Victims of the massive scandal that has brought down one of the most prominent families in Honduras, the Rosenthals, now include an estimated 11,000 crocodiles and seven lions kept at the family's 30-hectare ranch, who were at risk of starvation after unpaid workers abandoned the ranch. The Honduran Forest Institute had arranged for the usual supplier to ‘donate’ two tonnes of “cow entrails and chicken”, local media reported in early November, although this would last only a few days at most, the ranch manager admitted.
The fate of the animals is illustrative of the sheer depth of this scandal, which has rocked Honduras to its core. The reach of the Rosenthal family is such that its business interests could account for up to 5% of the country’s GDP, according to the family scion Jaime Rosenthal (‘the richest man in Honduras’), who is now wanted by US justice officials, and whose whereabouts are unknown. His son, Yani Rosenthal, reportedly has turned himself in at the US embassy in Guatemala City, according to late-October media reports, although this has not been confirmed by US authorities. Yankel Rosenthal, Jaime’s nephew, was arrested in Miami on 6 October and is now in custody awaiting a trial before a New York court. Honduran authorities have seized assets including two planes.
The scandal broke publically on 7 October, the day after Yankel’s arrest, when the US Department of the Treasury’s Office of Foreign Assets Control (Ofac) announced the designation of four Honduran businessmen and seven businesses as Specially Designated Narcotics Traffickers pursuant to the Foreign Narcotics Kingpin Designation Act for playing “a significant role in international narcotics trafficking”.
Those affected are Yankel, Jaime and Yani Rosenthal, as well as Andrés Acosta García, a lawyer for the family’s business conglomerate, Grupo Continental. “This action targets the three Rosenthal family members and their properties for their money laundering and drug trafficking activities,” stated Adam J. Szubin, Acting Under Secretary for Terrorism and Financial Intelligence. “This step underscores that the US government is fully committed to protecting the US financial system from criminals like the Rosenthals…[and] working with the Honduran authorities to take the necessary steps to protect the Honduran financial system from abuse by drug traffickers and other illicit actors, in order to further safeguard Honduran financial institutions,” Szubin added.
The Panama-registered Grupo Continental, the holding group for the Rosenthal family’s various businesses, immediately responded with a statement denying that it had been operating one of the region’s biggest money laundering networks for the proceeds of drug trafficking and foreign bribery. The designation affects group businesses including Banco Continental, allowing the freezing of assets under US control. Several offshore companies in the British Virgin Islands were also cited.
The Honduran government moved immediately, as per its obligations under international law, to order the compulsory liquidation of Banco Continental. The bank was banned from trading as of 12 October. Under the Ofac designation, the bank’s assets in the US were frozen, taking its capital adequacy ratio from 11.6% to 5.2%, below that permitted by local legislation (6%). The CNBS offered the bank’s 220,000 customers immediate deposit guarantees of up to HL204,000 (US$9,400) per fixed deposit account, with the funds funnelled for immediate release through four Honduran banks with any outstanding amount above that to be disbursed later. The banking and securities commission (CNBS) stressed that bank employees would receive their outstanding salaries. Emphatic that the wider local banking sector remained “solid”, the regulator urged the public to maintain “full confidence in the national financial sector”.
Meanwhile, the public ministry said that it will evaluate the other local companies linked to Grupo Continental in a bid to offer assistance, so far as reasonable, in support of their continued operation. These companies employ an estimated 11,000 people (with another 25,000 indirect employees), so the ripple effects through the economy could be severe. Grupo Continental has interests in almost every economic sector in Honduras. Aside from banking and insurance (Banco Continental, Banco de Occidente), this includes the media (El Tiempo, Canal 11, Cablecolor), cement, food packing, bananas, coffee, cocoa, cattle rearing, commercial and residential property.
President Hernández, in whose cabinet Yankel Rosenthal was an investment minister until last June, has sought to distance his government from the action, stressing that this is a strictly a matter for the US judicial authorities and that his government will meet any legal obligations, and will continue working with the US and other countries to defeat transnational crime and drug trafficking.
- Jaime Rosenthal not safe at home
In January 2012 Honduras amended its constitution to allow for the extradition to the US of nationals charged with drug trafficking, terrorism or crime, partially reversing a ban on extradition in place since 1982.
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