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Under investigation for laundering of drug money

The Norwegian company Halaco is currently under investigation in El Salvador for possible connections to the Italian-Canadian mafia and laundering of drug money. The Norwegian police have been asked to help Salvadorian authorities.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
The Norwegian company Halaco is currently under investigation in El Salvador for possible connections to the Italian-Canadian mafia and laundering of drug money. The Norwegian police have been asked to help Salvadorian authorities.

(First published in Norwegian 04 Jul 2005)

By Erik Hagen
Norwatch

In 2004 the Oslo-based company Halaco became the majority shareholder of El Salvador’s largest waste-disposal company, Mides. In total, Halaco is paying 11 million dollars for 90 percent of the shares. The company is now under investigation in El Salvador; the suspicion is money laundering.

Norwatch has been in contact with the public prosecutor in El Salvador, who explains that Mides was under investigation even at the time when Halaco bought the shares. The investigation started after an enquiry from the Canadian police. According to Salvadorian authorities, the enquiry connected part of the Mides administration to international drug trafficking and money laundering.

The Salvadorian daily newspaper El Diario de Hoy has been following the case for more than a year and claims that the former Mides administration has connections to the Italian-Canadian mafia.

“Why would a Norwegian company be interested in investing in a questionable project in El Salvador when there were indications that the initial funding was linked to money laundering?”, asks Nelson Mena.

Mena is the director of the Financial Investigation Unit, a section of the state prosecutor in El Salvador. He characterises the investment as an operation with a “very high risk”.

The prosecutor is now working to get to the bottom of Halaco’s involvement in the project. According to El Diario de Hoy, the prosecutor has requested documentation from Norwegian authorities regarding “the financial and legal background of Halaco, of the director Hans Troye, and of other members of the leadership”. The newspaper also states that the public prosecutor particularly wants to know whether the company and the board have a criminal record of drug trafficking or money laundering.

The letter was addressed to the Norwegian Ministry of Justice and was filed in their archives in Oslo on 8 March, 2005.

Dirty business
The Salvadorian waste disposal company Mides was originally established in 1997 as a joint venture between ten local mayors and the Canadian company Cintec Environnement. The mayors obtained 10 percent of the shares; the Canadians got the remaining shares.
The Canadian owners promised to provide $ 61 million to develop the project.
In addition, the inhabitants of the capital, San Salvador, would contribute $ 6 million in annual taxes. Mides would then for the next 20 years collect and handle the waste of San Salvador region. A garbage dump was then established in Nejapa, north of the capital. This is where half of El Salvador’s waste now is being deposited.

But the Canadian investment has not been used as intended. Instead of building up the infrastructure locally, large parts of Cintec’s funds in El Salvador were apparently transferred back to the Canadian mother company through various subsidiaries in Latin America.

When Cintec spent $ 6 million to build the garbage dump, they transferred $ 22 million in “fees” to the company management’s post box address in Barbados. Several such transfers have supposedly been made up until the investigation was initiated.

Political game
The fact that the local mayors who where shareholders in Mides all belonged to the left-wing party FMLN meant that the matter turned into an inflamed political affair. From the period of the presidential election in 2003, the governmental party Arena and the right-wing newspapers all accused the Mides shareholders of corruption and embezzlement. Some accusations were erroneous, and the main shareholder, Cintec, sued the leading daily newspaper for defamation. Matteo Pasquale, president of Cintec, informs Norwatch that they later dropped this lawsuit but are considering putting it before a Canadian court.

Pasquale denies to Norwatch all accusations by the Salvadorian press. According to him, no member of Cintec has been involved in organised crime. It was decided to sell the shares to the Norwegians because “there was obviously a harassment campaign against us”. So, when Halaco showed interest in buying the company, Cintec found it best to sell out.

“Was Halaco at that time aware of all the accusations made against Mides?”

“Yes, of course. Halaco was aware of all the accusations. But we gave them our documentation, which proved that all accusations were baseless.”

The Salvadorian public prosecutor is currently investigating all owners of Mides, both old and new shareholders. All capital that has been invested in the company, including Halaco’s, is under investigation.

The investigation continues
In March 2004, Halaco finally took over Cintec’s shares in the company. However, the prosecutor in El Salvador informs Norwatch that the transaction took a long detour. The trade was done through a Pamana-registered company in El Salvador, who bought the stocks from Cintec’s daughter company in Barbados.

“This is so far a hypothesis, but we’re trying to find out if we’re facing a cover-up operation. We want to investigate whether Halaco is actually laundering Cintec’s money”, Mena says, underlining that the case is still only under investigation, and that there is no proof that Halaco has committed any crime. It is of particular interest to establish whether there are any ownership connections between Cintec and Halaco.

Norwatch has not been able to uncover any such connections.

“In addition, we are interested in knowing the background for Halaco’s $ 11 million”, Mena says.

The shares were supposedly bought on credit, and only a small part of the shares have been paid for so far. The rest will be paid in stages over a period of 5 years. Norwatch’s search through  the tax assessment for 2003, shows that Halaco had belongings valued at 172,000 Norwegian kroner, and 25,000 kroner in income.

According to Nelson Mena, the investigation has been going on non-stop since 2003.

“Investigation closed”
When asked about Halaco’s knowledge of the Mides investigation, president Hans Troye says that the investigation already was closed at the time when they bought the shares.

“It was closed in 2004”, Troye says on the phone from El Salvador. “The investigation uncovered no criminal activities”, he says.

“This is wrong”, Nelson Mena says when he is confronted with Troye’s claim.

The Halaco president says the company never had any contact with Cintec when the memorandum of agreement was signed last spring. The transaction was not made directly with Cintec but solely through a third party in El Salvador.

“What I told over the phone from El Salvador was information we received from our people there”, Troye replies later to Mena’s statement. “Apart from this, I have no comments”.

Norwegian aid
Government attorney Geir Evanger confirms that Norwegian authorities have received a letter of request for information. At the time it was transferred to the Oslo police for further consideration.


FACTS
-Mides is the largest waste-disposal company in El Salvador.
-Until 2003 the largest shareowner was the Canadian company Cintec Environnement, owning 90 percent of the shares.
-Since 2003, Salvadorian prosecution office has had Mides and their shareholders under investigation for money laundering.
-The investigation was accused of being politically motivated. 10 percent of the owners in Mides are local mayors from the left-wing party FMLN.
-In 2004, the Norwegian company Halaco made a memorandum of agreement on buying Cintec’s shares, worth 73 million Norwegian kroner. That led to Halaco also being investigated.
-In March 2005, the Salvadorian public prosecutor turned to the Norwegian authorities for assistance. The prosecutor wants to find out how the project was financed, and if there are connections to Cintec in Canada. The case was then transferred to the Oslo police.

- Annonse -