Costa Rica Struggles to Profit from Sale of Narco-Assets

In Costa Rica, the seizure of narco-assets presents more of an obstacle than a gift to authorities.

In Mexico, for example, houses and cars seized from drug traffickers are sold off in high-profile auctions at the presidential palace, but Costa Rica faces stricter challenges.

Numerous administrative hurdles must be overcome before luxury vehicles, lavish mansions, and other expensive items can be sold off. Issues range from assets that cannot be disposed of while their owners’ trials are ongoing or those belonging to deceased criminals whose families are suing for ownership. It is estimated that the Instituto Costarricense Sobre Drogas (Costa Rican Institute on Drugs – ICD) spends over $3.4 million a year caring for these assets.

This includes looking after portfolios of properties taken all at once during sweeping raids. In May 2021, the takedown of a trans-Atlantic drug trafficking gang in the country led to the ICD taking over responsibility for several dozen buildings.

And as more cocaine continues to flow through Costa Rica and as its criminal actors become more sophisticated, the ICD’s burden may only begin to increase.

In a recent interview with Costa Rican newspaper, La Nación, ICD director Sergio Rodríguez Rodríguez laid out the full extent of these hurdles.

Empty Mansions Deplete Funds

For properties that cannot yet be sold, the ICD is expected to provide security, cleaning and maintenance to maintain their condition ahead of auction. The ICD is currently caring for 44 properties, which is draining its funds. As of June 2021, only 22 of these were being prepared for auction, and another 22 were still awaiting the result of legal proceedings.

Another issue is the lack of people willing to purchase these homes. According to the ICD director, many Costa Ricans are wary of purchasing the homes out of fear of facing retaliation from the former owners.

SEE ALSO: Argentina Asset Seizure Decree Debuts with Mixed Reviews

The lavish mansion of Alejandro Jiménez González, alias “El Palidejo,” has remained in ICD custody for seven years. Each time it’s put up for auction, potential buyers allegedly shy away from the house because of its ties to one of Costa Rica’s foremost drug kingpins.

Another property in San Luis de Santo Domingo de Heredia, has been in possession of the ICD since 2006, unable to be sold at auction as family members continue to fight over the possession of the home.

Jumping Through Hoops

Once a trafficker’s case has been closed, a judge determines whether the assets will be returned to the owner. Should the judge decide to grant ownership to the ICD, it is then able to fully utilize the assets, Rodríguez Rodríguez explained.

All items are evaluated by the ICD’s asset recovery unit to decide which are to be kept or to be sold. Vehicles, furniture and occasionally land can be kept within the ICD or distributed to other departments.

Other assets are sold in closed auctions but often at far less than their actual market value. In order to prevent criminals or their families from buying back their former property, buyers must register with the ICD and be approved to take part in the auctions.

And once the assets are sold, Costa Rican law aims for them to allow maximum financial returns and usually be invested in bonds.

But this income from such investments must then be divided among various departments. 30 percent of funds from these bonds must be allocated to drug prevention, treatment and rehabilitation programs developed by the Institute on Alcoholism and Drug Dependence (Instituto sobre Alcoholismo y Farmacodependencia – IAFA). Another 30 percent is given to the IAFA as a lump sum to use as needed. The Judicial Investigation Agency (Organismo de Investigación Judicial – OIJ) and police receive a further 30 percent. The ICD can then use the remaining 10 percent to cover the maintenance of other narco-assets.

SEE ALSO: Lost Property? Narco-Asset Seizures in Mexico Face Renewed Challenges

Temporary Solutions

As multiple assets continue to weigh down the ICD, the institute has looked for ways to use them wisely.

La Nación reported in August that the ICD had come into possession of the Hotel de Paso Infinity in Alajuela. The institute is now looking to keep the property permanently and maintain it as a hotel. According to Rodríguez Rodríguez, the room rates ranged from $24-48 per night. Should a court approve the ICD’s use of the hotel, it could begin to generate some money to maintain other properties.

The institution also maintains a fleet of about 1,300 vehicles taken from various raids. Since the ICD does not need so many cars for its own needs, a number have been loaned for use by OIJ officials and by the police.

Some are also parked inside seized properties to save on space and maintenance costs, but ICD officials admit many are sold for scrap since they would be worth very little at auction.

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