id: 176319 date: 10/31/2008 22:10 refid: 08LIMA1733
P 312210Z OCT 08 FM AMEMBASSY LIMA TO SECSTATE WASHDC PRIORITY 9522 INFO WESTERN HEMISPHERIC AFFAIRS DIPL POSTS PRIORITY CIA WASHDC PRIORITY DIA WASHDC PRIORITY USSOUTHCOM MIAMI FL PRIORITY USCINCSO MIAMI FL PRIORITY
C O N F I D E N T I A L LIMA 001733 E.O. 12958: DECL: 10/31/2018 TAGS: PGOV, SNAR, PE SUBJECT: PUCALLPA MAYOR ARRESTED ON DRUG TRAFFICKING CHARGES Classified By: Polcouns Alexis Ludwig. Reasons 1.4 (b) and (d). 1. (C) Summary: Peruvian police arrested Pucallpa Mayor Luis Valdez October 14 on charges of laundering drug trafficking proceeds through an extensive network of commercial enterprises. Twice elected mayor, Valdez enjoys significant public sympathy in his hometown. Peruvian law enforcement officials consider Valdez's arrest as on par in importance with that of kingpin Fernando Zevallos in 2004, but serious challenges in bringing him to justice - and in confronting other traffickers - remain. End Summary. 2. (SBU) Units of the Peruvian National Police Anti-drug Directorate (DIRANDRO) arrested Pucallpa Mayor Luis VALDEZ Villacorta and 13 others October 14 on money laundering charges. Arrest warrants remained outstanding for another 8 persons. Pucallpa is the capital of the jungle region of Ucayali in eastern Peru. Valdez owns a number of businesses in the region including a lumber mill, river ferry service, and brewery. Authorities began asset seizure proceedings for those operations, in addition to 34 properties in Lima, Iquitos and Pucallpa; 44 boats; and 200 vehicles. Police transported the suspects to Lima where they were to be held while authorities prepared a formal indictment. 3. (SBU) The arrests were the result of an investigation that began in February 2008, based on drug seizures dating back to 2003 in Guatemala, Panama and most recently in Holland. PNP officials subsequently determined that financial records of Valdez's enterprises showed at least USD 71 million in assets whose origin could not be substantiated. 4. (C) Given that Valdez's companies employ some 3,000 people in Ucayali and his election twice as Pucallpa mayor, he enjoys strong support from the public. After his detention some 30-40 supporters blocked streets and the entrance to the airport, hoping to prevent the authorities from removing him to Lima. Analysts explained to poloff that Valdez and his organization controlled the flow of drugs out of Peru to the east and northeast, primarily into Brazil. The organization used its commercial network and logistical resources to facilitate the movement out of the country of large quantities of cocaine, say those observers. Even without good estimates of the quantity of drugs the Valdez network moved, one analyst told poloff that Valdez's arrest was the single biggest blow to drug trafficking interests in Peru since the 2004 arrest of Peruvian drug kingpin Fernando Zevallos. 5. (C) Comment: While the Valdez arrest is good news in Peru's fight against drug trafficking, many challenges remain. First is whether the Peruvian justice system can avoid external pressures and successfully prosecute the case to its conclusion. Historical examples of lengthy prosecutions such as the Zevallos or Sanchez Paredes cases would put that result in doubt. Second, observers explain there is at least one Luis Valdez equivalent for every major exit route in the country, and many others waiting to take their places. As one analyst told poloff, much of the traffic previously moved to the northeast by the Valdez organization already had been diverted to land routes to Brazil in the far eastern region of Madre de Dios, along portions of the Interoceanic Highway. Similar routes existed overland via Puno to Bolivia; and out of ports in Arequipa, Lima, and Piura to maritime distribution channels in the Pacific, they said. MCKINLEY