NIGERIA AND NASCO - THE TRUSTEESHIP OPTION

S E C R E T SECTION 01 OF 02 ABUJA 001817

SIPDIS


NOFORN


E.O. 12958: DECL: 1.6X1, 1.6X6
TAGS: PTER PREL ETTC PINS NI
SUBJECT: NIGERIA AND NASCO - THE TRUSTEESHIP OPTION


REF: A. SUMMARY OF AHMED IDRIS NASREDDIN COMPANIES

B. 01 STATE 207526

C. STATE 10592

D. ABUJA 0187

E. EPSTEIN/ANDREWS EMAIL 6FEB02

F. ABUJA 0418

G. DATTA/ANDREWS EMAIL 24MAY02


CLASSIFIED BY CDA ANDREWS. REASONS 1.6X1, 1.6X6.



1. (C) Summary: If placing NASCO under trusteeship is a USG
priority, we suggest the Secretary raise it when he calls on
Obasanjo 21 June. Approaches at other levels are unlikely to
bear fruit. However, action against NASCO could result in
collateral damage to bilateral relations far exceeding the
value of the target. End Summary.



2. (S) Background: Ref C identified companies belonging to
the NASCO Group as possible sources of financing for
international terrorism and sought Mission views on adding
them to the E.O.13224 assets freeze list. The Mission
provided detailed information on the role NASCO plays in the
economy of Nigeria's eastern Middle Belt and advised that a
thorough and well-documented analysis of the NASCO companies'
role in financing international terrorism would be needed to
convince the Government of Nigerian (GON) to freeze NASCO
assets, an action that would put the companies out of
business, with attendant consequences for employees and
suppliers. Pursuant to Ref E, the Mission discussed at
length possible palliative measures but could identify
nothing significant and so reported ref F. The Department
subsequently provided Ref A, along with a request (ref G)
that the Mission informally explore whether the GON would be
amenable to placing the NASCO companies under a trustee.
Theoretically, this option would permit the companies to
remain in operation, generating benefits for Nigerians, while
preventing profits from falling into the wrong hands.



3. (S/NF) Actions Taken:


(A) Regional Affairs Counselor about two weeks ago gave Ref A
to National Security Advisor LTG Aliyu Mohammed (ret),along
with a summary of what the USG was seeking. Mohammed did not
respond to the request directly, but commented that he
thought Nasreddin had not visited Nigeria in recent years.
RAO/C did not have the impression that Mohammed would quickly
take action along the lines of our request.


(B) CDA 18 June broached the issue informally with MFA
Permanent Secretary T.D. Hart, asking Hart's "advice" on how
best to approach the GON. CDA did not mention that RAO/C had
spoken with Mohammed. Hart is very sympathetic to us on
anti-terrorism issues. He said such a matter should normally
be put before the NSA. However, because of intertwined
religious and political issues, the NSA would be hard-put to
act. Hart thought aloud a bit and concluded that the best
approach would be for a special emissary or USG delegation to
present our case directly to President Obasanjo. He could
not come up with any other avenue that would yield the
results we seek in reasonable time.



4. (S) Comment: Hart's conclusion on what Mohammed would
likely do matched RAO/C's initial assessment. Now that
Nigeria is entering an electoral cycle, every action that
might be contemplated is subjected to an assessment of how it
would play domestically -- not so much with respect to the
general public but more terms of how well-informed political
elites would react. While there is substantial support for
choking off funding for bin Ladin, Ref A does not establish a
very clear link between NASCO, on the one hand, and bin
Ladin, al Qaeda or the GSPC, on the other. Rather it asserts
that there exists evidence linking Nasreddin, through Bank Al
Taqwa (of which he is a director),to the financing of
international terrorism. We are asking the Nigerians to
accept (1) that this link exists and (2) that NASCO and its
Nigerian subsidiaries are a source of funds.



5. (S) Although Nigerian Heads of State traditionally have
exercised significant informal executive authority, we're
uncertain what legal basis exists for either seizure or
imposition of trusteeship. Obasanjo, already facing charges
that he abuses power, likely will not want to take on another
project that will give his opponents further basis for
arguing that he
(1) does not respect due process and democratic norms;
(2) lacks concern for the welfare of northern Nigeria; and
(3) jumps too high in response to U.S. demands.



6. (S) Comment continued: Complicating this picture is the
fact that most of the formal and informal security elements
fall under the authority of Muslims. Aliyu Mohammed is the
NSA; Lateef Kayode Are is the Director of State Security (and
acts as NSA when Mohammed leaves the country); and the
President's Chief of Staff is MG Abdullahi Mohammed (ret).
None of these individuals would be anxious to be known for
carrying our water on this issue.



7. (S) NASCO, Nigeria and the US: The Mission still has no
idea how much, if anything, the NASCO companies operating in
Nigeria contribute to the positive cashflow of entities
outside of Nigeria under Nasreddin control. From the look of
NASCO's flagship facilities in Jos, there does not seem to
have been much invested there recently. Also, NASCO is no
longer the beehive of activity it was several years ago. It
probably suffers from some many of the ailments that afflict
the manufacturing and food-processing sectors in Nigeria.
But, to the best of our knowledge, it remains by far the
largest private-sector employer in Plateau State. Moreover,
many small farms and businesses depend on it for sustenance.
As we detailed in refs D&F, action that shuts NASCO down will
inflict collateral damage on the bilateral relationship. If
NASCO's role in financing international terrorism turns out
to be minimal, the costs of that collateral damage could far
exceed the value of the target eliminated.



8. (S) While the trusteeship option might keep NASCO open, we
know neither what the books would show nor whether the
trustee would exercise its fiduciary responsibilities
faithfully. In other words, NASCO could already be in bad
shape, or the wrong choice of trustee could put it there. If
NASCO goes under as the (apparent) result of being placed
under trusteeship, Nigerians will blame the GON and the USG.
For Obasanjo, who faces a tough re-election fight and is not
anxious to create new adversaries, the costs of complying
with our request will be immediately evident. He wants to
keep Plateau State in his corner. Obasanjo has complained
recently that the USG makes too many demands while giving too
little heed to Nigeria's concerns. So, we will need to
deliver our request for a NASCO trusteeship from a level high
enough that Obasanjo will be forced to listen and to offer
evidence so strong that he will feel compelled to commit to
comply.



9. (S) Recommendation: If placing NASCO under trusteeship is
a USG priority, the Secretary's June 21 call on Obasanjo is
the best opportunity to raise this issue. Approaches at
other levels are unlikely to bear fruit. Hearing directly
from Secretary Powell the explanation that, understanding the
potential economic and political repercussions, we are not
asking to close NASCO but for Nigeria to keep future profits
from failing into the wrong hands should help.
ANDREWS