Honduras Elites and Organized Crime: Juan Ramón Matta Ballesteros

On the morning of April 5, 1988, Juan Ramón Matta Ballesteros left his palatial Tegucigalpa estate for a jog. Matta Ballesteros was wanted for murder, drug trafficking and other crimes in several countries, but in Honduras he felt safe. He regularly hosted parties for high-level officials at his home and had connections to military officers.¹ He employed thousands of locals at his legitimate businesses, who sang his praises for providing medicines, building schools and donating to charitable causes.² Legend has it that he once offered to pay the government’s mounting foreign debt, which at least one politician appeared to take seriously.³

Matta Ballesteros had also assisted the Honduran military and the United States in their battle against communism in the region. Using an airline he had set up, the United States shuttled supplies to the Contras, a Nicaraguan counter-revolutionary group, for Washington’s proxy war against the Sandinista government that had taken power after overthrowing Nicaragua’s corrupt, US-backed dictatorship in 1979. The US government paid his airline for this assistance, in spite of the fact that its own Drug Enforcement Administration (DEA) once categorized Matta Ballesteros as a “Class I DEA violator.”⁴

When Matta Ballesteros returned from his jog, he was surprised to find Honduran military and police, as well as four US Marshals, waiting for him. A US Marshal who was at the scene said Matta Ballesteros tried to run away but was captured. A struggle ensued. “During the struggle, punches and kicks were thrown by both Matta Ballesteros and the Honduran officers,” the marshal wrote later in an affidavit.⁵ “At one point, I observed Matta Ballesteros being wrestled to the ground, in an effort to detain him.”

Honduran authorities finally corralled Matta Ballesteros near the vehicle the marshal was driving, handcuffed him, placed a black hood over his head and forced him to the floor of the car. Matta Ballesteros continued to struggle, pleading for mercy and kicking the car door as they shut it. “Don’t do this to me please,” he screamed. “Don’t turn me over to the gringos.”⁶

Matta Ballesteros had reason to be worried. In Honduras, he might have been a kingmaker, but the US wanted him for the death of a DEA agent in Mexico, and there he faced the death penalty. “I didn’t have anything to do with it,” he screamed, presumably referring to the death of the agent. “Let me see my kids one last time. They are going to kill me.”⁷

With two Honduran police in his car and a military escort, the marshal drove Matta Ballesteros to a Honduran Air Force base about an hour away. There US and Honduran authorities placed him on an airplane and flew him to the Dominican Republic. Less than 24 hours later, he would find himself in a US prison facing kidnapping, murder and various drug trafficking charges.⁸

When the news broke of Matta Ballesteros’ extraordinary rendition, Honduras erupted. The military was silent on the arrest and the president spoke of “expelling” the accused murderer and drug trafficker,⁹ but on April 6, about 300 protestors marched to downtown Tegucigalpa; that night, students burned a US flag and a copy of the Honduran constitution in front of congress.¹⁰ Various congressmen and legal experts vilified the military and police for the “kidnapping,” and the courts that ordered the search and seizure of Matta Ballesteros’ properties.¹¹ On April 8, at least 1,000 protestors marched on the US Embassy.¹² In the melee that followed, a US Embassy annex — which housed the US Agency for International Development and the US Consulate — was burned along with about 20 vehicles;¹³ shots were fired, and five people died. Days later, local media called the marches the “the most violent anti-US protests in Latin America.”¹⁴

The incident at the embassy was the culmination of a twisted, blood-soaked relationship between Matta Ballesteros, the military and the United States government. It touches the core of an incredibly important development in Honduras, one that involves the evolution of a relatively new class of elites. The group was not part of the traditional or transnational elites that had for so long controlled the country’s economic resources and held its political reins. It emerged, instead, from the armed forces, an institution traditionally thought of as the elite’s muscle rather than its brain. And that is where we need to start this story.

Background – the Honduras Military’s Emergence as a Bureaucratic Elite

The Honduran Armed Forces have always been at or near the top of the government pyramid, but they did not always hold power directly. For over a hundred years after its founding in 1825,¹⁵ the military took part in civil wars and political upheavals, sometimes on the margins and sometimes leading events later characterized as “revolutionary uprisings.” On various occasions, generals became presidents following their victories on the battlefield.

The most notable of these was General Francisco Morazán. Considered to be Central America’s equivalent of Simon Bolívar, the independence hero of South America, Morazán became president of the Central American Federation of nations before it fell to pieces in the late 1830s. Morazán is still present in the names of provinces, parks, streets and a military academy in Honduras. Politicians of the time were, in essence, forged on the battlefields, but the military did not necessarily hold the reins of power. It would be better described during this period as the protector of others’ interests rather than as a political and economic actor in its own right.

Indeed, throughout its first hundred years, the military was organized in small enclaves, a disparate force with little centralized structure or national reach. These disparate forces at first protected the interests of the traditional elites — those growing cacao and coffee, and running cattle ranches — in these enclaves. Over time, their list of clients grew to include multinationals growing fruit and other products,¹⁶ but their role remained largely the same. And although the armed forces provided a means for social mobility, the military were not part of the economic activities it protected.

Beginning in the 1930s, this began to change. In 1932, Honduras elected a military officer as its president — General Tiburcio Carias Andino. Carias’ government — which lasted 16 years — is key to understanding how the armed forces began to establish themselves as an independent interest group and, eventually, as a bureaucratic elite. In part this is because Carias started the process of institutionalizing the military. He centralized the military’s structure and expanded its reach. His administration also created the Military Pension Regime in 1935. This would be the foundation for what was later called the Military Pension Institute (Instituto de Previsión Militar – IPM), which pre-dated even the national social security system and would later usurp various other important state-run companies.¹⁷

Carias’ presidency also marked the beginning of a period in which military personnel were more politically active. The general was a National Party militant who acted in his own interest and that of his party.¹⁸ This included incarcerating, deporting and possibly murdering political opponents, particularly in the Honduran Communist Party and the rival Liberal Party. His government also censured parts of the media. Carias was, in essence, constructing a caste within the military, one that transcended its military identity and would soon be capable of regularly influencing national decision-making and asserting itself economically.

By the late 1950s, the military was ready to take the next step. It started by absorbing the civilian police and transforming it into a national guard. Then, in 1963, just prior to the general elections in which the Liberal Party presidential candidate seemed on his way to victory, General Oswaldo López Arellano led a military coup. The coup was the start of a period of almost uninterrupted military rule that lasted until 1982, much of it under López Arellano. As its political alliances blossomed and it became increasingly aware of its own interests, the military stopped being just a placeholder for the elites. It focused on strengthening and securing its own modus vivendi.

This shift was evident in various ways. To begin with, the military expanded its control over civilian sectors of the government. The armed forces effectively took control of the National Agrarian Institute (Instituto Nacional Agrario – INA) under the guise of a land reform effort. It took over the running of the customs and border patrol services, the airports and other vital infrastructure. Control of these posts gave the military access to resources, both licit and illicit, as we shall see through some military officials’ relations with smugglers. In addition, the military increased its stake in a number of public entities. From transport to telecommunications companies, arms dealerships to banks, the military’s economic portfolio expanded. Being in the military also came with economic advantages. The companies do not pay the same import or earnings taxes giving them a competitive advantage.

Throughout this period, former and active military officers continued to strengthen their ties to the traditional political establishment. Most of these officers worked with the conservative National Party, but others began to work with the more centrist Liberal Party. Both parties supplied cabinet members to the military governments in the 1960s and 1970s. Among them was Ramón Lobo Sosa, a large landowner and National Party strongman who was the Minister of Communications and Public Works between 1965 and 1971, under the administration of López Arellano. (He would later serve in congress where he was connected — along with parts of this family — to organized crime.)

The relationships between officers and politicians started a process whereby it became harder to distinguish between these various elites. Their interests increasingly overlapped at crucial junctures in politics, business and society. On the private side, senior officers bought funeral homes, cemeteries, car dealerships, gas stations, sawmills, bus services, and private security companies. Some became partners in major financial institutions. In 1974, for example, López Arellano founded the bank Ficensa, and later he became a partner in Credomatic, a financial services company that manages international transactions.

Operating from within the country’s elites opened the way for other means of social ascension. Political power, coupled with more economic power, meant more social interaction amongst these elites. Soon military children were marrying children of the traditional elite, establishing new political-military lineages that are today marking their own path to power.

In 1981, under pressure from the United States, the military announced that it would oversee a return to civilian control of the government. The military had, by then, firmly established itself as a bureaucratic elite, and it would remain an immensely important actor in Honduran politics and economic life throughout the next decade, in part because of the US interest in funding proxy wars against its enemies in the region. US military aid to Honduras totaled $333 million from 1980 to 1989 (in constant 2011 dollars), second only to El Salvador in the region.¹⁹ US general assistance to Honduras also soared, topping out at $289.1 million in 1985 — most of it non-military²⁰; and for the decade, the United States provided close to $2.5 billion (constant 2011 dollars) in total assistance.²¹

For Honduras, this money was its lifeblood. It powered the government and the economy while traditional exports were waning and economic initiatives to modernize the economy were failing. The foreign assistance gave the military incredible power and leverage, which, as noted above, it used to enter the circles of other elites.

Perhaps the single most important symbolic illustration of the military’s reach came when the head of the armed forces, Gustavo Álvarez Martínez, created the Asociación para el Progreso de Honduras (APROH) in 1983. APROH was an arch-conservative — some say fascist²² — business association.²³ Among its founding members was Miguel Facussé, arguably the most powerful member of the country’s elite. Facussé was the economic adviser to the newly elected civilian president at the time, and served as APROH’s vice president.²⁴

Álvarez Martínez, however, was ousted as head of the armed forces in 1984, and left APROH, and the country, in disgrace amid rumors of a possible military coup. The APROH experience would be a lesson for some in the country’s elite, who began to distance themselves from the military.²⁵ While the association continued to be a vehicle for the country’s power brokers to channel their political and economic interests, the military was largely sidelined from these alliances and backroom dealings.

It was the beginning of the end of the military’s ascent, at least for the moment. The region was changing, but military officials were slow to react. The United States was winding down its efforts to fund proxy wars through Honduras, a policy that had made the Honduran military and government seem weak and coopted by Washington. Marginalized and shamed, the military began a slow withdrawal from politics. It was no coincidence that this retreat came as the US shifted its policies from fighting communism towards fighting drugs in the region. By 1988, the military’s loyalties were split between its official patron, the United States, and its unofficial patron, Juan Ramón Matta Ballesteros.

Matta Ballesteros: A Life of Crime

Matta Ballesteros’ story is littered with confusing and contradictory claims. By his own account, he was born in Tegucigalpa in 1945, the second of four brothers and sisters.²⁶ Some say he was a homeless pickpocket;²⁷ others say he collected the fares on buses.²⁸ Sources consulted for this report, who asked for anonymity, say Matta Ballesteros’ criminal career began in the early 1970s in the “Soto” neighborhood just outside the capital city, Tegucigalpa, where large marijuana dispensaries operated. By the time he was in his mid-twenties, Matta Ballesteros was known as the most powerful distributor in the area.

“I remember we used to call him the ‘pusher man’ because that was when that song was a hit,” one source told InSight Crime. “It was a hymn for a lot of people in the neighborhood who were dealing marijuana and everyone knew that Matta was the best. He lived in a house next to the cemetery and everyone knew ‘he was in the game.’ There would be lines of poor people who were there asking for money and gifts, everything! Everyone loved him and definitely saw him as a benefactor. But it was also clear that the narcs were also going in and out of his house with packages of all sizes.”²⁹

Eventually, Matta Ballesteros made his way to Mexico and later the United States, where he reportedly worked as a farmhand in Texas and a grocery clerk in New York City.³⁰ At some point, he connected with groups moving contraband and illegal drugs. By the late 1960s, this network stretched to Washington DC, where one former DEA agent claimed to have arrested him in 1969, with 50 kilos of cocaine at Dulles International Airport.³¹ Another account says he was arrested at Dulles in 1970, with 24.5 kilos of cocaine.³² In either case, he dodged the drug trafficking charges and was sentenced for immigration violations.

US authorities housed Matta Ballesteros in Eglin Air Force base in Florida, but he escaped and made his way back to Mexico where he began an incredible rise to power and played a key role in the cocaine trade.³³ Although he was arrested on at least two more occasions in the 1970s in Mexico, he managed to secure his release and obtain deeper relations with the growing Mexican underworld.³⁴ During this period, he reportedly met Alberto Sicilia Falcón, a Cuban trafficker based in Mexico, and Miguel Félix Gallardo. Félix Gallardo, a Mexican from the famed Sinaloa province, was building what would become known as the Guadalajara Cartel.³⁵ Matta Ballesteros also made his way to Colombia where he connected with those who were forming what would become known as the Medellín Cartel.

Soon Matta Ballesteros became a key broker for everything from cocaine to precious stones to US weapons. He connected the Mexican and Colombian underworlds with each other providing a vital bridge across Central America for the movement of cocaine. He also connected them with his native country, where he became part of an emerald, cocaine and arms smuggling enterprise run by Mary and Mario Ferrari. And later, he connected the CIA to its proxy army in Nicaragua, the Contras.

The emerald network stretched from Colombia through Mexico,³⁶ and, for a time, business was good. In addition to moving illegal goods north, Matta Ballesteros and Mario Ferrari owned a nightclub together. The Ferraris operated with impunity because of their military connections. They owned car dealerships and a beer company located on the property of the director of the Central Prison, military Colonel Ramón Reyes Sánchez.³⁷

The Ferrari network was, it appears, Matta Ballesteros’ first direct connection with the military in Honduras. The military made sure their trafficking partners were not prosecuted, and smoothed their passage through the airports, borders and customs houses, which the military controlled at the time. As described in detail in Julie Marie Bunck and Michael Ross Fowler’s Bullets, Bribes and Intimidation, when Matta Ballesteros wanted his judicial records and investigations against him destroyed, for instance, he went to the Ferraris.³⁸

At some point, a dispute erupted between the Ferraris and Matta Ballesteros. Some sources say the fight was over a drug deal in which Matta Ballesteros felt he had been cheated.³⁹ In December 1977, Matta Ballesteros’ henchmen kidnapped the Ferraris and flew them to Colombia where Matta Ballesteros personally oversaw their torture, one of the assassins later testified. They were then flown back to Honduras and killed, the same assassin said.⁴⁰ Six months later, the Ferraris’ bodies were found in a well on a farm on the outskirts of Tegucigalpa.⁴¹

Subsequent reports on the Ferrari murders by Tiempo and La Prensa newspapers — and a later account by reporter Thelma Mejía for the Transnational Institute⁴² — uncovered a cadre of military collaborators in the crime and began a slow process whereby military collusion in drug trafficking and smuggling operations through the country came to light.⁴³ These collaborators included the aforementioned Colonel Reyes Sánchez; Colonel Leónidas Torres Arias, the head of the “G2” intelligence service that is Honduras’ equivalent of the CIA; Lt. Colonel Juan Ángel Barahona, Chief of Interpol; and Colonel Armando Calidonio, a member of the National Investigative Unit (Dirección Nacional de Investigación – DIN), a special investigative unit. He is also father to Armando Calidonio Jr., a future National Party Congressman, high level official in the Security Ministry and now mayor to San Pedro Sula.

Of those implicated in the killing, Colonel Torres Arias deserves special mention. Tiempo said the murder was planned from Torres Arias’ G2 intelligence office in conjunction with Matta Ballesteros. But Torres Arias’ involvement in Matta Ballesteros’ operations appears to have gone much further than just helping to eliminate rivals. The colonel was also the go-between for official contacts in other countries, most notably with a Panamanian colonel named Manuel Noriega. The two colonels connected in the late 1970s, according to Jose Blandón, a former Panamanian official who worked for Noriega and testified before US Congress in the 1980s.⁴⁴ (Noriega would later become a military dictator, ruling Panama from 1983-1989, during which time he facilitated the movement of illegal drugs to the United States, setting the stage for the 1989 US invasion of Panama.) Torres Arias was initially backed by the CIA, which turned a blind eye to his involvement in drug trafficking due to his strong anti-Communist credentials.

Torres Arias was, in other words, the key broker who provided Matta Ballesteros with a way into the military bureaucratic elite in Honduras, as well as Panama. Although he was pushed out of service following revelations of his secret meetings to secure illegal weapons deals for Salvadoran rebels, Torres Arias was said to have remained close to the underworld for years after leaving the military,⁴⁵ providing an intimate link between Matta Ballesteros and the Honduran military officer corps well into the late 1980s.

Despite various public statements linking military personnel to the crime, there were no convictions of any of the alleged co-conspirators for the murder of the Ferraris. The most famous declarations came from Interpol Chief Barahona, who, after being publicly linked to the crime, implicated the military in drug trafficking and in the Ferrari murders, saying that “many stars” had been involved — a reference to the insignias denoting the highest-ranking officers in the armed forces. He also said that the head of the armed forces at the time, General Policarpo Paz García, had buried tape recordings and documents that connected high-level military officials to drug trafficking.⁴⁶ Barahona was later detained for slander, placed in solitary confinement, and denied access to his lawyer.⁴⁷

Mario Ferrari’s father also penned a letter to the newspaper Tiempo in which he said his son had worked closely with military officials and that they were responsible for his death.⁴⁸ But in the years that followed, the government stalled, then buried the investigation. The implicated military officials were never charged. Matta Ballesteros fled, basing himself mostly in Spain for the next several years. He was eventually acquitted of the murder charges after turning himself in to the authorities some years later.⁴⁹

The government also commissioned an internal report on the matter that found no wrongdoing on the part of the military. The military’s press office wrote that: “No military officer inside the armed forces has been involved in drug trafficking, the Ferrari case, or in the bloody incidents that the press is reporting.” Ironically, in the same communiqué, the press office admitted that, “Some members of the Armed Forces could have been involved in irregular acts in the course of their work, directly or indirectly.”⁵⁰

Matta Ballesteros, the Military and the CIA

Drug trafficking continued and, by many accounts, increased in the years after the Ferrari murders. Some said that it was because of the ties traffickers forged during the 1970s with the high ranks of the military, including Matta Ballesteros’ alleged link to Armed Forces General Paz García. Paz García became head of state in the so-called “cocaine coup” of 1978, which Matta Ballesteros allegedly helped finance.⁵¹ There are no official documents to back up this assertion, but Matta Ballesteros’ key interlocutor with the military, Torres Arias, remained on active duty through Paz García’s tenure.⁵²

The modus operandi for transporting illegal drugs then was similar to today. Marijuana and cocaine shipments moved through Honduran waters where Colombian “mother ships” would offload onto Honduran shrimp boats, which would then continue the journey northward to the United States by sea, air, or land.⁵³ This happened with the knowledge and complicity of the Honduran Navy, a DEA agent testified in 1986.⁵⁴ The DEA agent said that when he would notify the navy of suspicious activity, it would stall or say it did not have fuel to chase the traffickers. Torres Arias, the head of the intelligence services, was involved in the drug trade, he added. “It was difficult to conduct an investigation and expect the Honduran authorities to assist in arrests when it was them we were trying to investigate,” the DEA agent said.⁵⁵

These trafficking activities also often took place with the nod from US intelligence officials who were now enmeshed in a full-fledged proxy war against Nicaragua’s Sandinista government. The war, and the fight against communism in general, took precedence for the United States, and as a result they allowed the movement of drugs north and weapons and supplies south, often under the supervision of Matta Ballesteros and his military allies. Blandón, for example, said that by the early 1980s Torres Arias and Noriega were running drugs and trafficking weapons, including many to Salvadoran insurgents. Blandón added that the same clandestine landing strips in Honduras used by planes taking weapons to the US-funded proxy army known as the Contras were also used to traffic narcotics.⁵⁶ 

At the heart of US assistance to the Contras was SETCO, an airline Matta Ballesteros set up in Tegucigalpa. SETCO connected Matta Ballesteros to the Honduran military and to the US government, which used it to move supplies to the Contras along the Honduran-Nicaraguan border in the early 1980s. Records show that the State Department paid $185,924.25 to SETCO between January and August of 1986.⁵⁷ 

“Beginning in 1984, SETCO was the principal company used by the Contras in Honduras to transport supplies and personnel for the FDN [Fuerza Democratica Nicaraguense, a Contra faction] carrying at least a million rounds of ammunition, food, uniforms, and other military supplies for the Contras from 1983 through 1985,” stated the Kerry Report — named for then Senator and now Secretary of State John Kerry, who led the Senate Foreign Relations Committee’s inquiry into US support for the Contras.⁵⁸

Matta Ballesteros was also using the company to move drugs north to his allies in Mexico. The report adds that other US agencies knew of SETCO’s role in trafficking drugs. “A 1983 Customs Investigative Report states that ‘SETCO stands for Services Ejecutivos Turistas Commander and is headed by Juan Ramón Mata [sic] Ballesteros, a class I DEA violator,’” the Kerry Report said. “According to the Drug Enforcement Agency [sic], ‘SETCO Aviation is a corporation formed by American businessmen who are dealing with Matta and are smuggling narcotics into the United States.’”

The contacts gave Matta Ballesteros and his military allies important cover as they moved cocaine and marijuana to the United States. It also strengthened his contacts with the Honduran military, which was surging with the assistance of the United States. The priority for the CIA was clear: keep the Contras afloat at any cost. To cite one example, the DEA agent who had worked in Honduras said he told the United States about Torres Arias’ involvement in drug trafficking, but, he added, the colonel remained a US ally during this period.⁵⁹ For its part, the DEA office in Honduras was closed in 1983 for “budgetary reasons.”⁶⁰

“Instead of moving decisively to close down the drug trafficking by stepping up the DEA presence in the country and using the foreign assistance the United States was extending to the Hondurans as a lever, the United States closed the DEA office in Tegucigalpa and appears to have ignored the issue,” the Kerry Commission wrote.⁶¹

US assistance also seemed to embolden certain parts of the Honduran military. In 1984, the FBI seized a $40 million load of cocaine on a south Florida airstrip. The money, the FBI said, was to be used in a plot to assassinate then-Honduran President Roberto Suazo Córdova. One man was arrested in the United States, and the Honduran military attaché to Chile was implicated and extradited to the United States to face charges in the case. Top US intelligence officials, however, intervened on his behalf — ostensibly because of his “service” to the United States in the Contra war — and limited his punishment to five years at the Eglin Air Force base’s prison camp. The other suspect got 30 years in a US jail for his involvement in the plot.⁶²

“It appears that a compelling factor in United States-Honduran relations was support for American policy in the region, especially support for the Contra war,” the Kerry Commission added in its scathing assessment of the matter.  “As long as the Honduran government provided that support, the other issues were of secondary importance.”⁶³

These issues included questions swirling around the activities of Matta Ballesteros, who, by the mid-1980s, was one of the most important drug traffickers in the hemisphere. With allies in Colombia and Mexico, as well as a cadre of high-ranking Honduran military officers and the CIA protecting his illicit businesses, Matta Ballesteros appeared relatively untouchable. His connections to the Honduran military intelligence service, or G2, seemed particularly powerful. According to one former member of the diplomatic service, the G2 requested a passport for Matta Ballesteros in 1982. “I went looking for the then-foreign chancellor,” the ex-diplomat explained. “He came, and he looked into it, and I remember that he shrugged his shoulders and said: give it to him; it’s a high-level request, and it’s part of a negotiation that I’m not familiar with.”⁶⁴

The Murder of an Agent, the End of a Relationship

In 1985, everything changed for Matta Ballesteros when the Guadalajara Cartel, angered by the DEA’s success in seizing large tracts of its marijuana crops in Mexico and cocaine shipments in the United States,⁶⁵ kidnapped and killed Enrique Camarena, a DEA agent. Camarena’s murder happened slowly. A year after his death, Mexican authorities turned over audiotapes of an hours-long torture session of the agent and his pilot, who was also killed.⁶⁶ In the tapes, Camarena groans in pain and pleads for his life, while giving away confidential information about DEA informants and fellow agents.⁶⁷ “With the beating you have given me do you think that I am going to lie to you?” he asks his interrogators.

Camarena and his pilot were found buried in a Guadalajara field, along with a number of other bodies.⁶⁸

With Camarena’s death, the United States government began to operate on the margins of international law in order to arrest and try several international suspects. Over the next several years, numerous Guadalajara operatives and leaders were arrested and convicted in Mexico. Others were taken illegally from Mexico to face trial in the United States. Matta Ballesteros himself was arrested in Colombia in 1986, but with the Medellín Cartel’s help,⁶⁹ he escaped and made his way back to Honduras, where he felt protected by his vast network and wealth.

At first, this protection came in spades. Matta Ballesteros was a public figure in Honduras, known as much as a businessman and philanthropist as he was a drug trafficker. By one count, he had coffee, tobacco, spice, dairy and cattle holdings in Honduras; he also founded construction and agro-industrial companies.⁷⁰ He built schools and his businesses employed as many as 4,000 people.⁷¹ He gave cash handouts from his front door and was known to call the pharmacy to secure medicine for the sick.⁷² He once reportedly offered $25,000 during a telethon, which was rejected but garnered him sympathy all the same.⁷³ He was, according to multiple military sources consulted for this study, humble and down-to-earth — the type of person who enjoyed eating in the kitchen with his cooks.

Matta Ballesteros also wielded significant political influence. He hosted parties at his mansion where he allegedly entertained politicians, military officials and the then-Honduran police chief.⁷⁴ At one point, like his business partner Pablo Escobar had once done in Colombia, he famously offered to pay off the country’s foreign debt. Honduran officials seemed to think the offer might have been more than symbolic, and in 1986, then-Finance Minister Reginaldo Panting mused that Matta Ballesteros’ money “would be welcomed in our country because it would help us to improve our balance of payments.”⁷⁵

The exchange about the foreign debt represents a glimpse into the mindset of Honduran power holders with regards to illicit capital. Honduras was an enclave economy, dependent on foreign capital for growth and economic development. This intensified in the 1980s when, as traditional exports waned, the country leaned heavily on US assistance and later multilateral banks. Viewed from this perspective, Matta Ballesteros’ foreign-earned capital fit in well with the Honduras economic model. He was, in a way, a new entrepreneur, one that could provide direct foreign investment and supply thousands with jobs. And, contrary to the case of Pablo Escobar in Colombia chronicled in one of our Colombian case studies, his largesse was publicly welcomed.

However, the noose around Matta Ballesteros’ neck soon tightened. In part this was due to his involvement in the Camarena case. But it was also due to shifting domestic politics in the United States. In the 1980s, the US was suffering a spate of violence, some of which was related to increasing domestic drug consumption and drug dealing in its inner cities. For US politicians and government officials, foreign traffickers such as Escobar and Matta Ballesteros provided convenient scapegoats. With time, these fears would even supplant the communist threat and lead to the overthrow and jailing of one of Matta Ballesteros and Escobar’s many regional partners, Panamanian military ruler Manuel Noriega.

By early 1988, the US government was openly discussing Matta Ballesteros and his high-level connections in the Honduran military. These included his longtime conduit to the armed forces, former intelligence chief Torres Arias, who had returned to Honduras in 1987, just over a year after Matta Ballesteros himself had arrived.⁷⁶ Written questions submitted by US counternarcotics officials to a US congressional committee hearing referenced reports that Torres Arias, the former Honduran intelligence chief and ally of Matta Ballesteros, was an “influential advisor” to the then-head of the armed forces, General Humberto Regalado, and to the chief of military intelligence.⁷⁷

In the days following, a list of potential Matta Ballesteros collaborators, allegedly drawn up by the United States, was read aloud on Honduran radio. The list included the minister of defense, the director of Military Intelligence, the head of the navy, the armed forces chief of staff, and the former director of the military command school.⁷⁸ There was also the suggestion that Matta Ballesteros counted among his backers the chief of police, Leonel Riera Lunati, as well as employed a cadre of ex-Honduran Special Forces to work for him and his security company.⁷⁹ In a written response to the question about the relationship between Torres Arias and Regalado, the State Department downplayed this connection. “We do not believe he is an influential advisor,” it said, referring to Torres Arias. “It is normal that Torres would know Regalado and other Honduran military officers with whom he served.”⁸⁰

However, the US government was clearly worried.⁸¹ The congressional hearing on the matter in March 1988 began with congressman Benjamin Gilman of New York outlining the challenges in Honduras. “A member of the Medellín cocaine cartel, Juan Matta Ballesteros, has set up shop in Honduras,” he said. “Already he is extending his corrupting influence in that society. He is attempting to buy off officials in the Honduran government. Ballesteros is a tough and savvy drug trafficker.”⁸²

The congressman later noted the Honduran military’s alleged involvement in Matta Ballesteros’ criminal activities. “I am also concerned about recent reports that some of the military officers in Honduras may very well be involved in drug trafficking, and I hope we’re not going to look the other way because of certain other security interests there,” he said, in reference to the ongoing proxy war against the Sandinista regime in neighboring Nicaragua. “I hope that Mr. Ballesteros has not already succeeded in building a drug trafficking network in Honduras, with the cooperation of some of these corrupt military officers.”⁸³

While it had downplayed Torres Arias’ ongoing connections to the upper echelons of the Honduran military, the State Department was also worried about what was happening in Honduras. During that same hearing, the State Department’s assistant secretary at the Bureau for Inter-American Affairs, Elliott Abrams, said cocaine trafficking immediately increased after Matta Ballesteros arrived in the country.⁸⁴ In February 1988, the US State Department had issued a statement outlining these concerns.

“The department and many Honduran officials, including the senior leadership of the armed forces, became seriously concerned about the possibility of significantly increased drug trafficking when Juan Ramón Matta Ballesteros returned to Honduras from Colombia,” the State Department said. “We believe he is attempting to create a drug-trafficking network in Honduras undoubtedly with the cooperation of some corrupt officials. However, we don’t believe that such corruption has yet become pervasive.”⁸⁵

The message was clear. It was time to cut ties with Matta Ballesteros, and, on April 5, the Honduran Special Forces and police, along with four US marshals, intercepted him following his morning jog, bundled him up and transported him to the Dominican Republic. From there, in what can only be considered an extraordinary rendition, he was taken to the United States to face charges on the Enrique Camarena case, among others.⁸⁶ Thousands of Hondurans, angered by the move and allegedly encouraged by the military, later protested and burned an annex of the US consulate.⁸⁷ Five died, and US officials said it took two hours for the Honduran authorities to respond to their call for help.⁸⁸ Matta Ballesteros was later convicted of kidnapping in a Los Angeles court,⁸⁹ and of drug trafficking in a separate trial, and remains in a US federal prison.

Conclusions – A Mutually Beneficial Relationship

The relationship between Matta Ballesteros and the military-bureaucratic elites was born out of opportunity and circumstance, but it became essential for both sides. The relationship began because Matta Ballesteros and his criminal allies at the time, the Ferraris, needed the military’s help to smuggle emeralds and illegal drugs. The military controlled the airports, the borders, and the customs and immigration offices, among other vital government posts. This control of bureaucratic positions made them an obstacle for trafficking illicit goods. Rather than go around this obstacle, the criminal network decided to coopt the military, and make them part of the team. It was a symbiotic relationship at the most basic operational level.

However, the relationship went beyond this basic level to include the highest echelons of the armed forces and even the government. How it permeated so far is not clear. Nor is it clear whether this penetration went from the bottom up or the top down. What is clear is that it reached into the heart of the military intelligence services. Matta Ballesteros’ key ally Torres Arias was not a mere border guard or low-ranking soldier when he allegedly participated in the murder of Ferraris; he was the head of the G2 military intelligence service. The distinction is critical — and the services he offered were vital.

Torres Arias appears to have been both the protector and the conduit through which Matta Ballesteros developed a deep and lasting relationship with the military. While at first he provided protection, over time he became an offensive weapon, giving access to equipment, arms and personnel. Matta Ballesteros most likely used these assets to kill his powerful allies, the Ferraris, once they stopped being useful to him or crossed him. Torres Arias also helped provide conduits through other countries, such as Panama, where his relationship with Manuel Noriega proved equally important.

From that point on, what emerged was nothing short of a partnership between the Matta Ballesteros network and the military-bureaucratic elite. Matta Ballesteros used his contacts in the military to create a vast and lucrative passageway for drugs moving north on behalf of his partners in both Colombia and Mexico. He cleverly intersected his interests with those of the military and the military’s other patron, the United States — a point we shall return to in a moment. The use of the SETCO airline was, for instance, the move of a chess master who understood how to satisfy the needs of local and international political actors at the same time as he was satisfying his own ends. It was, in other words, a win-win-win.

Along the way, Matta Ballesteros became one of the most powerful drug traffickers in the world, amassing a fortune that some said reached into the billions of dollars.⁹⁰ He used economic capital abroad to keep himself from facing any real prison time, bribing and threatening officials and prison authorities when necessary, in places like Colombia and possibly Spain. And he used his political and social capital to keep himself out of jail in Honduras.

It’s tempting to imagine what would have happened to Matta Ballesteros had he taken a slightly different path. His economic, political and social base had positioned him well to transition into a more established elite. (As we shall see, it is a transition that his family has sought to continue, with limited success.) And he had a way of winning over the common people that went beyond his fame as a drug trafficker.

“Birds always keep their nest clean,” a retired army colonel told InSight Crime. “And ‘Moncho’ Matta wanted to live in Honduras. He wanted to help his country. He didn’t want to be a trafficker. If you asked me, ‘How do the people see the narcos?’ The answer is simple: they provide employment, they put food on the table. They help, they protect them. They make them feel that they are one of them. That’s why the people admire them. And being pragmatic, what do the people want? To die of hunger with honor or to eat three times a day without honor because of what the narco is doing? The answer is clear.”⁹¹

When Matta was in jail for a few days in Tegucigalpa, after he’d escaped from a Colombian jail and had returned to Honduras, people went to visit him. “The lines were enormous,” an ex military officer told InSight Crime. “They brought him food and in return, he gave them love [money]. Later, they went to his house in the Los Angeles neighborhood [of Tegucigalpa], and that is why when they extradited him the people took to the streets to defend him and to protest. He had established social network that protected him.”⁹²

It was this political and social capital that made him seem so dangerous to the United States, and accelerated his conversion from erstwhile anti-communist ally to drug trafficking enemy. His defiant public persona after he returned to Honduras, along with his involvement in the murder of a DEA agent, made him an easy scapegoat for a US political establishment that was searching for people to blame during a period of domestic turmoil. That murder, and his overt ambition to become a legitimate power broker, eventually caught up to him. It also impacted his family. His children could not get into the elite-run schools.⁹³ The country clubs were off limits. Even his attempt to bankroll a telethon was rejected because of his reputation as a drug trafficker.

This incident — perhaps Matta Ballesteros’ first public attempt to gain legitimacy among the elites — ended in humiliation. He offered a large donation to the Telethon Foundation, but was rejected by its main sponsor, media entrepreneur Rafael Ferrari, who publicly said that the money was not welcome. “I remember when Don Rafael Ferrari came amid the Telethon to reject this donation which I think was more than one million lempiras, a lot of money back then, with which the target was met and exceeded. But he was very brave to say no to that drug money; it was a blow to Matta,” a journalist who covered the event told InSight Crime.⁹⁴

The event illustrated that Matta could never be an elite in the traditional sense because his criminal acts, most notably the murder of a DEA agent, were simply too public and the figure of a drug trafficker too low on the social scale.

Ambition was at the heart of the downfall of the Honduran military as well. Ironically, the military might well have achieved its vast political power without Matta Ballesteros. It had emerged as a bureaucratic elite before Matta Ballesteros became its unofficial patron. The armed forces had gone from protector of the country’s wealth to active participant in and beneficiary of its creation. This was part of a path the military had forged by controlling critical government posts and state resources, as well as developing a political acumen that reached across class lines. The military’s power was such that it drew both traditional and eventually transnational elites into its fold, positioning itself to become a long-term power broker.

However, some members of this bureaucratic elite sought more power through a share in the vast illegal proceeds that were there for the taking. The temptation is understandable. The drug money was significant, and came with undeniable power. Operating with underworld figures gave some military officials the resources to branch into new businesses and extend their political reach and influence. And, as we shall see, some of the families who allegedly worked with Matta Ballesteros have become part of new elite that is running the country today.

Whether this was a top-down strategy is unknown and arguably irrelevant. The military’s relationship with Matta Ballesteros reached its highest levels. Others in the institution ignored that relationship, benefitted from it or participated directly in it for at least a decade despite its clear repercussions for the military’s internal dynamics. There are some, for example, that say this relationship may have fostered the coup in the late 1970s that put General Paz García in power. While there is little evidence to back this assertion, the official identified as Matta’s key contact in the military — Torres Arias — retained his powerful connections with high-level army officers for years after he’d been connected to Matta Ballesteros.

There was no visible revolt against the military’s connection with Matta Ballesteros until it jeopardized the institution’s relationship with the United States. Following Matta Ballesteros’ capture in April 1988, The New York Times reported that there had been a “bitter factional struggle” within the Honduran military in the days leading up to his arrest between those who wanted to continue working with the trafficker and those who wanted to sever ties. The article cited the congressional hearings in which Blandón and others spoke about Honduran military complicity with drug trafficking as the tipping point.⁹⁵

In the days that followed the capture and extraordinary rendition of Matta Ballesteros, Honduran authorities were also in a near total state of confusion as they sorted through who was to blame for Matta Ballesteros’ situation and under what legal statute he’d been sent to face trial abroad. Although the minister of Foreign Relations claimed the arrest order had come from the courts, Salomón Jiménez Castro, the head of the Supreme Court — the institution with the final say over the extradition of any Honduran citizen — said the court had nothing to do with the capture and deportation of Matta Ballesteros. Jiménez added that the US had not made an extradition request.⁹⁶ Days later, Interior Minister Romualdo Bueso Peñalba said there was not even a functioning extradition treaty between the countries.⁹⁷

But far from saving Honduras via a public shaming and an illegal arrest, the US government shares the blame for the Honduran military’s unholy alliance with traffickers. The United States had been sending mixed signals to its ally because of its other political interests in the region. Specifically, the CIA’s active relationship with Matta Ballesteros’ airline SETCO, as well as with figures like Torres Arias in the early 1980s, were an unofficial green light that illegal proceeds from the drug world were acceptable, as long as they served the greater purpose of fighting communism. The message changed only after the Honduran military’s criminal ally became involved in the murder of a US anti-drug agent. The killing, coupled with an increasing pressure to deal with drug violence at home, pushed the US government to give the Honduran military an ultimatum on Matta Ballesteros: Him or us?

The Matta Ballesteros arrest was the end of an era for the Honduran military. The decadence and arrogance that characterized it, especially in the 1980s, had come to an abrupt and public end. Its principal legitimate patron, the United States, had essentially shamed it into shifting its priorities and reining in its unofficial patron (Matta Ballesteros). The public uprising that followed the arrest illustrated just how much political and social capital Matta Ballesteros had built in Honduras. It also illustrated the frustration of the population that the country had been used as a US military base for nearly a decade.

Following the extraordinary rendition of Matta Ballesteros, the Honduran military began a backslide into political purgatory. While the arrest of Matta Ballesteros did not cause this shift, it contributed to it. The civilian government soon replaced military supervisors that had run various state institutions for years. This included national phone company Hondutel, the Agrarian Institute and immigration services. The business association APROH distanced itself from the military core that had created it. And the government formally reestablished a civilian police force, separate from the military.

Still, various ex-military officials used this period to launch business and political careers, setting the stage for the next generation of bureaucratic elites. To be sure, the bureaucratic elite that emerged in the half century prior to Matta Ballesteros’ arrest did not disappear after it, but simply shifted gears, rebranded itself as the country’s top crime fighting body, and embraced its long-time alliance with the National Party. The results are evident in today’s ruling class.

Epilogue: The New Bureaucratic Elite and Organized Crime

On July 31, 2014, Honduran authorities seized 17 properties belonging to Juan Ramón Matta Waldurraga, the son of Juan Ramón Matta Ballesteros.⁹⁸ There had long been rumors about Matta Waldurraga’s involvement in the drug trade, and the family has had various run-ins with the law since Matta Ballesteros was jailed. In 1993, Colombian police arrested Jaime García García, Matta Ballesteros’ brother-in-law, and charged him with trafficking cocaine to the United States via Costa Rica.⁹⁹

In 2004, an airplane carrying illegal drugs landed in front of one of Matta Waldurraga’s properties in the state of Olancho, having allegedly come from Colombia.¹⁰⁰ In the following years, Colombian authorities also confiscated properties and detected large sums of money from the family moving in and out of that country.¹⁰¹ And in 2005, the director of immigration for Honduras was arrested for allowing 14 Colombians linked to Matta Waldurraga to enter the country without visas.¹⁰²

In interviews for this report, current and former officials routinely referred to Matta Waldurraga as his father’s successor in the drug trade, as well as a person who manages government contracts and serves as a kind of informal bank for the underworld. But the recent seizures were not accompanied by a public order for his arrest, and Matta Waldurraga has never been charged with a crime in Honduras. In declarations to the press, Matta Waldurraga called the 2014 seizure operation a “payasada,” a joke, and said the property was inherited from his grandmother.¹⁰³ The family also protested the government’s confiscation of its property, but there was little it could do. The properties, the Honduran government said, were purchased with illegal proceeds and were thus subject to confiscation under a new law the government had passed just two years earlier.¹⁰⁴

The government’s aggressive actions against the family would have been a surprise if it had not already made clear its intention of taking a hard line on crime. Since entering office in 2014, the administration of Juan Orlando Hernández, a National Party stalwart with a military education and bloodline, had illustrated its resolve against the drug trade. In addition to its actions against the Matta Ballesteros clan, the Hernández administration had captured and extradited a Honduran accused of drug trafficking to the United States — the first national extradited in over 100 years;¹⁰⁵ and captured three top members of the Valle Valle clan,¹⁰⁶ a powerful drug trafficking family based in the western department Copán, who one US official told InSight Crime had been moving up to 20 tons of cocaine per month through the country.¹⁰⁷ The Honduran government had also effectively declared the country a no-fly zone for traffickers when it passed a law authorizing the air force to shoot down suspected drug flights in its air space.¹⁰⁸ By late 2014, nearly half of the Honduran drug traffickers wanted in the US were in custody,¹⁰⁹ and drug flights were down considerably, according to interviews with Honduran and international drug agents.¹¹⁰

Hernández established his administration as firmly opposed to organized crime, and he did it with a coalition that was eerily reminiscent of the military-dominated government of the 1980s. While he has not served in the military himself, Hernández — who is a long-time National Party strongman and a former president of Congress — has surrounded himself with numerous current and former military personnel. This includes his brother, Amílcar Hernández, who is one of his most important security advisors; retired General Julián Pacheco, who has held several important posts including that of security minister; and Oscar Álvarez, a former Honduran Special Forces officer who trained and studied in the United States and has held ministerial and congressional posts.

For his part, Pacheco is arguably the most powerful member of the bureaucratic elite since Paz García left office in 1981. After winning the presidency, Hernández immediately tapped the former head of military intelligence to direct FUSINA, an inter-agency task force created to fight organized crime. Among other powers, FUSINA has control over the National Anti-Extortion Force (Fuerza Nacional Antiextorsión – FNA). The FNA controls the government’s only phone-interception unit and reportedly maintains tight control of intelligence operations. Pacheco’s powers increased in early 2015, when he became the country’s first active military general to be appointed security minister. He had to officially retire from service to take the post, and, in an interview with InSight Crime, he claimed that rumors about his reach were greatly exaggerated.¹¹¹ “I don’t have as much power as people credit me with because it’s not true,” he said. “Plus the only power I can have is the experience I’ve managed to accumulate over a 35-year career.”

Another close advisor to the president is Álvarez. Álvarez is a descendant of the military-bureaucratic elite: his uncle was General Gustavo Álvarez Martínez, the founder of the military-founded business association APROH. He trained with US Special Forces before serving in the Honduran Special Forces. As a powerful member of the National Party, Álvarez has been a close advisor to more than one president. He was security minister in 2002 and then again in 2010, under Porfirio Lobo, who he also helped get elected. He later did the same for Hernández, working on his campaign and helping design his security strategy. Álvarez was elected to congress in 2013, and is the head of the National Party’s caucus in the legislative body.

One of Álvarez’s close party confidants over the years is also from an important military family. Armando Calidonio Alvarado served as Álvarez’s second at the Security Ministry from 2002-2005 and then again from 2010-2011. He also worked on the campaigns of Lobo and Hernández, and became a congressman. In 2013, he was elected mayor of San Pedro Sula. Calidonio’s father, also named Armando Calidonio, was one of those accused of links to the Matta Ballesteros network following the assassination of the Ferraris.

Echoing the 1970s military governments, Hernández has stacked the government with military personnel in what are traditionally civilian-held positions. In addition to Pacheco, he has placed military personnel as the heads of Civilian Aeronautics, the prison system, the national ports, the special “development zones,” the agricultural development institute and the housing authority.

The Hernández government is, in essence, a hybrid of bureaucratic and traditional land-owning elites. The president’s own background illustrates this fusion. One of 17 children, Hernández studied at a military school, but his family was small coffee farmers. He seems to have ascended via his political connections and his marriage to Ana García Carias, a direct descendent of the military dictator Tiburcio Carías Andino, the same Carías Andino who had set in motion numerous changes in the military that led to its eventual emergence as a bureaucratic elite. These connections have helped Hernández secure lucrative business deals. He reportedly owns coffee farms, amongst other agricultural holdings, as well as hotels, and radio and television stations.¹¹² Hernández is also a National Party strongman. He has gained support for and received support from party heavyweights such as Porfirio Lobo and his brother, Ramón, and he reportedly tightly stage-manages the party. He has been linked to a mysterious lobbying group called Colibrí, which has reportedly engineered lucrative government contracts and kickback schemes for its members and supporters.¹¹³

However, the Hernández administration’s power is most evident in the security forces. In addition to centralizing the control and flow of intelligence through the hands of Security Minister Pacheco, as president of congress he engineered a law that created a 5,000-member military police.¹¹⁴ As president of the country, he has strengthened that force. Both Hernández and Pacheco insist that the military police is only a temporary measure, but in 2015 Hernández moved to enshrine the force in the country’s constitution. The measure failed. However, Hernández said he would try again at a later date.¹¹⁵

The reach and power of the military-bureaucratic elite frightens some observers, especially since the institution’s relationship with organized crime is still in question. Álvarez’s first tenure as security minister, for instance, coincided with a crackdown on gangs in Honduras carried out, in part, by a police-run death squad known as the Magnificos.¹¹⁶ One alleged member of this group was a police commander named Juan Carlos “El Tigre” Bonilla. The police inspector at that time said she had initiated 13 internal investigations into Bonilla’s activities, including the murder of several men who had kidnapped and killed a former minister, Reginald Panting, the same man who had publicly entertained Matta Ballesteros’ offer to help pay down the country’s debt.¹¹⁷ The cases were archived, the inspector said, because of Álvarez.

Though President Hernández has not himself been implicated in criminal activities, his presidential campaign had some questionable operatives, including Hugo Ardón, who headed up Hernández’s presidential campaign in the western part of the country. Ardón ran the highway authority for years up until June 2015, during which time he approved numerous government contracts to companies run by criminal groups such as the Cachiros, a once powerful clan based in the Colón province and the subject of our other Honduras case study. Ardón’s brother, Alexander, was the mayor of El Paraíso, Copán, an important drug trafficking corridor. As mayor, Alexander became infamous for having reconstructed city hall in the image of the White House, complete with a heliport. Authorities told InSight Crime in 2015, they were investigating Alexander for drug trafficking.¹¹⁸

The National Party has had its share of high level figures connected to criminal activities. Ramón Lobo, a former congressman and brother of former President Porfirio “Pepe” Lobo has been under scrutiny for years. Ramón’s daughter, Margarita, was injured in a 2003 attack by the Cachiros criminal organization on a rival trafficker who was allegedly dating Margarita at the time. In 2012, Ramón himself attended the inauguration of a gasoline station and mall in the state of Colon; the mall was constructed by Javier Rivera Maradiaga, the leader of the Cachiros.¹¹⁹

Pepe Lobo has also been connected to criminal elements. During his term in office, the son of José Natividad “Chepe” Luna Pereira, posted a photo of the then-president on Facebook with his father. Luna, a Salvadoran national wanted at the time by the United States for drug trafficking, owned and ran a fleet of buses and trucks from his headquarters in San Pedro Sula. When he was arrested in Honduras in 2011, during Lobo’s time in power, Salvadoran and US authorities scrambled to get him deported to El Salvador where he was facing drug trafficking charges, but a judge mysteriously released him before they could mobilize their resources. Lobo did not return InSight Crime’s efforts to seek comment.¹²⁰ Luna was assassinated in San Pedro Sula in 2014.¹²¹

The Lobo family has continued to face scrutiny since Lobo left office. In May 2015, Lobo’s son, Fabio Lobo Lobo, was  captured, reportedly in Haiti, and taken to New York to face drug trafficking charges.¹²² Lobo did not defend his son and told the press that he would have to face the consequences of his actions. In a tweet, the US Ambassador to Honduras, James Nealon, declared: “No one is above the law.”

*This report was written by Steven Dudley. Dudley, along with researchers from the Centro de Investigación y Promoción de los Derechos Humanos (CIPRODEH) and the Asociación para una Sociedad más Justa (ASJ), as well as an independent researcher who wishes to remain anonymous, assisted in the investigation and production of this report. Map by Jorge Mejía Galindo. Graphics by Andrew J Higgens.

Endnotes