Table of Contents

View Infographic: The Structure of Corruption in Honduras

The networks that have been ushered into control of the Honduran political economy by this process are perhaps less unitary than those of such highly structured kleptocracies as Azerbaijan, or Cambodia, or Zine el-Abidine Ben Ali’s Tunisia.61 In those countries, the private sector is or was almost entirely dominated by subordinate members of the ruler’s clan. In today’s Honduras, by contrast, the public, private, and criminal sectors, while closely intertwined, are quite fractious and retain at least some autonomy.

For example, much of the modern private sector (banking, energy production, fast food and tourism, telecommunications, a few export commodities) lies in the hands of a small number of families whose shared Levantine origins isolate them somewhat from the rest of Honduran society. Such families—the Facussés, the Canahuatis, the Goldsteins, the Kafies, the Laraches, the Nassers, the Rosenthals, among others—moved to Honduras from the Middle East in the first part of the twentieth century and have benefited from post-Mitch economic policies. Until very recently, they tended to marry endogenously, thus preserving their distinct culture and identity.62 (Those marriages can largely be understood as economic alliances.) Several individual members have served in high public office, such as Flores, who was a nephew of the group’s late patriarch, Miguel Facussé; Carlos Facussé’s daughter, Mary Elizabeth Flores Flake, the current ambassador to the United Nations, or former minister to the presidency Yani Rosenthal.

But according to most (though not all) Hondurans interviewed for this study, this dominant Levantine private-sector strand and the public-sector element of Honduras’s kleptocratic networks are not identical, but rather are bound together by a kind of elite bargain. “‘I have to have someone to manage the state,’” a Latin American official working in Tegucigalpa represented the elite’s viewpoint. “‘You do it in my service. You’re there to guarantee our businesses. In return, you can steal as much as you want.’”63 Or, in the words of another highly placed interviewee, “The politicians are at the service of the economic elite. When the president tries to be a real president and doesn’t obey the ten families, you get a coup d’état.”64

To put the exchange in strictly material terms, it appears that different revenue streams tend to accrue to different elements of the network. Looting of state coffers, by way of the public health system budget or padded public procurement contracts or self-dealing concessions for hydroelectric dams,65 for example, enriches members of the public-sector element, as does the extortion of bribes. To capture returns from public procurement fraud, of course, government officials or their family members have to found private companies: pharmaceutical businesses or contracting firms, for example. So this strand of the private-sector element does fully overlap with the public sector.

But the dominant private-sector network elements reap their gains by way of laws, regulations, and selective enforcement that guarantee them undue profits. At the summit of the network, recompense for these official favors has increasingly taken the form of shares in the companies that stand to benefit, according to multiple interviewees. But the secrecy of corporate records and the use of proxies to hide the identity of the true beneficiaries of such shares made confirming these suspicions impossible.

In the past decade or so, both the elite public- and private-sector circles have been establishing increasingly close connections with the out-and-out criminal networks that run the narcotics trade as well as other types of smuggling, such as trafficking in people. Individuals and families that have tied their fortunes to government service provide legal or other help to criminal organizations, or ensure protection and impunity for their activities. In several cases, members of notorious drug-trafficking families have held local office, thus constituting a node connecting those two sectors. For their part, members of the economic elite connect with criminal organizations by providing money-laundering services or engaging in joint business ventures.

By sheer monetary value, this criminal sector likely dwarfs the other two,66 and many experts suggest it should therefore be understood as the dominant element in Honduras’s kleptocratic network. Yet ordinary people’s perceptions and expectations of their government, and their keen desire to find a way to function in the licit economy, suggest that the criminalization and abuse of power of those two sectors may weigh just as heavily on the national psyche. The three sectors will therefore be treated here as of roughly equal consequence.

Notes

61 See Chayes, Thieves of State; and Chayes, “Structure of Corruption”; as well as “Cambodia’s Family Trees: Illegal Logging and the Stripping of Public Assets by Cambodia’s Elite,” Global Witness, June 2007.

62 Victor Meza et al., Poderes Fácticos y Sistema Político (Tegucigalpa: Centro de Documentación de Honduras [CEDOH], 2014); Dario Euraque, “La configuracion historica de las elites en Honduras hasta 1990: una aproximacion” (seminar paper and presentation for “Elites and the Reconfiguration of Power in Central America,” Antigua: American University, February 16–18, 2012); Stephen Dudley, “Honduran Elites and Organized Crime: Introduction,” InSight Crime, April 9, 2016; and numerous interviews.

63 Topping the world in unexplained deaths of environmental activists, Honduras is an extremely dangerous country for those who threaten the regime. For this reason, the names of all interlocutors will be withheld from this publication (interview by author, Tegucigalpa, August, 3, 2016).

64 Interview by author, Tegucigalpa, August 3, 2016. Among other versions of the idea we heard, from Hondurans of all walks of life: “It’s financial and media support, and freedom to steal, in return for stability.” “It functions via favors: you do this for me, I do this for you. It’s good for the president and his family and his town.” Leticia Salomón, “La percepción de la relación entre grupos económicos y poder politico,” in Meza et al., Poderes Facticos, 49–50: “Businessmen see the relationship [with politicians] as a bet whose prize is political security for their business, which pushes them to become close to anyone who could win, and ultimately, those who have the possibility of controlling government groups or institutions.” Or, “The quantity of institutions in which private business has institutional representation is worrying, as are the growing amounts of power they are acquiring with each new government. . . . [And] the instrumental vision businesspeople have of the state, which they perceive less as an arbiter and more as a means to transmit their corporate interests” (52).

65 See section below on the IHSS scandal on the health budget. On padded procurement contracts, see “Exgerente Roberto Martinez acusado de millonario fraude,” La Prensa, September 5, 2016, http://www.laprensa.hn/honduras/997184-410/exgerente-roberto-mart%C3%ADnez-acusado-de-millonario-fraude. On hydroelectric dams, see “Honduras: The Deadliest Place to Defend the Planet,” Global Witness.

66 Although there is not a clear-cut estimate for the size of the criminal sector in Honduras, it has been estimated that extortion alone costs Hondurans upward of $200 million per year (see Mike LaSusa, “Honduras Authorities Grapple With Social, Economic Impacts of Extortion,” InSight Crime, May 2, 2016), whereas cocaine flowing through Honduras has an estimated eventual value of up to $25.2 billion, based on estimates that 90 percent of the United States’ $28-billion cocaine market passes through the Central American corridor; see World Drug Report 2016, (Vienna: United Nations Office on Drugs and Crime [UNODC], 2016), 77, http://www.unodc.org/doc/wdr2016/WORLD_DRUG_REPORT_2016_web.pdf.