Mine! Mine! Mine! Oops!

The Honduran Congress is like the seagulls in the movie Finding Nemo. It shouts "mine! mine! mine!" at everything confiscated by the security forces directed by Oscar Alvarez. These government seagulls are using the funds "confiscated" from organized crime as if they are their own money, spending it outside of the official budget.

How much are we talking about? 211 million lempiras of confiscated funds and property to date. The confiscated money and property is managed by the Oficina de Administradora de Bienes Incautados (OABI) a division of the Public Prosecutor's office directed by Omar Zuniga, . The OABI has divided the 211 million lempiras between the security forces, the defense department, development projects, and funds for the poor (the 10 thousand lempira bonus program started by Lobo Sosa), as specified in the law rushed through congress last year.

Only one problem; the courts are ordering that the OABI give back some of the funds and property; three million lempiras here, another few thousand there. By the OABI's own projections they expect the courts to order restitution of an equivalent of 48 percent of the resources, or about 100 million lempiras of the 211 million lempiras currently controlled by the OABI.

This stupidity is the Ley de Disponibilidad Emergente de Activos Incautados which passed Congress in November 2010. The law demands that the OABI assign immediately, according to the specified percentages, the rights to use the funds under OABI control to the benefiting agencies. So who benefits?

The Public Prosecutor gets 26.6%
The Security Minister gets 26.7%
The Defense Minister gets 26.6%
The 10,000 lempira bonus fund gets 10%
The fund for marginal people gets 10%

Here's another stupid part: the law says the OABI guarantees the funds and guarantees the interest on any funds deposited with it. How can it do that, if it has to immediately give the funds out as windfalls to the above beneficiaries? There's no budgetary support for it to do this. The law says its up to the Finance Minister to guarantee the funds that need to be returned.

Thus, if restitutions are ordered by the court, the OABI is left with a budgetary problem, where to come up with the funds for restitution (not to mention property, which the OABI can sell). As the Zuniga, the director of the OABI notes, there is no budgetary support that guarantees the repayment should the OABI have to return funds, there's no budgetary line item in Congress for it. The law specifies that the Minister of Finance is the guarantor of the funds, so its his problem to find them, when the court orders a restitution.

Funding for the OABI comes out of the Public Prosecutor's office budget. Currently it does not include funds to manage the physical assets assigned to the OABI, the boats, houses, cars, and other physical property confiscated. Zuniga notes that for one confiscated property alone the OABI has spent 1.1 million lempiras on security and upkeep over the last several years.

Does the law seem poorly thought out, gentle reader? That's because it is. It allows the benefiting agencies to spend funds that don't really belong to the state, leaving future governments the responsibility of repaying those funds, when the courts order their repayment. By their own estimates, the courts will order repayment of about half those funds.

As we've said many times, the Honduran government is broke (and broken). This was an ill considered law that provided for windfall spending to reward a small number of powerful beneficiaries, and ones whose budgets for 2011 were already increased over previous levels. Now that the courts are ordering restitutions, the Lobo Sosa government will be forced to find funds it already doesn't have to pay back these obligations.

We doubt it will have the political will to take back these funds from future budgets of these powerful agencies, so look for further cuts in the budgets of education, culture, and development, already reduced in this year's Lobo Sosa budget.Any source