases, contracts or purchases at prices in some cases more than twice the global average, and purchases of medicine that proved not to contain the requisite active ingredients—that were, in effect, placebos.237 According to reports and some trial documents, an array of shell companies—Insumedic, for example, or Sumimed, or Improme—were incorporated to obtain contracts for which no goods or services were delivered, or to bank inflated payments. Some were incorporated in Panama, but many in Honduras.238

President Lobo’s declaration of a dengue fever emergency in 2010 reportedly facilitated some of these fraudulent purchases.239 And from that year through the next four, according to one of our interviewees (an international official who is involved in ongoing investigations), 60 to 70 percent of the IHSS operating budget was siphoned off.

The 2014 investigation examined the potential implication of as many as 400 individuals, most of them either public officials themselves or related to or close friends of officials. The IHSS commissioner and the chief of supplies and purchases (both with the family name Zelaya, though unrelated to each other or the former president) topped the list alongside the agency’s treasurer, Vivian Melissa Juárez Fiallos, and Edita Lizbeth Lopez, the wife of IHSS administrative and financial manager José Ramon Bertetty.240 Most spectacularly, a drug company founded by Congress Vice President Lena Gutiérrez, her father, and two of her brothers sold placebos and charged the health system vastly inflated prices for other supplies. Arrested in July 2015, she has been on trial since August 2016.241 Other suspects have been convicted and are serving prison sentences, but none of these cases have yet cast light on the links between the IHSS scandal and the presidential reelection fund.

This case illustrates the rough division of labor or territory that characterizes the Honduran kleptocratic network, with most of the outright looting of government coffers perpetrated by public-sector members, often via private companies in the hands of relatives or immediate proxies. In general, companies that win public procurement contracts from government agencies like the IHSS tend not to belong to members of the self-contained, Levantine-descended business elite.

But the “ten families,” as they are sometimes called, were not entirely unspattered by the scandal. In June 2015, business magnate Shukri Kafie was arrested on suspicion that his company had overcharged the IHSS in contracts for the acquisition, maintenance, and repair of medical machinery worth some $118 million (though he was immediately released upon his assertion of a medical emergency, and there is no indication that legal proceedings have gone forward).242 Banco Ficohsa was also implicated, reportedly participating in an illegal transfer of IHSS funds as part of the scheme.243

A number of the people involved in breaking or investigating the case have suffered reprisals. Both the lead prosecutor and the attorney general were transferred to other posts (though the attorney general was made a justice of the Supreme Court). Globo’s Romero and several key witnesses were shot and wounded in the weeks following the 2015 television report.244

Yet the IHSS scandal and the massive demonstrations it sparked eventually forced the government to acquiesce to the establishment of a version of CICIG in Honduras. The MACCIH, as it is called (Misión de Apoyo Contra la Corrupción y la Impunidad en Honduras, or Support mission against corruption and impunity in Honduras), can assist Honduran legal authorities in investigating and bringing corruption cases—but it cannot bring them itself, as can the CICIG. The MACCIH does, however, have the authority to help design institutional reforms that might constrain the incentive structure and opportunities favoring corruption, such as changes to campaign finance or corporate laws. (For more, see the section on MACCIH, pages 105–106 below.)

In a notable parallel to the national electricity company, ENEE, discussed above, the International Monetary Fund identified the losses incurred by the IHSS as a major contributor to the Honduran government’s deficit. But rather than pinpoint the actual cause of those losses—in both cases, corruption—and require specific measures to address the problem, such as the investigation and sanctioning of wrongdoers and improvements in government oversight, the IMF seems to have found sufficient explanation for the poor financial performance in the bare fact that the IHSS was a public institution. The “restructuring” of the IHSS (read: privatization), like that of ENEE, was a prerequisite to delivery of the IMF’s 2014 package of financial assistance. Tegucigalpa was not required to increase the independence of its anti-corruption agencies, or to demonstrate robust legal action against high-ranking IHSS suspects and their beneficiaries, or even to demonstrate how privatization would be conducted in such a way as not automatically to benefit the very companies that had exfiltrated the public funds.245

Notes

67  Interview by author, Tegucigalpa, August 3, 2016.

68   “Ley de Promocion de la Alianza Publico-Privada,”La Gaceta de la Republica de Honduras, September 16, 2010, http://www.poderjudicial.gob.hn/CEDIJ/Leyes/Documents/LeyPromocionAlianzaPublicoPrivada.pdf.

69   See “170 Companies at ‘Honduras Open for Business,’” Central America Data, March 11, 2011, http://www.centralamericadata.com/en/article/home/170_Companies_at_Honduras_Open_for_Business; “Este jueves comienza la ronda de negocios ‘Honduras is Open for Business,’” America economica, May 5, 2011, http://www.americaeconomia.com/economia-mercados/comercio/este-jueves-comienza-la -ronda-de-negocios-honduras-open-business; “Honduras Is Open for Business,” Council for Hemispheric Affairs, July 26, 2011, http://www.coha.org/honduras-is-open-for-business/; “Renewable Energy Sector Investment Opportunities: Honduras Is Open for Business,” Honduran National Investment Promotion Program, April 2011; and Associated Press, “Honduran Judges Rule Against Privately Run ‘Model Cities’ Project,’” Guardian, October 4, 2012, https://www.theguardian.com/world/2012/oct/04/honduran-judges-reject-model-cities.

70   Current top COHEP officials are also in the inner circle of the private-sector element of this network, such as its president, Luis Napoleón Larach, and director, Luis Alberto Atala.

71   Interviews by author, Tegucigalpa, August 2016.

72   “Ley Contra el Financiamiento del Terorismo,” Government of Honduras, November 2011, https://www.unodc.org/tldb/pdf/Honduras/Ley_Contra_el_Financiamiento_del_Terorismo_Honduras_.pdf.

73   See Thomas Carothers and Saskia Brechenmacher, “Closing Space: Democracy and Human Rights Support Under Fire,” Carnegie Endowment for International Peace, 2014, 29–30.

74   “Ley Especial sobre la Intervencion de las Comunicaciones Privadas,” Government of Honduras, December 12, 2011, http://www.poderjudicial.gob.hn/CEDIJ/Leyes/Documents/Ley%20Especial%20sobre%20Intervencion%20de%20las%20Comunicaciones%20Privadas%20(8,2mb).pdf.

75   See “Junta Nominadora Exige cese de espionaje telefonico,” El Libertador, January 8, 2016, https://honduprensa.wordpress.com/2016/01/10/junta-nominadora-exige-cese-de-espionaje-telefonico-junta-nominadora-confirma-espionaje-telefonico-en-honduras-asesor-presidencial-revela-nombres-de-proximos-magistrados/; “Honduras: Gobierno paga L.8 millones en software de espionaje telefonico,” Conexihon, July 6, 2015, https://honduprensa.wordpress.com/2015/07/06/honduras-gobierno-paga-l-8-millones-en-software-de-e spionaje-telefonico/; “Revelado espionaje contra Rafael Leonardo Callejas,” Cholusat Sur Canal 36, May 21, 2015, http://cholusatsur.com/noticias/?p=10621; Inter-American Commission on Human Rights, “Situation of Human Rights in Honduras,” Organization of American States, 2015, 187.

76   Interview by author, Washington, DC, February 16, 2017.

77   “Ley Especial del Consejo Nacional de Defensa y Seguridad,” Government of Honduras, December 12, 2011, http://www.poderjudicial.gob.hn/CEDIJ/Leyes/Documents/Ley%20Especial%20del%20Consejo%20Nacional%20de%20Defensa%20y%20Seguridad%20(2,9mb).pdf.

78   “Ley Para la Clasificacion de Documentos Publicos Relacionados con la Seguridad y Defensa Nacional,” Government of Honduras, January 24, 2014, http://www.tsc.gob.hn/leyes/Ley%20para%20la%20Clasificaci%C3%B3n%20de%20Documentos%20P%C3%BAblicos%20relacionados%20con%20la%20Seguridad%20y%20Defensa%20Nacional.pdf.

79   Interview by author, Monte Capado, July 23, 2016.

80   Inter-American Commission on Human Rights, “Situation of Human Rights,” 183–84.

81   See James Phillips, Honduras in Dangerous Times: Resistance and Resilience (Lanham, MD: Lexington Books, 2015), 45; and “Illegal Logging in the Rio Platano Biosphere: A Farce in Three Acts,” Global Witness, January 2009.

82   “Presidente envia al CN revision de Ley Antimaras,” La Tribuna, March 16, 2015, http://www.latribuna.hn/2015/03/16/presidente-envia-al-cn-revision-de-ley-antimaras/.

83   “‘Ley Antimaras’ debia ser derogada tras sentencia de CORTEIDH pero al contrario sera endurecida,” Radio Progreso y el ERIC, March 27, 2015, http://radioprogresohn.net/index.php/comunicaciones/noticias/item/1959-%E2%80%9Cley-antimaras %E2%80%9D-deb%C3%ADa-ser-derogada-tras-sentencia-de-corteidh-pero-al-contrario-ser%C3%A1-endurecida; and interview with Adrienne Pine, Washington, DC, February 16, 2017.

84   See Chayes, “Vertically Integrated Criminal Syndicates,” chap. 5 in Thieves of State, 58–67.

85   Alvaro Morales Molina, “Public Prosecutors’ Hunger Strike Becoming a Complicated Affair,” Honduras Weekly, December 12, 2008, http://www.hondurasweekly.com/joomla-pages-iii/archieved-articles/53-news/national/6899-public-prosecutors-hunger-strike-becoming-a-complicated-affair; Guido Eguigure, “Notes for Understanding the Hunger Strike of the Public Prosecutors in Honduras,” DanChurchAid, May 5, 2008; Thelma Mejia, “Honduras: Prosecutors on Hunger Strike Against Corruption,” Inter-Press Service, May 6, 2008, http://www.ipsnews.net/2008/05/honduras-prosecutors-on-hunger-strike-against-corruption/; Bureau of Democracy, Human Rights, and Labor, “Honduras: 2008 Country Report on Human Rights Practices,” U.S. Department of State, February 25, 2009, https://www.state.gov/j/drl/rls/hrrpt/2008/wha/119164.htm. For a close account of the prosecutor strike, see Adrienne Pine, “Caso Gasolinazo,” Quotha (blog), June 8, 2008, http://quotha.net/node/17.

86   See Phillips, Honduras in Dangerous Times, 51; Dana Frank, “The Long Judicial Arm of the Honduran Coup,” World Post, February 4, 2015; and Inter-American Commission on Human Rights, “Situation of Human Rights,” 113–18, including examination of later purges. In October, 2015, in a case brought by four judges, the Inter-American Commission on Human Rights found Honduras guilty of violating the right to judicial guarantees, the principle of legality, the victims’ freedom of expression and association, political rights, and judicial protection. None has been reinstated. For further, see “Situation of the Judgment of the Inter-American Court of Human Rights in the Case of López Lone vs Honduras; Expiration of the Term of Compliance,” Peace Brigades International, November 10, 2016, http://www.pbi-honduras.org/fileadmin/user_files/projects/honduras/Publications/161110Briefing_AJD_EN.pdf.

87   “Reacciones al golpe tecnico a la Corte Suprema de Honduras,” La Prensa, December 13, 2012, http://www.laprensa.hn/especiales/377761-273/reacciones-al-golpe-t%C3%A9cnico-a-la-corte-suprema-de-honduras.

88   “Presidente de la Corte Suprema niega participacion en destitucion de magistrados,” Proceso Digital, December 13, 2012, http://www.proceso.hn/component/k2/item/28446.html; “Corte Suprema de Honduras esta de luto por golpe,” La Prensa, December 14, 2012, http://www.laprensa.hn/especiales/330939-273/corte-suprema-de-honduras-est%C3%A1-de-luto-por-golpe; “Claves 2012: Las noticias mas importantes en Honduras,” La Prensa, December 17, 2012, http://www.laprensa.hn/especiales/377778-273/claves-2012-las-noticias-m%C3%A1s-importantes-en-honduras; “Integrantes de la Corte Suprema de Justicia,” Poder Judicial de Honduras, 2016, http://www.poderjudicial.gob.hn/Corte%20Suprema%20de%20Justicia,%20Per%C3%ADodo%202009-2016/Paginas/Integrantes.aspx.

89   For parliamentarians criticizing Zelaya’s mentioning of reelection for officials as a “grave error,” see “Turba encabezada por ‘mel’ se tome base aerea,” El Heraldo, June 25, 2009.

90   “Honduran President to Seek a Second Term, Opposition Cries Foul,” Reuters, November 9, 2016, http://www.reuters.com/article/us-honduras-election-idUSKBN1343L7.

91   See Tracy Wilkinson, “A Honduran Coup Comes Full Circle,” Los Angeles Times, April 27, 2015, http://www.latimes.com/world/mexico-americas/la-fg-a-honduran-coup-20150427-story.html; and “Re-election a Done Deal,” Honduras Culture and Politics (blog), April 25, 2015, http://hondurasculturepolitics.blogspot.com/2015/04/re-election-done-deal.html. See also Brian Sheppard and David Landau, “Why Honduras’s Judiciary Is Its Most Dangerous Branch,” New York Times, June 25, 2015, https://www.nytimes.com/2015/06/26/opinion/why-hondurass-judiciary-is-its-most-dangerous-branch.html?_r=0.

92   “Honduras: Libre revela nombre de diputados del Congreso que recibieron sobornos,” El Heraldo, February 9, 2016, http://www.elheraldo.hn/pais/928027-466/honduras-libre-revela-nombre-de-diputados-del-congreso-que-recibieron-sobornos.

93   “Mel: ocho diputados recibieron hasta medio millon de lempiras,” La Prensa, February 9, 2016, http://www.laprensa.hn/honduras/927879-410/mel-ocho-diputados-recibieron-hasta-medio-mill%C3%B3n-de-lempiras.

94   Interview, Tegucigalpa, August 3, 2016.

95   See also “Honduras Report: Situation of Human Rights, Judiciary Independence, Militarization of Police Functions Within the Framework of the Alliance for Prosperity Plan,” Coalition Against Impunity, June 18, 2016, 1–2.

96   Ibid., 4–7; Inter-American Commission on Human Rights, “Situation of Human Rights,” 29–30, 40, 43–44; “The Voice of Greatest Authority Is That of the Victims,” Commission of Truth, April 2013, 98–102; “Declaran culpable por seis delitos de difamacion e injuria a David Romero,” El Heraldo, November 13, 2015, http://www.elheraldo.hn/pais/900815-466/declaran-culpable-por-seis-delitos-de-difamaci%C3%B3n-e-injuria-a-david-romero; and “Estado Hondureno Recrudece Persecucion Contra Defensores y Defensoras de Derechos Humanos,” Radio Progreso el ERIC, March 14, 2014, http://radioprogresohn.net/index.php/comunicaciones/noticias/item/793-estado-hondure%C3%B1o-recrudece-persecuci%C3%B3n-contra-defensores-y-defensoras-de-derechos-humanos.

97   “Declaran culpable por seis delitos de difamacion e injuria a David Romero,” El Heraldo, November 13, 2015, http://www.elheraldo.hn/pais/900815-466/declaran-culpable-por-seis-delitos-de-difamaci%C3%B3n-e-injuria-a-david-romero.

98   See also Honduprensa’s blog archives relating to political persecution, at: “Entradas etiquetadas como persecucion politica,” Hondurprensa (blog), May 25, 2015, https://honduprensa.wordpress.com/tag/persecucion-politica/.

99   Interview, Tegucigalpa, August 6, 2016. See also examples of mishandled evidence in “‘There Are No Investigations Here’: Impunity for Killings and Other Abuses in Bajo Aguán, Honduras,” Human Rights Watch, February 2014, https://www.hrw.org/sites/default/files/reports/honduras0214web.pdf.

100 See Chris Arsenault, “Court Files Stolen in Case of Murdered Honduran Land Rights Activist: U.N.,” Reuters, October 4, 2016, http://www.reuters.com/article/us-honduras-landrights-activist-idUSKCN1241X9; or “Honduras: Explican Porqué Expediente de Berta Cáceres Estaba Fuera de CSJ” [Honduras: Explain why Berta Cáceres’s file was taken from the Supreme Court], El Heraldo, September 30, 2016, http://www.elheraldo.hn/pais/1004614-466/honduras-explican-porqué-expediente-de-berta-cáceres-estaba-fuera-de-csj; or Sarah Faithful, “Conspiracy Surrounding Cáceres Stolen Files,” Council on Hemispheric Affairs, October 12, 2016, http://www.coha.org/conspiracy-surrounding-caceres-stolen-case-files/.

101 Andrew Higgins, “Moldova: Hunting for Missing Millions, Finds Only Ash,” New York Times, June 4, 2015, http://www.nytimes.com/2015/06/05/world/europe/moldova-bank-theft.html?_r=0; Serbia’s Slobodan Milošević went further, actually transporting the bodies of war crimes victims in refrigerator trucks deep inside Serbia, where they were dumped in rivers or buried under highways. I reported this story for the BBC-WGBH radio program The World in 2001. See also “Serbian Minister Comments on Exhumed Bodies,” BBC Worldwide Monitoring, June 13, 2001, https://www.globalpolicy.org/component/content/article/163/28718.html.

102 Interview by author, Nueva Palestina, August 1, 2016. The reference is to the 2015 scandal in the public health care system, IHSS, discussed on pages 48–50.

103 See United States of America v. Jaime Rolando Rosenthal Oliva, Yani Benjamin Rosenthal Hidalgo, Yankel Rosenthal Coello, and Andres Acosta Garcia, S2 13 Cr. 413 (JGK), https://www.justice.gov/usao-sdny/file/781866/download. Yani and Yankel are in U.S. custody and standing trial as of April 1, 2017.

104 Interview by author, Juticalpa, July 24, 2016.

105 Some portion of the money from street-level shakedowns and bribes extorted from passers-by, arrestees, and even the victims of crime is typically sent upward within the hierarchy. The total sum is very significant. For examples, see Chayes, chap. 5 in Thieves of State.

106 Inter-American Commission on Human Rights, “Situation of Human Rights,” 102.

107 See “Results of the First 60 Days” (materials presented at Wilson Center event, June 16, 2016) Special Commission for the Clean-up and Transformation of the National Police, https://www.scribd.com/doc/316032212/Honduras-Police-Depuracion-Documents; or “Honduras Organized Crime News,” InSight Crime, December 6, 2016, http://www.insightcrime.org/honduras-organized-crime-news/honduras#security. Quote from an interview in Tegucigalpa, August 5, 2016.

108 Interview in Tegucigalpa, August 5, 2016.

109 See for example Inter-American Commission on Human Rights, “Situation of Human Rights,” 28–29, 42, 44, http://www.oas.org/en/iachr/reports/pdfs/Honduras-en-2015.pdf.

110 Charles Ford, “Zelaya Administration’s First 45 Days” (leaked cable available in the public record), WikiLeaks, March 16, 2006, https://wikileaks.org/plusd/cables/06TEGUCIGALPA526_a.html.

111 Hugo Llorens, “Merida 2.0 in Honduras” (leaked cable available in the public record), WikiLeaks, October 29, 2009, https://wikileaks.org/plusd/cables/09TEGUCIGALPA1090_a.html.

112 Elisabeth Malkin and Alberto Arce, “Files Suggest Honduran Police Leaders Ordered Killing of Antidrug Officials,” New York Times, April 15, 2016, https://www.nytimes.com/2016/04/16/world/americas/files-suggest-honduras-police-leaders-ordered-killing-of-antidrug-officials.html?_r=0; and Alberto Arce, “Honduran Ex-Police Chief Says Government Faked Documents in Assassination Case,” New York Times, April 22, 2016, http://www.nytimes.com/2016/04/23/world/americas/honduras-ramn-sabilln-pineda-police-antidrug-assassination.html suggest that the 2016 leak of information on the conspiracy that he reported may have been part of a ruse to allow Hernández to hobble the police and exert more direct control over internal security.

113 Just two examples: U.S. Attorney’s Office, Southern District of New York, “Manhattan US Attorney Announces Charges Against Members of the Honduran National Police for Drug Trafficking and Related Firearms Offenses,” press release, U.S. Department of Justice, June 29, 2016, https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-charges-against-members-honduran-national-police-drug; Malkin and Arce, “Files Suggest,” New York Times.

114 Interview, Tegucigalpa, August 5, 2016.

115 Interview, Monte Copado, July 22, 2016.

116 “Estado Hondureño Recrudece Persecución Contra Defensores y Defensoras de Derechos Humanos” [Honduran state intensifies persecution of human rights defenders], Radio Progreso, March 14, 2014, http://radioprogresohn.net/index.php/comunicaciones/noticias/item/793-estado-hondureño-recrudece-persecución-contra-defensores-y-defensoras-de-derechos-humanos.

117 Phillips, Honduras in Dangerous Times, 149–51, 158.

118 Interview, La Paz Department, July 22, 2016. See also “Honduras Indigenous Leader Under Police Protection Arrested,” TelesSUR TV, January 11, 2017, http://www.telesurtv.net/english/news/Honduras-Indigenous-Leader-Under-Police-Protection-Arrested-20170111-0024.html.

119 Interview, Tegucigalpa, August 2, 2016.

120 Interview, Nueva Palestina, August 1, 2016.

121 Links between the police and narco-traffickers are more well-known and better documented, and are discussed below in the section on local officials.

122 Interview, Tegucigalpa, July 23, 2016.

123 “La Pandilla Tenía a sus Servivios a 13 Jefes Policiales” [13 police chiefs in the gang], La Prensa, January 10, 2016, http://www.laprensa.hn/honduras/1033698-410/la-pandilla-ten%C3%ADa-a-sus-servicios-a-13-jefes-policiales.

124 “Honduras Gangs Extort Homeowners,” Fox News, August 9, 2012, http://www.foxnews.com/world/2012/08/09/honduras-gangs-extort-homeowners.html.

125 Interview, July 21, 2016.

126 Interview, Tegucigalpa, July 23, 2016.

127 Interview, Juticalpa, July 25, 2016.

128 Interview, Tegucigalpa, August 3, 2016. See also “Caen Dos Policias por Extorsion y Tres Civiles en Honduras” [Two policemen and three civilians arrested by National Anti-Extortion Force], El Tiempo, September 18, 2015, http://tiempo.hn/caen-dos-policias-por-extorsion-y-tres-civiles-en-honduras/.

129 Phillips, Honduras in Dangerous Times, 58. Also see Adrienne Pine, Working Hard, Drinking Hard: On Violence and Survival in Honduras, 1st ed. (Berkeley: University of California Press, 2008), 56–69.

130 Interviews, and see Adrienne Pine, “Waging War on the Wageless: Extrajudicial Killings, Private Armies, and the Poor of Honduras,” in The War Machine and Global Health: A Critical Medical Anthropological Examination of the Human Costs of Armed Conflict and the International Violence Industry, eds. Merrill Singer and G. Derrick Hodge (Lanham, MD: AltaMira Press, 2010), 241–76; Inter-American Commission on Human Rights, “Situation of Human Rights,” 47–48.

131 And yet, many major initiatives aimed at curbing these flows focus on reinforcing these very same police. See Office of the Press Secretary, “Fact Sheet: Alliance for Prosperity,” White House, March 3, 2015, https://obamawhitehouse.archives.gov/the-press-office/2015/03/03/fact-sheet-support-alliance-prosperity-northern-triangle; Esther Yu His Lee “Experts Say US Aid Package to Central America Is Backfiring Big Time,” Think Progress, February 4, 2016, https://thinkprogress.org/experts-say-u-s-aid-package-to-central-america-is-backfiring-big-time-c0928534f91c#.sacjx04s2.

132 “Decreto 21-2016” [Decree no. 21-2016], La Gaceta de la Republica de Honduras, April 8, 2016, http://www.observatoriodescentralizacion.org/download/decretos_vigentes/DECRETO-DE-EMERGENCIA-DEPURACION-POLICIAL-08-DE-ABRIL-2016.pdf; for an assessment, see Mike LaSusa, “Breaking Precedent, Honduras Police Reform Commission Making Progress,” InSight Crime, June 17, 2016 http://www.insightcrime.org/news-analysis/honduras-police-reform-commission-making-progress-members-say.

133 For the text of the law setting up the commission, see Decreto 21-2016 [Decree No. 21-2016], La Gaceta de la Republica de Honduras, April 8, 2016, http://www.acnur.org/t3/fileadmin/Documentos/BDL/2016/10611.pdf.

134 “Depuracion Policial Ceso a Mas de Dos Mil Agentes en Honduras” [More than two thousand officers and agents let go in purge], Prensa Latina, December 27, 2016, http://prensa-latina.cu/index.php?o=rn&id=53004&SEO=depuracion-policial-ceso-a-mas-de-dos-mil-agentes-en-honduras.

135 Interview, Tegucigalpa, August 5, 2016.

136 Interview, Tegucigalpa, August 6, 2016. Several other interviewees echoed these sentiments. For other concerns about the commission’s independence, see Laura Jung, “Honduras Special Commission on Police Reform: Genuine Cleanup Effort or Yet Another PR Scheme,” The Americas (blog), Center for Economic and Policy Research, July 8, 2016, http://cepr.net/blogs/the-americas-blog/honduras-special-commission-on-police-reform-genuine-cleanup-effort-or-yet-another-pr-scheme. In an interview on October 13, 2016, Honduras officers at USAID’s Office of Transition Initiatives (OTI) confirmed that they had no knowledge of a systematic analysis of which officers are getting purged. They emphasized that the focus of OTI’s work is on street-level officers.

137 See R. Evan Ellis, Honduras: A Pariah State, or Innovative Solutions to Organized Crime Deserving of U.S. Support? (Carlisle, PA: Strategic Studies Institute, U.S. Army War College, June 2016), 24–26.

138 Watch “Alianza – Creacion de la Policia los TIGRES” [Police creation of the Tigers],” YouTube video, uploaded by “Alianza por la Paz y la Justicia” [Alliance for peace and justice], October 18, 2012, https://www.youtube.com/watch?v=r5mIPqYWNko. See also: Marguerite Cawley, “Plans for New Military Police in Honduras Backed by Congress,” InSight Crime, May 9, 2013, http://www.insightcrime.org/news-briefs/honduras-police-military-unit-organized-crime; Thelma Mejia, “Government Puts Tigers on the Streets,” Inter-Press Service, August 7, 2012, http://www.ipsnews.net/2012/08/honduran-president-puts-tigers-on-the-streets/.

139 Capt. Thomas Cieslak, “Special Forces Soldiers Train Honduran Force,” U.S. Army, March 3, 2015, https://www.army.mil/article/143821/Special_Forces_Soldiers_train_Honduran_force. A U.S. army officer, recently returned from a year in Honduras, confirmed that most U.S. cooperation in-country with Honduran units is with the TIGRES. In his assessment, most work done by U.S. forces stationed in Honduras is focused outside Honduran territories, in cooperation with non-Honduran forces.

140 Deduction based on experience with military assistance, and see Ellis, Honduras: A Pariah State, 25. For evidence regarding policy decisions made with the express purpose of attracting U.S. military assistance, see then Ambassador Larry Palmer’s assessment of the quid-pro-quo expected by the Honduran government in return for its dispatch of some 300 soldiers and officers to Iraq. Larry Palmer, “Status of Honduran Troop Deployment to Iraq” (U.S. embassy cable), WikiLeaks, July 22, 2003, http://cables.mrkva.eu/cable.php?id=9590.

141 Interviews in La Esperanza, July 22, 2016, Joshua Partlow and Gabriela Martinez, “Suspicions Mount in Slaying of Honduran Environmentalist,” Washington Post, March 18, 2016, https://www.washingtonpost.com/world/the_americas/suspicions-mount-in-murder-of-noted-honduran-environmentalist/2016/03/17/cbac766c-ea2d-11e5-a9ce-681055c7a05f_story.html?utm_term=.cf0e436c4a77.

142 See pages 32–35, and among other studies, Victor Meza et al., “La Militarizacion de la Seguridad Publica en Honduras [The militarization of public security in Honduras],” CEDOH, 2015.

143 “World Prison Brief Data: Honduras,” Institute for Criminal Policy Research, University of London, http://www.prisonstudies.org/country/honduras; Inter-American Commission on Human Rights, “Situation of Human Rights,” 193, http://www.oas.org/en/iachr/reports/pdfs/Honduras-en-2015.pdf; “Honduras: Events of 2015,” Human Rights Watch, 2015, https://www.hrw.org/world-report/2016/country-chapters/honduras; “Shadow Report From Honduran Civil Society to the UN Committee Against Torture (CAT),” World Organization Against Tortune, 2016, 12, http://www.omct.org/files/2016/07/23875/informe_alternativo_honduras_cat_e.pdf. Also see José Martínez d’Aubuisson and Steven Dudley, “Where Chaos Reigns: Inside San Pedro Sula Prison,” InSight Crime, February 2, 2017, http://www.insightcrime.org/investigations/where-chaos-reigns-inside-the-san-pedro-sula-prison.

144 According to Fiona Mangan, an international corrections expert, the likelihood of money flowing upward to the capital from individual prison administrators depends on the government’s awareness of prison corruption and its control over prison administration (e-mail communication, March 21, 2017). Given the notorious nature of prison corruption in Honduras, and Hernández’s appointment of a former military officer to run the system, both of those factors are likely to be high in Honduras.

145 Tim Weiner, “At Least 100 Are Killed in Prison Fire in Honduras,” New York Times, May 18, 2004, http://www.nytimes.com/2004/05/18/world/at-least-100-are-killed-in-prison-fire-in-honduras.html?_r=0; “Honduras Prison Fire Video Purportedly Captures Deadly Blaze,” Huffington Post, February 16, 2012, http://www.huffingtonpost.com/2012/02/16/honduras-prison-fire-video-deadly-blaze_n_1281941.html; Inter-American Commission on Human Rights, “Situation of Human Rights,” 54-56, http://www.oas.org/en/iachr/reports/pdfs/Honduras-en-2015.pdf; José Martínez d’Aubuisson and Steven Dudley, “Where Chaos Reigns: Inside San Pedro Sula Prison,” InSight Crime, February 2, 2017, http://www.insightcrime.org/investigations/where-chaos-reigns-inside-the-san-pedro-sula-prison.

146 Annie Bird, “The Agua Zarca Dam and Lenca Communities in Honduras,” Rights Action, October 3, 2013, 7. See also Jordy Willems and Anne de Jonghe, “Protest and Violence Over the Agua Zarca Dam,” Bankwatch, February 2016, 27–28.

147 Ariel Torres Fuenes, “El Destino de Agua Zarca” [The destiny of Agua Zarca], El Pulso, March 2, 2017, http://elpulso.hn/el-destino-de-agua-zarca/.

148 “Por Los Intereses Oligarcas, Detienen Ilegalmente en Rio Blanco Tres Companeros Lencas del COPINH” [In the interest of oligarchs, three fellow Lenca COPINH members illegally detained], COPINH, November 2, 2012, https://www.copinh.org/article/por-los-intereses-oligarcas-detienen-ilegalmente-e/; “Arbitrary Detention, Subsequent Release of Ms Berta Cáceres and Mr Tomas Gomez Membreno,” Protection International, May 27, 2013.

149 Both were deployed to the Bajo Aguán, where clashes over the expansion of palm plantations involved numerous human rights violations. (See various mentions below.) Nina Lakhani, “Berta Cáceres Court Papers Show Murder Suspects’ Links to US-Trained Elite Troops,” Guardian, February 28, 2017, www.theguardian.com/world/2017/feb/28/berta-cacereshonduras-military-intelligence-us-trained-special-forces; see also Jason McGahan, “Army Major, Corporate Goons Charged in Murder of Berta Cáceres in Honduras,” Daily Beast, May 8, 2016, http://www.thedailybeast.com/articles/2016/05/08/did-corporate-goons-plot-to-murder-activist-berta-caceres.html.

150 Becky Myton et al., “Honduras Tropical Forest and Biodiversity Assessment,” USAID Honduras, September 2014, A21.

151 See Victor Meza et al., “La Militarizacio.”

152 It is law 168-2013, and has gone through a few modifications since. See: “Decreto No. 168-2013,” UNHCR ACNUR, http://www.acnur.org/t3/fileadmin/Documentos/BDL/2016/10608.pdf; “Decreto No. 168-2013,” La Gaceta de la Republica de Honduras, http://www.tsc.gob.hn/leyes/Ley_Policia_militar_orden_publico_2013.pdf; “Decreto No. 410-2013,” La Gaceta de la Republica de Honduras, http://www.tsc.gob.hn/leyes/Ref_PMOP_2014.pdf.

153 “Memoria Annual, 2015: Ano del fortalecimiento de La Policia National,” Honduran National Police, 2015, 18, http://www.seguridad.gob.hn/policiaNacional/media/MEMORIA%202015.pdf.

154 “Permanent Parallel Police Forces?,” Honduras Culture and Politics (blog), January 19, 2015, http://hondurasculturepolitics.blogspot.com/2015/01/permanent-parallel-police-forces.html; http://www.laprensa.hn/honduras/788396-410/diputados-no-ratifican-rango-constitucional-de-la-polic%C3%ADa-militar?utm_source=laprensa.hn&utm_medium=website&utm_campaign=temasdestacados.

155 Private conversation, Washington, DC, December 22, 2016. See also Sarah Kinosian, “Honduras’ Military: On the Streets and in the Government,” Latin America Working Group, February 10, 2015; and Inter-American Commission on Human Rights, “Situation of Human Rights,” 93; and a blogger identified as RNS, “Permanent Parallel Police Forces?,” Honduras Culture and Politics (blog), January 19, 2015, http://hondurasculturepolitics.blogspot.com/2015/01/permanent-parallel-police-forces.html.

156 And see Agence France-Presse and Agencia EFE, “Creacion de policia military levanta temor en Honduras,” La Nacion, August 23, 2013, http://www.nacion.com/mundo/centroamerica/Creacion-policia-militar-levanta-Honduras_0_1361663860.html. For a description of its official makeup, training, and duties, see Ellis, Honduras: A Pariah State, 20–24.

157 The most careful recent round-up of information on military involvement in the Cáceres assassination is in “Honduras: The Deadliest Place to Defend the Planet,” Global Witness, 14.

158 Such private security companies may be owned by former military officials. Servicos Especiales de Seguridad (SESER), which belongs to the former commander of a military intelligence unit, was used by the Canadian mining company Aura Minerals. See Karen Spring, “Mining in a State of Impunity,” MiningWatch Canada, June 28, 2016, http://miningwatch.ca/sites/default/files/mining-in-a-state-of-impunity-web_1.pdf.

159 Anna Jover Segura, “Honduras, Bajo Aguan: Nuevo Coronel de la Operacion Xatruch, ¿Mas de lo Mismo?,” Upside Down World, March 21, 2014, http://upsidedownworld.org/noticias-en-espa/noticias-en-espa-noticias-en-espa/honduras-bajo-aguan-nuevo-coronel-de-la-operacion-xatruch-imas-de-lo-mismo/. See also detailed reporting in “‘There Are No Investigations Here,’” Human Rights Watch.

160 Ellis, Honduras: A Pariah State, 17. See, on its use against gang extortion, “Presidente Hondureno Asegura que en 2016 ‘Combatira la Extortion,’” El Libertador, December 30, 2015, http://www.web.ellibertador.hn/index.php/noticias/nacionales/889-presidente-hondureno-asegura-que-en-2016-combatira-la-extorsion; other sources detail on abuses at Radio-TV Globo and assert the force reports directly to Hernández, see “Militares intimidan a personal de Radio y TV Globo,” Criterio, May 24, 2016, http://criterio.hn/2016/05/24/militares-intimidan-personal-radio-tv-globo/.

161 See InSight Crime’s roundup on Honduras, “Honduras,” InSight Crime, December 6, 2016, http://www.insightcrime.org/honduras-organized-crime-news/honduras; Reuters, “Police Militarization in Honduras Has Helped Cut Violence, but Soldiers Are Being Accused of Murder and Torture,” Business Insider, July 9, 2015, http://www.businessinsider.com/r-military-helps-cut-honduras-murder-rate-but-abuses-spike-2015-7; Inter-American Commission on Human Rights, “The Situation of Human Rights,” 93; Sarah Kinosian, “Honduras’ Military: On the Streets and in the Government,” Security Assistance Monitor, February 10, 2015, http://securityassistance.org/blog/honduras-military-streets-and-government.

162 “Honduras Cuts Security Tax After Angering Businesses,” Reuters, September 14, 2011, http://www.reuters.com/article/honduras-tax-idAFS1E78D23920110914.

163 Meeting with two members of the State Department Bureau of Conflict and Stabilization Operations, June 28, 2016.

164 Hugo Noe Pino, “Honduras: The Fragility of Gains in Budget Transparency,” International Budget Partnership, October 2016, http://www.internationalbudget.org/wp-content/uploads/ibp-case-study-honduras-budget-transparency-2016.pdf.

165 Gerardo Reyes-Tagle and Mikel Tejada, “The Fiscal Implications of Public-Private Partnerships in Honduras,” Inter-American Development Bank, July 2015, https://publications.iadb.org/bitstream/handle/11319/6991/FMM_DP_Fiscal_Implications_of_Public_Private_Partnerships_Honduras.pdf?sequence=1, 32.

166 Ibid., 27.

167 Ibid., 29. The assessment of the supreme audit institution was corroborated by interviewees, including a Honduran oversight professional, who called it “a joke. It is no control institution.”

168 “Informe Consolidado de Rendicion de Cuentas del Sector Publico, Periodo 2015,” Tribunal Superior de Cuentas, July 31, 2016, http://www.tsc.gob.hn/Rendicion_de_cuentas/2015/Informe_001-DF-2016.pdf; and telephone interview, February 8, 2017.

169 Ibid.

170 Ibid.

171 “Debt Management Reform Plan: The Republic of Honduras,” World Bank Group, October 2014, http://www.sefin.gob.hn/wp-content/uploads/2015/09/plan_mejoradeuda.pdf.

172 Interview with an IDB official, Tegucigalpa, August 3, 2016. But cf. the IDB’s own website: “Trust Funds,” Inter-American Development Bank, http://www.iadb.org/aboutus/trustfunds/fundsearch.cfm. See also Stephan Lefebvre, “Honduras: IMF Austerity, Macroeconomic Policy, and Foreign Investment,” Center for Economic and Policy Research, September 2015, http://cepr.net/documents/Honduras_IMF-2015-08.pdf, 14–18. This feature of Honduran kleptocratic operations has uncomfortable similarities in the West, including the privatization of public services in Chicago, where a bank-backed consortium won key contracts there. According to Hilari Rantakarii, of Transparency International Finland, the contracting out of Helsinki public services to private companies has also resulted in loss of public access to the terms of the deals or oversight on their implementation in that country.

173 Marco Caceres, “Honduras: Bargaining Away the State Power Company,” World Post, no date, http://www.huffingtonpost.com/marco-caceres/honduras-bargaining-away_b_5767394.html; “IMF Executive Board Approves $113.2 Million Stand-By Arrangement and $75.4 Million Stand-By Credit Facility for Honduras,” press release, International Monetary Fund (IMF), December 4, 2014, http://www.imf.org/en/News/Articles/2015/09/14/01/49/pr14545; “Debt Management Reform,” World Bank Group, 11; Marco Antonio Hernandez et al., “Honduras Economic DNA,” World Bank, June 2015, http://documents.worldbank.org/curated/en/150731468189533027/pdf/97361-WP-PUBLIC-Box391473B-Honduras-Economic-DNA-First-Edition-11Jun2015-FINAL-PUBLIC.pdf, 10: “One of the main contributors to persistent deficits to the combined public sector has been the state-owned electricity company (ENEE).”

174 Luciano Gonzalez, “Concerning Developments Over at ENEE,” Honduras News, October 19, 2015, http://www.hondurasnews.com/concerning-developments-over-at-enee/.

175 Kyrgyzstan, Brazil, subsidies, and so on.

176 Figures on ENEE losses from “Perdidas Electricas de la ENEE suman L 47,296 millones en seis años,” El Heraldo, April 24, 2016, http://www.elheraldo.hn/pais/953306-466/p%C3%A9rdidas-el%C3%A9ctricas-de-la-enee-suman-l-47296-millones-en-seis-a%C3%B1os. GDP figures from “Data: Honduras,” World Bank, http://data.worldbank.org/country/honduras.

177 “IMF Executive Board,” press release, IMF, December 4, 2014; “IMF Completes Third and Fourth Reviews Under SBA and SCF With Honduras,” press release, IMF, November 2, 2016, https://www.imf.org/en/News/Articles/2016/11/02/PR16482-Honduras-IMF-Completes-Third-Fourth-Reviews-Under-SBA-SCF.

178 Kelssin Vasquez, “Congreso aprobo liberalizer la generacion de energia electrica,” El Heraldo, April 7, 2014, http://www.elheraldo.hn/csp/mediapool/sites/ElHeraldo/Economia/story.csp?cid=611117&sid=294&fid=216.

179 Cesar Pantin, “Honduras: Sacan de la Enee a 2,000 empliados,” La Prensa, November 24, 2014, http://www.laprensa.hn/honduras/770871-410/honduras-sacan-de-la-enee-a-2000-empleados; “Masivos despidos en la ENEE,” Tiempo Digital, November 4, 2016, http://tiempo.hn/masivos-despidos-en-la-enee/.

180 Luis Rodriguez, “Perdidas electricas de la ENEE suman L 47,296 en seis anos,” El Heraldo, April 24, 2016, http://www.elheraldo.hn/pais/953306-466/p%C3%A9rdidas-el%C3%A9ctricas-de-la-enee-suman-l-47296-millones-en-seis-a%C3%B1os. But note the lempira lost value against the dollar in 2014, making dollar comparisons misleading. See “Devaluation in Honduras,” Central America Data, http://www.centralamericadata.com/en/search?q1=content_en_le:%22devaluation%22&q2=mattersInCountry_es_le:%22Honduras%22.

181 Interview with resident of Choluteca (where there are at least three large electricity generators, two oil-fired and one solar), August 6, 2016. Interviewee recorded blackouts for as long as eight hours a day for several days a week.

182 According to figures cited by the World Bank for 2011 and 2012, a little over 82 percent of the population had electricity, but only 65 percent of rural households. See “Access to Electricity (% of Population),” World Bank, accessed April 14, 2017, http://data.worldbank.org/indicator/EG.ELC.ACCS.ZS?locations=HN.

183 Interview, Tegucigalpa, August 2, 2016.

184 Interview, Tegucigalpa, October 2014; and see Jose Ernesto Calix Mendoza, “Origen, Causa-Efecto de los Problemas Financieros de la ENEE, y las Medidas Alterntivas para Afrontarlos,” Colegio de Ingenieros Mecanicos, Electricistas y Quimicos de Honduras, October 2014, http://www.cimeqh.org/index.php/noticias/351-origen-causa-efecto-de-los-problemas-financieros-de-la-enee-y-las-medidas-alternativas-para-afrontarlos, 15.

185 Ibid., which is a plan drawn up by Mendoza, ENEE’s national coordinator for loss control, projecting a “realistic” reduction target of 60 percent of nontechnical losses only. Congress approved forty-one renewable energy contracts in September 2010. “Empleados hondureños entraran a las 7:30 AM,” La Prensa, March 1, 2011, http://www.laprensa.hn/honduras/548392-97/empleados-hondurenos-entraran-a-las-730-am.

186 “Continua revision de contratos termicos en Honduras,” America Economia, March 24, 2014, http://www.americaeconomia.com/negocios-industrias/continua-revision-de-contratos-termicos-en-honduras; and ibid., Marco Caceres. See also motivation for a potential loan by the Inter-American Development bank, “Programmatic Support for Structural Reforms in the Electricity Sector,” for consideration by Board of Directors, December 2, 2017, p. 5, https://www.gtai.de/GTAI/Content/DE/Trade/Fachdaten/PRO/2015/01/Anlagen/PRO201501275005.pdf?v=1.

187 Ley de Promocion a la Generacion de Energia Electrica con Recursos Renovables” [Law to promote electricity generation using renewable resources], La Gaceta de la Republica de Honduras, October 2, 2007, http://www.poderjudicial.gob.hn/juris/Leyes/Ley%20de%20Promocion%20a%20la%20Generacion%20de%20Energia%20Electrica%20con%20Recursos%20Renovables.pdf. See also Climatescope’s 2016 profile of Honduras: “Honduras,” Climatescope, December 14, 2016, http://global-climatescope.org/en/country/honduras/#/details.

188 Robert Fares, “Price of Solar Is Declining to Unprecedented Lows,” Plugged In (blog), Scientific American, August 27, 2016, https://blogs.scientificamerican.com/plugged-in/the-price-of-solar-is-declining-to-unprecedented-lows/.

189 “Electrical Elites and Political Power,” in Meza et al., Poderes Facticos, 119–34.

190 Interview (telephone), October 3, 2016.

191 “Incentivos elevaran el costo del kilovatio de energia solar,” La Prensa, April 13, 2013, http://www.laprensa.hn/economia/laeconomia/830712-410/incentivos-elevar%C3%A1n-el-costo-del-kilovatio-de-energ%C3%ADa-solar.

192 According to unpublished research conducted in Tegucigalpa, and confirmed in interviews.

193 See note 187; and interview with former senior official, Tegucigalpa, August 4, 2016.

194 Via Grupo Lufussa, COHESSA, and SOPOSA of the Larache Group, and Grupo Terra, respectively; and interviews, Tegucigalpa, August 5, 2016.

195 One indication of its dismay at the terms of these contracts is ENEE’s apparent failure to pay out the incentives. See Rosie Fitzmaurice, “Developers of Honduran PV Still Yet to Receive Incentive Tariff,” IJGlobal, June 30, 2016, https://ijglobal.com/articles/101219/developers-of-honduran-pv-still-yet-to-receive-incentive-tariff.

196 Several of which were declared to be of national interest in 2011, and provided with extraordinary legal provisions for expropriating land and other inputs, under the Special Law Regulating Land Acquisitions for the Execution of Special Renewable Energy Projects (Ley Especial Reguladora de Adquision de Bienes Inmuebles para la Ejecucion de Proyectos Especiales de Energia con Recursos Renovables).

197 See “Honduras: the Deadliest Place to Defend the Planet,” Global Witness.

198 One, initiated in the mid-1990s, was dropped in 1999 because Hurricane Mitch, which had devastated the area the previous year, severely eroded the banks. Concerned about the reliability of projected water flows, Chicago-based Harza Engineering Company (later MWH Global) and Dallas-based Panda Energy International cancelled their participation. Opposition on the part of local communities, allied in the Platform for the Defense of the Patuca River, also influenced their decision. A decade later, Taiwanese partners abandoned their 2006 promise of support for a different 104-megawatt project, Patuca III, situated upstream of the original site. See Jack Eidt, “Honduras: Patuca River Dams Threaten Indigenous Survival,” WilderUtopia, July 26, 2011, http://www.wilderutopia.com/environment/honduras-patuca-river-dams-threaten-indigenous-survival/; Monti Aguirre, “Damming the Patuca,” International Rivers, June 30, 2016, https://www.internationalrivers.org/blogs/233/damming-the-patuca; Mark Graffis, “Dam Dilemna in Honduras (Patuca River), Conservation Media Center, Rainforest Alliance, August 26, 1998, http://www.hartford-hwp.com/archives/47/225.html; “Taiwan President Confirms Loan to Build Honduras‘ 100-MW Patuca 3,” Hydroworld, August 27, 2008, http://www.hydroworld.com/articles/2007/08/taiwan-president-confirms-loan-to-build-honduras-100-mw-patuca-3.html.

199 IANS, “Honduras Signs Deal With Chinese Firm on Hydro Plant,” Thaindian News, April 19, 2011, http://www.thaindian.com/newsportal/business/honduras-signs-deal-with-chinese-firm-on-hydro-plant_100527451.html. A thorough search in English, Spanish, and Chinese, by an experienced corporate due diligence professional, failed to turn up a copy of the actual contract.

200 Alex Flores, “Honduras: Viene Sinohydro a negociar segunda etapa de Patuca III,” El Heraldo, April 7, 2014, http://www.elheraldo.hn/alfrente/564883-209/honduras-viene-sinohydro-a-negociar-segunda-etapa-de-patuca-iii.

201 For some elements of a timeline, see “Hydroelectric Project Patuca III in Honduras,” Central America Data, http://en.centralamericadata.com/en/search?q1=content_en_le%3A%22Hydroelectric+Project+Patuca+III%22&q2=mattersInCountry_es_le%3A%22Honduras%22&start=15; and Sara Santiago, “Understanding Power: The Prospects for Indigenous Resistance to a Proposed Mega-dam in Rural Honduras” (undergraduate research thesis, Department of Geography, Ohio State University, May 17, 2012), http://kb.osu.edu/dspace/handle/1811/52064, 36–41.

202 From a copy of the letter in the Carnegie Endowment’s possession.

203 “Estudios Ambientales y Sociales Adicionales - Patuca 3, Honduras,” AF Industry AB y Ecologia y Servicios SA, November 2012 (report in Carnegie’s possession).

204 See, for instance, Mongabay’s portrait of Honduras: “Honduras,” Mongabay, last updated February 6, 2006, http://rainforests.mongabay.com/20honduras.htm.

205 Interview, Tegucigalpa, August 6, 2016.

206 See the text of the convention here: International Labor Organization no. 169, “C169 - Indigenous and Tribal Peoples Convention,” June 27, 1986, http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::p12100_instrument_id:312314.

207 Gerardo Torres, “Hondurans Protest Over Lands Lost in Hydroelectric Project,” Telesur, February 2, 2015, http://www.telesurtv.net/english/news/Hondurans-Protest-Over-Lands-Lost-in-Hydroelectric-Project-20150202-0020.html.

208 Interview, Las Planchas, July 25, 2016.

209 Interview, Tegucigalpa, August 6, 2016.

210 “Continuan tomas en carretera al Proyecto Patuca III,” El Sol de Honduras, November 21, 2016, http://www.elsoldehonduras.com/nacionales/continuan-tomas-en-carretera-al-proyecto-patuca-iii/.

211 Interview, Las Planchas, July 25, 2016.

212 Interview, Las Planchas, July 26, 2016.

213 Interviews with Mayor Andres Avelino Betancourt and a member of his staff, Nueva Palestina, July 26, 2016.

214 Interview, July 28, 2016.

215 Interview, July 31, 2016.

216 Interview, Krausirpi, July 29, 2016.

217 Interview, July 26, 2016.

218 Interview, Krausirpi, July 29, 2016.

219 Interview, July 30, 2016.

220 The National Institute for Space Research has estimated that dams are the single-largest, human-based source of methane, accounting for 23 percent of all emissions. See “Greenhouse Gas Emissions From Dams FAQ,” International Rivers, May 1, 2007, https://www.internationalrivers.org/resources/greenhouse-gas-emissions-from-dams-faq-4064. See more in Bridget Deemer et al., “Greenhouse Gas Emissions From Reservoir Water Surfaces: A New Global Synthesis,” BioScience 66, no. 11 (October 2016): 949–64.

221 Interview, Tegucigalpa, August 4, 2016.

222 Interview, Tegucigalpa, August 2, 2016; see also, “Energy Integration in Central America: Full Steam Ahead,” Inter-American Development Bank, June 25, 2013, http://www.iadb.org/en/news/webstories/2013-06-25/energy-integration-in-central-america,10494.html; and Jay Zarnikau et al., “Will the SIEPAC Transmission Project Lead to a Vibrant Electricity Market in Central America?,” Energy Forum, International Association for Energy Economics, September 24, 2013.

223 Jeremy Martin, “Central America Electric Integration and the SIEPAC Project: From a Fragmented Market Toward a New Reality,” Center for Hemispheric Policy, May 6, 2010, https://umshare.miami.edu/web/wda/hemisphericpolicy/Martin_Central_America_Electric_Int.pdf.

224 Already, despite the regulatory confusion, the integrated grid has linked beyond Central America to into those of Mexico and Colombia. Zarnikau et. al., “Will the SIEPAC Transmission Project Lead to a Vibrant Electricity Market in Central America?”

225 See “CNA denuncia a Funcionarios y Ex funcionarios de la Empresa Nacional de Energia Electrica (ENEE),” press release, Consejo Nacional Antocorrupcion, August 16, 2016, http://www.cna.hn/index.php/43-noticias-fijas/437-cna-presenta-denuncia-ente-el-ministerio-publico-mp-en-contra-de-actuales-funcionarios-y-ex-funcionarios-de-la-empresa-nacional-de-energia-electrica-enee; also, “CNA pidea la Fiscalia declarer en reserve caso de Patuca III,” La Prensa, September 7, 2016, http://www.laprensa.hn/honduras/997942-410/cna-pide-a-la-fiscal%C3%ADa-declarar-en-reserva-caso-de-patuca-iii.

226 “Nadie aclara polemic contrato de Enee con empresa Odebrecht” La Prensa, February 21, 2017, http://www.laprensa.hn/honduras/1046225-410/nadie-aclara-pol%C3%A9mico-contrato-de-enee-con -empresa-odebrecht; Silma Estrada, “CNA interpone de denundia en contra de ex funcionarios y ex empleados de la ENEE,” HRN, August 24, 2016, http://www.radiohrn.hn/l/noticias/cna-interpone-denuncia-en-contra-de-ex-funcionarios-y-ex-empleados-de- la-enee; “Contratos de obras se hicieron al amparo de la Ley Especial,” La Prensa, September 5, 2016, http://www.laprensa.hn/honduras/997181-410/contratos-de-obras-se-hicieron-al-amparo-de-la-ley-especial.

227 Alex Flores, “Avanzo o retrocedio Honduras en la lucha contra la corrupcion en 2016?,” Revistazo, January 25, 2017, http://www.revistazo.biz/web2/index.php/nacional/item/1167-%C2%BFavanz%C3%B3-o-retrocedi%C3%B3- honduras-en-la-lucha-contra-la-corrupci%C3%B3n. Even more shockingly, it seems ENEE encouraged a company belonging to the Cachiros drug cartel to bid for the job: “ROMA invito a Los Cachiros a particpar en las licitaciones de la ENEE,” Criterio, March 29, 2017, http://criterio.hn/2017/03/29/roma-invito-los-cachiros-participar-las-licitaciones-la-enee/.

228 “La ENEE dio otro contrato de construccion a Los Cachiros,” El Heraldo, March 27, 2017, http://www.elheraldo.hn/pais/1057899-466/la-enee-dio-otro-contrato-de-construcción-a-los-cachiros.

229 “James Robinson and Ragnar Torvik, “White Elephants,” Journal of Public Economics 89 (2005): 197–210, http://scholar.harvard.edu/files/jrobinson/files/jr_WhiteElephants.pdf; for an Egyptian case study, see Frederick Deknatel, “White Elephants,” Nation, August 13, 2015, https://www.thenation.com/article/white-elephants/. Dams are regularly looted in this way—to the extent that they often fail to recoup even the cost of construction. Oxford University’s Atif Ansar et al. found in 2013 that three out of four large dams suffer cost overruns—with an average actual expenditure 96 percent higher than estimates. In nearly half of the cases, sunk costs will never be recovered. Atif Ansar et al., “Should We Build More Large Dams? The Actual Costs of Hydropower Megaproject Development,” Energy Policy 69 (June 2014): https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2406852; see also Bent Flyvbjerg, “What You Should Know About Megaprojects and Why,” Project Management Journal 45, no. 2 (April 2014): http://www.pmi.org/learning/library/know-mega-projects-overview-2267; and Transparency International, Global Corruption Report 2008: Corruption in the Water Sector (Cambridge, UK: Cambridge University Press, 2008), http://www.transparency.org/whatwedo/publication/global_corruption_report_2008_corruption_in_the_water_sector.

230 “Quiebra del Seguro Social IHSS - Globo TV Honduras,” YouTube video, posted by “The MrR5,” May 8, 2015, https://www.youtube.com/watch?v=WMdmVeAEKF8.

231 A month later, Hernández admitted the money had gone to his political party, but claimed not to have known about it, and said he would pay it back. Agencia EFE, “Presidente hondureño acepta que su campaña recibió dinero de corrupción,” Excelsior, June 4, 2015, http://www.excelsior.com.mx/global/2015/06/04/1027556.

232 “Informe revela escandalosa corrupcion en IHSS,” El Heraldo, April 28, 2014, http://www.elheraldo.hn/csp/mediapool/sites/ElHeraldo/Pais/story.csp?cid=702964&sid=299&fid=214.

233 “Protesta de empleados y pacientes en IHSS” El Heraldo, July 31, 2014, http://www.elheraldo.hn/pais/734058-214/protesta-de-empleados-y-pacientes-en-ihss.

234 “Hondurano protesta contra saqueo al IHSS en la Copa America!,” Diario Deportivo Mas, June 7, 2016, http://www.diariomas.hn/2016/06/07/hondureno-protesta-contra-saqueo-al-ihss-en-la-copa-america/; “Cerca de tres mil personas han muerto por descalabro en el IHSS,” La Tribuna, May 28, 2015, http://www.latribuna.hn/2015/05/28/cerca-de-tres-mil-personas-han-muerto-por-descalabro-en-el-ihss/.

235 For earlier reports of corruption in the IHSS, see “Informe confirma ‘corrupcion institucionalizada’ en el IHSS,” Proceso Digital, March 6, 2014, http://www.proceso.hn/component/k2/item/6822.html; for May and June protests, see “Capitalinos marchan exigiendo resolucion en case del IHSS,” La Prensa, May 30, 2015, http://www.laprensa.hn/honduras/844810-410/capitalinos-marchan-exigiendo-resoluci%C3%B3n-en-caso- del-ihss; and Elisabeth Malkin, “Wave of Protests Spreads to Scandal-Weary Honduras and Guatemala,” New York Times, June 12, 2015, https://www.nytimes.com/2015/06/13/world/americas/corruption-scandals-driving-protests-in-guatemala-and-honduras.html?_r=0.

236 Informe confirma ‘corrupcion institucionalizada’ en el IHSS,” Proceso Digital; and “Informe revela escandalosa corrupcion en IHSS,” El Heraldo, April 28, 2014, http://www.elheraldo.hn/pais/702964-214/informe-revela-escandalosa-corrupci%C3%B3n-en-ihss.

237 Ibid.; and “ASJ muestra irregularidades Astropharma en innformes,” La Prensa, June 19, 2015, http://www.laprensa.hn/honduras/851251-410/asj-muestra-irregularidades-de-astropharma-en-informes.

238 “Mario Roberto Zelaya Rojas,” Persona de Interes, https://www.personadeinteres.org/personas/2276; “Los cheques fueron entregados por el senor Zelaya,” El Heraldo, March 9, 2015, http://www.elheraldo.hn/alfrente/820507-209/los-cheques-fueron-entregados-por-el-señor-zelaya.

239 “Familia Gutierrez intento vender medecinas hace 2 meses al Estado,” La Prensa, July 1, 2015, http://www.laprensa.hn/honduras/854571-410/familia-guti%C3%A9rrez-intent%C3%B3-vender -medicinas-hace-2-meses-al-estado.

240 “Mujeres acusadas de lavado de activos del IHSS dejaron sus lujos y ahora van a la iglesia,” La Tribuna, June 30, 2016, http://www.latribuna.hn/2016/06/30/mujeres-acusadas-lavado-activos-del-ihss-dejaron-lujos-ahora-van-la-iglesia/.

241 “Lena y su familia van a juicio por caso de Astropharma,” La Prensa, August 5, 2015, http://www.laprensa.hn/honduras/986870-410/lena-y-su-familia-van-a-juicio-por-caso-de-astropharma.

242 “Al dictarle detencion judicial a Shukri Kafie es trasladado a una clinica privada,” TVC, June 12, 2015, http://direct.televicentro.hn/nota/2015/6/12/dictan-detención-judicial-a-shukri-kaffie.

243 RNS, “CONATEL Attempts to Shut Down Cholusat Sur,” Honduras Culture and Politics (blog), October 16, 2015, http://hondurasculturepolitics.blogspot.com/2015/10/conatel-attempts-to-shut-down-cholusat.html.

244 NPINEDA, “Detencion judicial dicta juez a John Charles Bogran,” La Prensa, May 17, 2015, http://www.laprensa.hn/sucesos/840871-410/detenci%C3%B3n-judicial-dicta-juez-a-john-charles-bogr% C3%A1n.

245 “IMF Executive Board,” press release, IMF, December 4, 2014; and “IMF Completes Third and Fourth Review,” press release, IMF, November 2, 2016.