Dominicans Allow Drugs Easy Sailing

SANTO DOMINGO, Dominican Republic -- In the early 1990's, Colombia's drug
barons were fed up and eager to rearrange their business. Impatient with
the Mexican traffickers who were demanding half of every load delivered and
distributed in the United States, they went looking for a country with weak
law enforcement, proximity to the United States and established drug
distribution networks.

It did not take long for them to find the Dominican Republic. By the spring
of 1995, Colombian cartels were ensconced here and looking to expand their
network, which is what led one boss to invite Hidalgo Elías Vélez, the
Colombian owner of a struggling tropical-woods business here, to a lavish
party outside Bogotá and recruit him as an agent.

The Dominican Republic was "excellent," Mr. Vélez, now serving a prison
term here, recalled being told by his Colombian host.

"You don't have any problems with your merchandise," the Colombian said.

"Getting the money out is easy." Compared to their Mexican and Colombian

counterparts, the Dominican authorities were so inexperienced, unprepared
and ill equipped, "you don't even have to pay protection."

The Colombian drug cartel leaders also recognized, Mr. Vélez said in an
interview recently, that low-level Dominican drug dealers based in New York
City were pushing their way up to the next echelon of the drug business,
bidding for a bigger share of the wholesale distribution of cocaine and
heroin in the New England and mid-Atlantic states.

Just a few years later, the alliance between Colombian cartels and their

Dominican partners has changed the geography of the drug trade once again.
For the first time since American authorities began trying to blockade
South Florida in the early 1980's, a significant portion of the drugs sold
and profits made in the Eastern United States is moving through the island
countries of the Caribbean, with the Dominican Republic, a nation of eight
million, serving as the main gateway.

With that flood of drug profits have come a wave of corruption and a
growing threat to political stability throughout the region. The amount of
money from the United States laundered through Dominican financial
institutions has doubled over the last three years, according to United
States Customs Service estimates, to more than $1 billion annually. Much of
this is being invested in real estate, banks and businesses here.

At the same time, Dominican and Dominican-American drug traffickers are
popping up in Puerto Rico, Haiti and the English-speaking Caribbean as the
heads of smuggling operations. Since they are willing to work for
commissions of only 25 percent, or sometimes even for cash rather than
merchandise, they are increasingly favored by the Colombian cartels.

The Dominicans are supported by Colombian cartels determined not to repeat
the error they made with Mexican rings, which are now gobbling up

the Colombians' markets in the United States and even trying to encroach

on operations in South America.

A University of Miami expert on international drug trafficking, Bruce
Bagley, put it this way: "When the Colombians saw the Mexicans becoming
greedier and even develop into rivals, they began to look to the Dominicans
as more reliable partners."

The Colombians moved huge amounts of drugs through the Caribbean in the
early 1980's, prompting the Reagan Administration to mount its major
crackdown. That in turn spurred the Colombians to emphasize other routes,
primarily through Mexico. The alliance that ensued has ravaged that
country's already weak judicial system, corrupted high officials and shaken
its growing partnership with the United States.

While the bulk of Colombian cocaine and heroin continues to move through

Mexico, the Colombian traffickers have in the last few years come full
circle, returning to the Caribbean as a base of operations.

A big obstacle remains in the way of this new breed of techno-savvy
Dominican trafficker: Leonel Fernández, the country's reformist President.
Mr. Fernández, 44, a lawyer, grew up in Manhattan, where in the 1960's he
watched a drug culture emerging around him. It was then, friends say, that
he developed an antipathy for narcotics and the corruption they engender.

But as President, Mr. Fernández must combat a recalcitrant Government
bureaucracy and a political opposition that controls the Congress and is

becoming increasingly dependent on drug money, American and Dominican
officials say.

Those drug profits are finding their way into the economy in this island

nation. Office buildings, hotels and shopping centers are springing up in
Santo Domingo, Santiago and San Francisco de Macorís -- often in a gaudy

style that some describe as narco-deco. Dominican banks have opened
branches as far away as Thailand, raising new fears about the growing
economic influence of the traffickers.

"There is a process of Colombianization going on," Marino Vinicio Castillo,
the outspoken law-and-order crusader whom Mr. Fernández chose as the leader
of his anti-drug program, warned in an interview here. "It is a very
serious threat," he said, adding, "The Colombians may not have been able to
detect it happening there, but here we can see the narcotics traffickers

covertly infiltrating the banking system, political parties and the media."

The Safe Drug Channel: A Nation Ill-Equipped Against Traffickers

To hear Mr. Vélez and American officials tell it, the Dominican Republic in
the mid-1990's was a drug dealer's paradise. Less than 24 hours from
Colombia by fast boat, and only 75 miles from Puerto Rico and American
territory, this country was forced to rely on a weak, corrupt and
ill-equipped military as its main line of defense.

Traffickers were aided, Mr. Vélez said, by Colombian military officials,
who were routinely selling the coordinates of the American and Dominican
vessels on patrol in the Caribbean. With that information in hand, it
became a simple matter to land drug cargos of a ton or more on isolated
beaches

here.

"You can get eight days of information for $5,000," said Mr. Vélez, "and I
know because I went to Cartagena and saw it happen with my own eyes." His
job was to supervise the landings and deliver shipments to a warehouser
known to him only as Robocop.

"Without that information, we wouldn't have been able to do what we did."

At that time, as during much of the last three decades, the Dominican
Republic was ruled by Joaquín Balaguer. Now 91 and still politically
active, Mr. Balaguer came to office after the American invasion of his
country in 1965, and kept himself in power through a mixture of guile,
rampant voter fraud and other forms of corruption.

But when the Colombians were moving in here, Washington's main policy focus
was not on drugs. Instead the Clinton Administration was desperately
seeking the Balaguer Government's cooperation with a United Nations
economic embargo aimed at toppling the military dictatorship in Haiti,
which shares the island of Hispaniola with the Dominican Republic.

After a come-from-behind victory in a runoff vote, Mr. Fernández succeeded
Mr. Balaguer on Aug. 16, 1996, promising change and less corruption.
American officials expressed pleasure, describing him as a Kennedyesque
figure who knew the United States intimately and shared the

view of trafficking as a menace to both countries.

Cables from the American Embassy in Santo Domingo in late 1996 drew a grim
picture of the situation Mr. Fernández had inherited. One described

how corrupt personnel routinely incapacitated airport X-ray machines here
to let drugs through. A second cable detailed corruption as "widespread
among airport employees, the national police, military security and the
army's J-2," the military intelligence division.

>From the start, Mr. Fernández was also hamstrung by his party's weakness

in Congress, where it controlled less than a tenth of the seats. He has
since faced an uphill fight to cleanse a corrupt bureaucracy, replace
judges and prosecutors who delayed and undermined drug cases, and cajole
banks to tighten rules aimed at thwarting money launderers.

"Fernández can only go so far," said John F. Forbes, a senior United States
Customs investigator who works on Dominican money-laundering cases. "The
head of General Motors can fire people, but the President is stuck with the
existing civil service and bureaucracy from 30 years of one-man rule."

The results so far, American and Dominican officials acknowledge, have been
mixed.

On the positive side: Dominican drug suspects are for the first time being
extradited to the United States; the tiny budgets allotted to anti-drug
agencies have been increased; more than 50 properties linked to
narcotics-related crimes were seized last year; wiretaps are more widely

used to monitor trafficking groups, and a newly appointed high court has

been given powers to remove corrupt, incompetent judges from lower courts.

In a report issued in March certifying that the Dominican Republic is
cooperating fully with American anti-drug efforts, the State Department
noted that under Mr. Fernández's leadership, "promising reforms began in

1997."

But the department also noted that the Dominican Government "only achieved
sporadic seizures" of cocaine and heroin last year, "as it has not
adequately motivated its police and military forces to join in the struggle
against the illicit drug trade."

Drug Enforcement Administration figures indicate that only 1.2 metric tons
of cocaine were seized in the Dominican Republic in 1996, compared with 3.6
metric tons in 1995. Last year, the figure rose slightly, to 1.35 tons, but
arrests for drug-related offenses declined, and the impatience of American
officials has increased accordingly.

"The fact is that under President Fernández, not a single drug-related case
has been prosecuted," said a State Department official who deals with
Dominican policy. And in a recent intelligence report, the Drug Enforcement
Administration asserted that "Colombian and Dominican trafficking
organizations continue to maximize well-established cocaine routes through
the Dominican Republic" and that "heroin trafficking continues to be on the
rise."

Meanwhile senior aides to Mr. Fernández, under pressure from voters
demanding that campaign promises to ease poverty and improve public
services be fulfilled, are divided as to how much emphasis to put on
cooperation with the United States to fight drug trafficking. Mr. Castillo,
President Fernández's drug czar, cited the flow of "narco-dollars" into
local political campaigns. He expressed concern that cooperation might
become more difficult after crucial elections scheduled for Saturday to
choose the legislature that would have to approve any new anti-drug
treaties or laws.

Dominican officials say they are doing the best they can with meager
resources at their disposal, which are being drained by the need to patrol
a long, porous border with Haiti. And they assert that even more drugs flow
through the American commonwealth of Puerto Rico than their country.

The country's attorney general, Abel Rodríguez del Orbe, criticized the
United States for a "lack of cooperation."

"If we had the proper equipment," he said, "planes with infrared lights,
for example, we'd be finished with this plague in a year."

The Bend in the River: A Tough New Leader Allows Extradition

At the peak of their criminal careers, Maximo Reyes and Francisco Medina
were among the most wanted men in New York City, accused of the contract
killings of more than 30 people on behalf of Dominican trafficking groups.
With the police closing in, they returned to the Dominican Republic,
certain that they were finally beyond the reach of American authorities.

Last August, however, President Fernández broke with decades of tradition
and bypassed the Dominican Congress, signing an executive order that sent
the two men back to New York City to face charges. That day, law
enforcement authorities in New York City detected a dramatic increase in

telephone conversations among Dominican traffickers alarmed that they would
no longer enjoy impunity in their homeland.

In a larger sense the episode illustrated the strategy that the Fernández
administration, trying to turn a liability into a strength, has adopted.
With limitations on equipment, personnel and spending that weaken its
ability to interdict drugs, the Dominican Government has instead decided to
use the

instruments of law to attack traffickers and curb the enormous profits they
make.

"The only thing the cartels fear is extradition," said Mr. Castillo, the

country's anti-drug program director. "That is the most powerful tool in
the hands of both Governments."

Heartened by Mr. Fernández's cooperation, the Clinton Administration is now
seeking the extradition of more than 30 other Dominicans wanted in the
United States. But that process promises to be even more controversial and
convoluted, with resistance rising in the Dominican Congress and media
coverage against returning those on the list, including the two most
prominent, Edmon Elías and Ricardo (Tito) Hernández, both influential
businessmen.

Mr. Elías's interests include casinos as well as hotels and other real
estate investments; Mr. Hernández is an owner of the popular Cibao Eagles
baseball team. Both face charges in Miami concerning a Mexican-American
named Luis Cano. They are accused of having helped him buy airplanes he
reportedly used to smuggle 10 tons of cocaine into the United States.

Mr. Hernández did not respond to calls requesting comment, but Mr. Elías,
in an interview here, denied wrongdoing, calling himself "an enemy of drugs
and a friend of the United States" and dismissing the charges as a
"fantasy." He acknowledged that he had introduced Mr. Cano to leading
Dominicans but said Mr. Cano had gained his confidence under false pretenses.

Still, Dominican law enforcement officials describe the country's casinos,
Mr. Elías's among them, as a main mechanism by which drug profits are
laundered here. They say that banks, boutiques, businesses, sports betting
parlors -- almost all forms of private enterprise -- are being used to turn
illicit cash into tangible, legitimate assets.

As a result, Dominican officials and business people say, more and more
drug money is flowing in unimpeded. The problem is probably most acute,
they maintain, in cities like Santiago and San Francisco de Macorís, in the
northern Cibao Valley, birthplace of many of the most notorious Dominican
traffickers based in the United States.

For instance Santiago, the country's second-largest city, has in the last
two years gained many new businesses like as auto dealerships and hardware
stores. That would not be suspicious in itself, since the Cibao Valley is
enjoying a tobacco-led economic boom. But many of these new businesses are
selling their products below cost.

As one Santiago businessman put it: "How can you buy steel rods or cement
blocks in the capital, transport them up here and then sell them for less
than you originally paid? There are suddenly a lot of people around who
went to New York as nobodies a few years back and have come back with lots
and lots of money whose origins no one seems able to explain."

Along the country's north coast, multimillion-dollar weekend homes are also
going up. Nor is it unusual to come across expensively protected country
mansions adorned with stained glass windows, mock Greco-Roman pillars and
tile images of the Virgin of Altagracia, the country's patron saint.

"All this recycled money that can't be traced is creating a new culture,"
said a lawyer in San Francisco de Macorís. "You go into a restaurant, and
there are all these guys wearing ostentatious rings and glittering
medallions of the Virgin of Altagracia, flashing big wads of thousand-peso
notes and boasting about their big cars outside. It's a new reality that is
very disturbing to us and which no one seems able to control."

The Course Yet Uncharted: A Reformer's Future In the Voters' Hands

his week, voters here will go to the polls for elections that Dominican

and American officials regard as crucial to the Fernández

Government's success during its two remaining years in office. At the
moment, the President's party controls only one of 30 Senate seats and 10
of 120 seats in the Chamber of Deputies, meaning that no legislation can be
passed without the backing of at least one of the two main opposition parties.

The Fernández administration has expressed support for tougher

money-laundering legislation and streamlined extradition procedures, which
Congress would have to approve to go into effect. So it is obvious why the
stakes in the vote are so high. Mr. Castillo, the Dominican anti-drug
chief, said trafficking groups here and in New York and Colombia had
responded by funneling money into the campaigns of candidates they believe
will vote against the proposals.

"This is the greatest problem we face in these elections," he said. "Not
only that, narcotics traffickers from New York are putting their own
people, by which I mean their brothers and cousins, into the campaigns, and
some of the candidates know that."

American officials have long harbored similar suspicions of the Dominican
political process. During the 1996 presidential campaign here, in fact, the
Drug Enforcement Administration, responding to a Central Intelligence
Agency inquiry, took the highly unusual step of organizing a sting
operation in the United States against Mr. Fernández's chief opponent, José
Francisco Peña Gómez, in an effort to determine whether he and his party
were involved in drug trafficking.

Mr. Peña Gómez was running well ahead of Mr. Fernández in election polls
when he took his campaign to New York City's large Dominican immigrant
community early that year. At a rally at the Washington Heights
headquarters of the Dominican Revolutionary Party, or P.R.D., members of
his staff were approached by a couple who said they were representatives of
a Colombian cocaine cartel but in reality were Drug Enforcement
Administration agents working undercover.

The pair offered the Peña Gómez campaign an immediate $50,000 and said
$250,000 more would be forthcoming each month if Mr. Peña Gómez, once
elected, would agree to let five planeloads of drugs land unobstructed.
Such an agreement was already in place with Dominican military and police
authorities, they said, urging Mr. Peña Gómez and his aides to check the
authenticity of their claim with the officials involved.

One of his New York representatives later met the drug agents at an office
at Columbia-Presbyterian Medical Center, but Mr. Peña Gómez eventually
rejected the overture, and shortly afterward he sent a letter of protest to
President Clinton. American suspicions were again aroused, however, when,
just days after Mr. Peña Gómez won the first round of the election and
declared himself "virtually president," several of his party members were
detained and a shipment of 778 pounds of cocaine seized, according to
Dominican officials.

In an interview here, Mr. Peña Gómez attributed the case, which those
officials say is still pending, to a political vendetta against his party.
"An accusation like this can destroy a person in this country," he said,
"and that's what my enemies are trying to do to me. I was the victim of a
campaign in which false denunciations were made to middle-level American
officials in an effort to involve me in this."

Recent polls indicate Mr. Peña Gómez as favorite in the race next month for
mayor of Santo Domingo, the second-most-important elected post in this
country. But Mr. Peña Gómez is also suffering from an advanced case of
pancreatic cancer.

The struggle to succeed him as party leader is already under way, and
American and Dominican law enforcement officials said there is ample
evidence that some of the contenders are receiving support from drug
traffickers.

"The narcotics traffickers don't like to have all their eggs in one
basket," a senior Dominican Government official said, speaking on condition
of anonymity. "And so they donate to all the parties. But the biggest
problem is in the P.R.D. We don't like to say that publicly, however,
because then people think we are acting from political motives."

In the United States, Federal drug agents and local law enforcement
officials have also been looking closely at the party's branches and
leaders throughout the Northeastern United States. The drug enforcement
agency's documents identify the party's New England headquarters in
Worcester, Mass., as a major drug distribution center. They say that local
party officials in New York, New Jersey and Pennsylvania, some of whom have
previous drug convictions, are also involved in such activities.

Even if the drug traffickers' candidates are defeated, the rings will offer
no respite, warned Mr. Vélez, the Colombian businessman who is in custody
here. The Colombian cartels, having established an enormously lucrative
foothold in the Dominican Republic, will stop at nothing to expand it, he
said, even if that means "killing judges, lawyers, cops and reporters," as
well as ordinary citizens who stand in their way.

"In whatever country they establish themselves," Mr. Vélez said, "the
cartels get involved in politics and the economy, buying up properties and
infiltrating all aspects of public and private activity. That's what's
coming here, and this country isn't prepared and doesn't know how to stand
up to it. It's going to be a catastrophe."

Checked-by: Richard Lake