Santo Domingo. - The United States Embassy in Santo Domingo cautioned Washington against investing in Dominican Pension Fund Administrators (AFP) on an alleged high possibility of losing it to fraud and corruption, states cable number 35414, sent to the State Department June 27, 2005.
The warning is contained in a cable released by WikiLeaks and published by local news source sin.com.do, and adds: “The United States government shouldn’t invest in pensions Dominican (AFP - Pension Fund Administrators) due to the extremely high possibility losing the funds due to the fraud and corruption. Based on the present state of the things in DR, the American embassy in Santo Domingo urges the Department (State, NT) not to authorize the participation in the local Social Security system. The embassy in Santo Domingo urgent the Department to approve our request to place the local personnel pension money in a pension fund located in the U.S.
In the cable, that forms part of more than 2,000 WikiLeaks provided to SIN, the U.S. Embassy in Santo Domingo warns that the Dominican AFPs are controlled by private Dominican banks, and that these banks have been subject to lax regulatory controls that have consistently failed in assuring that the bankers abide by the laws and regulations in effect.
“The banking industry’s position, power and impunity allow it to conduct transactions with each other. The actions that would normally lead to legal action in the US by abuse of privileged information and corrupt practices occur frequently and are part of a ‘normal way of doing business in DR,” it said.
“Dominican banks aren’t restricted by the regulatory controls that limit investment in industries not related to the banks. In fact, the investments on the part of Dominican banks in news media, trader firms and insurance companies are the norm instead of the exception. Half a dozen Dominican banks controls the great majority of the financial transactions within Dominican Republic.” adds the cable.
PART OF WIKILEAKS’ CABLE RELEASED BY SIN
27 June 2005 Hertell 35414
35414
C O N F I D E N T I A L SECTION 01 OF 06 SANTO DOMINGO 003370
SIPDIS
DEPARTMENT FOR WHA, WHA/EX, WHA/CAR, HR/OE
E.O. 12958: DECL: 06/24/2015
TAGS: AMGT, KJUS, PGOV, DR, Banking
SUBJECT: U.S. TAXPAYERS WILL LOSE MONEY IN DOMINICAN AFPS
REF: A. EMAIL CORRESPONDENCE KUBISKE/ESTRADA/BOOTH MAY 05
B. 04 SANTO DOMINGO 2694
C. 04 STATE 070041
D. 03 STATE 87287
E. 03 SANTO DOMINGO 1476
F. 01 STATE 36095
G. 01 STATE 36080
Classified By: DCM Lisa Kubiske, reasons 1.4 (b) & (d).
1. (SBU) The USG should not invest in Dominican pension funds (AFPs - Administradoras de Fondos de Pensiones) because the likelihood of losing the funds due to fraud and corruption is extremely high. Based on the current state of affairs in the Dominican Republic, Embassy Santo Domingo strongly urges the Department to authorize non-participation in the Local Social Security System (LSSS). Embassy Santo
Domingo urges the Department to concur with our request to place locally engaged staff pension monies into US based pension funds. This cable replies to Department request (reftels) for information additional to that contained in reftel B.
AFPs controlled by banks
2. (SBU) AFPs in the Dominican Republic are controlled by privately owned Dominican banks. Dominican banks have been subject to lax regulatory controls that have consistently failed to ensure that the banks are complying with applicable laws and regulations. Dominican banks are not constrained by regulatory controls that limit investment in non-banking related industries. In fact, investment by Dominican banks in media outlets, insurance companies, and securities firms is the norm rather than the exception. Half a dozen Dominican banks control the vast majority of the financial dealings within the Dominican Republic.
Banks' role in the Dominican Republic
3. (SBU) The banking sector's domination of Dominican business, along with its pervasive role in financial transactions in the country, has put it in a position of great power in the country. This power position means the banking industry influences not only banking related businesses and industries, but the judicial and executive branches of government as well.
Insider dealing
4. (SBU) The position, power and impunity of the banking industry allows it to engage in self-dealing transactions. Actions that would commonly be prosecuted in the United States as insider trading and corrupt practices are everyday occurrences and a part of "normal business practice" in the Dominican Republic (see below for examples). Subjecting U.S. taxpayer money and the future financial well-being of USG employees to such a system would be negligent at best. To place pension funds in Dominican banks knowing the history of the banks, banking industry, regulatory structure, and judicial system, could open the USG to civil suits by locally engaged staff.
From: Dominican Republic, Puerto Plata
Didn't they recently pass a law to authorize dipping into the pension funds to subsidize low cost building projects?
What do you think will happen?
From: Dominican Republic, vieja Santo Domingo
Let us look at what eventuated from the time of this cable to the present . In the DR, during the world economic dowturn ,all the banks here stayed on their feet with no trouble at all and lending continued and the Pension Fund continued to prosper and grow . However in the USA, many financial institutions went to the wall and pension Funds were almost completely wiped out and lending slowed down and the US Government had to step in .. Why ?? because of totally lax regulations and because of fraud and corruption committed by directors and employees of some institutions .In fact we now know the banks were under capitaised.
So the author of this cable could not have been more wrong ,
Another amazing statement is the horror of the author that the banks in the DR invested in media companies, trading companies and insurance companies ,,,To my mind exactly what we want the banks to do .We want them to invest in the Dominican economy and not just in overseas investments .
From: United States
It is very like in this scenario three things , either money comming into banks in the DR during the global financial downturn were illicit , possibly monies of narco trafficantes, as we saw in The Bahamas in the late 1980 during a past period of global economic retraction, if this is the case we will see a beginning of an end in the industry within 18 months when consumers high leveraging explode from non fulfilment of obligations and inability to do so.
Second , inter banking practices create systematic corruption , it could be possible that the books here are cooked systematically and bank profits and expansion are only on paper , have these banks acquired any substantial foreign assets over the economic exspansion in the past 3 years , if not then the answer becomes more transparent.
Third, in undevelop economies their is just one direction regardless of global direction , upward , we have seen this throughout the region and in asia, this is no phenomenon, its rational.
From: Dominican Republic, vieja Santo Domingo
Sorry Blu to inform you that I am most definitely NOT off shore in any sense of investment or person...except off shore to the USA
From: Dominican Republic, vieja Santo Domingo
Walter Polo ,,I actually think it is a good idea in principle to make this investment in low cost housing but I have been swayed away from supporting it only because of the fear that there is too great an opportunity for corruption in the handling of contracts ,,an essential part of construction
From: Dominican Republic, Puerto Plata
Rico
I think this pension-fund construction funding opens the door to anything evil you can think of.
The Government is in dire straits; last time I looked DR was still ranking badly for levels of corruption; and last but not least, low-cost housing in the present employment situation with a twist of nepotism in obtaining those loans would trrigger a subprime crisis we can't afford to have.
Remember Robert Maxwell and his last deed before jumping off the boat?
Skimmed the pension fund, to the bottom.
From: United States
Why is there ANY question these inbred entitlement mentality morons will not steal the money?
One, nothing embarrasses these clowns and they think there is nothing wrong with stealing it.
They screw the people that need that money everyday, they have no conscience. They will always choose wrong over right.
From: Dominican Republic, vieja Santo Domingo
gmiller the reason is that up to this date , the pension funds seem to have been managed very well so one has to ask ..why should this good management not continue ...and the simple answer is because there will be a large number of contracts that present tempting opportunities for people to act badly
Written by: danny00, 30 Aug 2011 10:47 AM
From: United States, syosset, key west, santo domingo AND NOW THE GLOBE TROTTER
.we want them to invest in the dominican economy and not just in overseas investments
this mr. ricky for sure is a government guy.
invest in the dr banks? not with your money guy.
nothing but fraud in the dr, nothing is for real
u need to be one idiot to listen to any thing or numbers this government puts out.
us banks are broke? this guy is nuts, they are the banks in the us sitting with more money now then every before, just as american business companys have more captial now then ever in their history.
.
Written by: danny00, 30 Aug 2011 10:51 AM
From: United States, syosset, key west, santo domingo AND NOW THE GLOBE TROTTER
hey! mr ricky.. i cant remember but was there one big dr bank that close up when mr hippo the idiot was pres. lol..lol...lol.
just remember if u get f***ed in the dr
no ones going to help u not even mr. ricky.
and their is a big history of getting f***ed of your money in the dr.
land of idiots and fools the only thing they know how to do is screw people out of the money. {and speak about the united states}
Written by: danny00, 30 Aug 2011 10:57 AM
From: United States, syosset, key west, santo domingo AND NOW THE GLOBE TROTTER
just remember if your thinking about an investment in the dr.
its a f***ing 3rd world country.
no one is going to help u when they steal your money {u be lucky if u dont end up dead}
3rd or 4th world country.
no education at all in this country. 8 yeary old go to school {maybe] at 8am in pop they are home at 11 am?
since their is or has ever been no education the only thing they know how to do is steal, rob, fraud, almost every one carries a gun in the dr. becareful.
Written by: danny00, 30 Aug 2011 10:58 AM
From: United States, syosset, key west, santo domingo AND NOW THE GLOBE TROTTER
just look at every home, apt, business, they are behind bars, people in this country are scared of their own police and army.
u really want to invest into this this?
From: United States
Little Ricky.
"the pension funds seem to have been managed very well"
One, who says so? Them? two, I am sure everyone thought Banniter Bank was managed well, until they got screwed.
Take off the rose colored glasses. Until there is REAL transparency (not just transparent corruption) and someone goes to jail, these scum will ALWAYS steal.
From: Dominican Republic, vieja Santo Domingo
I have said that because the pension funds are the one thing that is audited well and because they always post all their annual results and because the net assets continue to increase,,,that is why I said it seems that the Pension Fund has been manged well.
The Baniter Bank case is entirely different because there was fraud there on a truly massive scale .
From: Iran, DirectorioDominicano.com
I suspect and there is evidence to support this statement; our banking system is a "House of cards" and when the winds of change (as in change of a more corrupt gov't) come around, it will start to crumble. :-(
We (RD) are just 2 elections away from becoming haiti. lest we wake up the populace, which
is gonna be difficult when they are more and more of haitian descent,,can you say catch 22?
** En Higüey de cada 10 partos de 6 a 7 son de haitianas, a veces son hasta 8** (hoy.com.do)
From: Dominican Republic, vieja Santo Domingo
The banks here in DR are very conservative and I very much doubt that they are a pack of cards even under a Mejia government
Written by: juanb, 30 Aug 2011 8:14 PM
From: Dominican Republic
There is nothing in the DR that is well audited.
Looks like the government reenlisted the services of Sr. B.S.
Written by: marty, 31 Aug 2011 12:12 PM
From: Dominican Republic
I suppose well-managed depends on where you are looking. Yes there have been great earnings but as personal experience I can tell you there is an oversight problem which for a person trying to get their money out makes this almost impossible. And as soon as you petition for YOUR money they begin trying to find a way to keep you from getting it. The amount is held at the moment the petition is entered. So while you, the owner of the account, are endlessly given the runaround YOUR money stopped earning interest! No wonder they are posting great earnings. My case has been going on for almost a year...calculate the inflation and lack of further interest and it begins to feel like I am begging for MY OWN MONEY!
From: Dominican Republic, I dislike all politicians and their afiliated parties... "I simply say it AS IT IS!!"
D document dates back to 2005
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What do you think will happen?
So the author of this cable could not have been more wrong ,
Another amazing statement is the horror of the author that the banks in the DR invested in media companies, trading companies and insurance companies ,,,To my mind exactly what we want the banks to do .We want them to invest in the Dominican economy and not just in overseas investments .
Second , inter banking practices create systematic corruption , it could be possible that the books here are cooked systematically and bank profits and expansion are only on paper , have these banks acquired any substantial foreign assets over the economic exspansion in the past 3 years , if not then the answer becomes more transparent.
Third, in undevelop economies their is just one direction regardless of global direction , upward , we have seen this throughout the region and in asia, this is no phenomenon, its rational.
I think this pension-fund construction funding opens the door to anything evil you can think of.
The Government is in dire straits; last time I looked DR was still ranking badly for levels of corruption; and last but not least, low-cost housing in the present employment situation with a twist of nepotism in obtaining those loans would trrigger a subprime crisis we can't afford to have.
Remember Robert Maxwell and his last deed before jumping off the boat?
Skimmed the pension fund, to the bottom.
Why is there ANY question these inbred entitlement mentality morons will not steal the money?
One, nothing embarrasses these clowns and they think there is nothing wrong with stealing it.
They screw the people that need that money everyday, they have no conscience. They will always choose wrong over right.
this mr. ricky for sure is a government guy.
invest in the dr banks? not with your money guy.
nothing but fraud in the dr, nothing is for real
u need to be one idiot to listen to any thing or numbers this government puts out.
us banks are broke? this guy is nuts, they are the banks in the us sitting with more money now then every before, just as american business companys have more captial now then ever in their history.
.
just remember if u get f***ed in the dr
no ones going to help u not even mr. ricky.
and their is a big history of getting f***ed of your money in the dr.
land of idiots and fools the only thing they know how to do is screw people out of the money. {and speak about the united states}
its a f***ing 3rd world country.
no one is going to help u when they steal your money {u be lucky if u dont end up dead}
3rd or 4th world country.
no education at all in this country. 8 yeary old go to school {maybe] at 8am in pop they are home at 11 am?
since their is or has ever been no education the only thing they know how to do is steal, rob, fraud, almost every one carries a gun in the dr. becareful.
u really want to invest into this this?
Little Ricky.
"the pension funds seem to have been managed very well"
One, who says so? Them? two, I am sure everyone thought Banniter Bank was managed well, until they got screwed.
Take off the rose colored glasses. Until there is REAL transparency (not just transparent corruption) and someone goes to jail, these scum will ALWAYS steal.
The Baniter Bank case is entirely different because there was fraud there on a truly massive scale .
We (RD) are just 2 elections away from becoming haiti. lest we wake up the populace, which
is gonna be difficult when they are more and more of haitian descent,,can you say catch 22?
** En Higüey de cada 10 partos de 6 a 7 son de haitianas, a veces son hasta 8** (hoy.com.do)
There is nothing in the DR that is well audited.
Looks like the government reenlisted the services of Sr. B.S.