Treasury Designates Tobacco Company for Supporting Paraguay’s Sanctioned Former President

WASHINGTON — Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Paraguayan tobacco company Tabacalera del Este S.A. (Tabesa) for providing financial support to Paraguay’s former president, Horacio Manuel Cartes Jara (Cartes), who OFAC sanctioned on January 26, 2023 for his involvement in corruption. Tabesa is being designated pursuant to Executive Order (E.O.) 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse and corruption around the world.

OFAC previously identified Tabesa on OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List as an entity in which Cartes owned, directly or indirectly, a 50 percent or greater interest. While Cartes no longer owns Tabesa following a sales agreement to acquire Cartes’s shares in the company, Tabesa has made—and plans to continue making—payments worth millions of dollars to Cartes, despite Cartes’s designation by OFAC.

Tabesa is being designated for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of Cartes, a person whose property and interests in property are blocked pursuant to E.O. 13818. Note that licensed activities related to Tabesa pursuant to General License 7 under the Global Magnitsky Sanctions Regulations continue to be authorized.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the designated person described above that are in the United States or in the possession or control of U.S. persons remain blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons also remain blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. 

In addition, financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated person, or the receipt of any contribution or provision of funds, goods, or services from any such person. 

GLOBAL MAGNITSKY

Building upon the Global Magnitsky Human Rights Accountability Act, E.O. 13818 was issued on December 20, 2017, in recognition that the prevalence of human rights abuse and corruption that have their source, in whole or in substantial part, outside the United States, had reached such scope and gravity as to threaten the stability of international political and economic systems. Human rights abuse and corruption undermine the values that form an essential foundation of stable, secure, and functioning societies; have devastating impacts on individuals; weaken democratic institutions; degrade the rule of law; perpetuate violent conflicts; facilitate the activities of dangerous persons; and undermine economic markets. The United States seeks to impose tangible and significant consequences on those who commit serious human rights abuse or engage in corruption, as well as to protect the financial system of the United States from abuse by these same persons.

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the SDN List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.

Click here for more information on the entity designated today.

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