Identifier
Created
Classification
Origin
02ROME1587
2002-03-28 15:53:00
UNCLASSIFIED
Embassy Rome
Cable title:  

MEETINGS WITH WORLD FOOD PROGRAM ON FINANCIAL

Tags:  EAID WFP UN 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 ROME 001587 

SIPDIS

FROM U.S. MISSION IN ROME

STATE FOR IO AND PRM
USAID FOR DCHA/FFP FOR LLANDIS, JDRUMMOND AND LWILLIAMS
USAID FOR FM FOR BMAIPID-SMITH
USDA/FAS FOR ESELLERS

E.O. 12958: N/A

TAGS: EAID WFP UN EAID WFP UN
SUBJECT: MEETINGS WITH WORLD FOOD PROGRAM ON FINANCIAL
ISSUES


-------
SUMMARY
UNCLASSIFIED

PAGE 02 ROME 01587 01 OF 02 281725Z
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UNCLAS SECTION 01 OF 02 ROME 001587

SIPDIS

FROM U.S. MISSION IN ROME

STATE FOR IO AND PRM
USAID FOR DCHA/FFP FOR LLANDIS, JDRUMMOND AND LWILLIAMS
USAID FOR FM FOR BMAIPID-SMITH
USDA/FAS FOR ESELLERS

E.O. 12958: N/A

TAGS: EAID WFP UN EAID WFP UN
SUBJECT: MEETINGS WITH WORLD FOOD PROGRAM ON FINANCIAL
ISSUES


--------------
SUMMARY
UNCLASSIFIED

PAGE 02 ROME 01587 01 OF 02 281725Z
--------------


1. A TEAM OF USAID/DCHA/FFP AND USAID/FM REPRESENTATIVES
AND US MISSION/ROME PERSONNEL CONDUCTED TWO DAYS OF MEETINGS
WITH THE WORLD FOOD PROGRAM'S (WFP) FINANCIAL MANAGEMENT
STAFF TO RESOLVE ISSUES RELATED TO THE CLOSING OF ACCOUNTS
FOR COMPLETED USG-FINANCED ACTIVITIES. THESE MEETINGS WERE
DESIGNED TO RESOLVE MANY OUTSTANDING ISSUES AND RESULTED IN
AN AGREEMENT TO CLOSE ALL WFP'S 1997 AND 1998 LETTERS OF
CREDIT (LOC) GRANTS FOR INTERNAL, TRANSPORT, STORAGE AND
HANDLING (ITSH) AS WELL AS ALL 1997 AND 1998 WFP FREIGHT
ACCOUNTS BY THE FIRST WEEK OF APRIL 2002 (WHEN BILATERAL
CONSULTATIONS BETWEEN THE USG AND WFP ARE SCHEDULED IN
WASHINGTON). A NUMBER OF ISSUES REGARDING THE CLOSURE OF
WFP'S 1997 AND 1998 INLAND TRANSPORTATION ACCOUNTS REQUIRED
FURTHER RESEARCH AND WILL BE ADDED TO THE AGENDA OF THE
FINANCIAL SUB-CONSULTATIONS. CLOSURE OF THE LOC GRANTS FOR
ITSH AND OCEAN AND INLAND FREIGHT ACCOUNTS, AND DEOBLIGATION
OF REMAINING FUNDS, SHOULD MAKE AVAILABLE AN ESTIMATED USD
31 MILLION THAT CAN BE REPROGRAMMED FOR DCHA/FFP SHIPPING
COSTS.


2. THE TEAM ALSO RAISED THE ISSUE OF THE WFP'S LARGE CASH
BALANCE WITH THE HEAD OF WFP'S FINANCE DIVISION, WHO
CONFIRMED WFP'S PREVIOUS COMMITTMENT TO PROVIDING A MORE
DETAILED BREAKDOWN AND ANALYSIS OF THIS CASH BALANCE AT
WFP'S UPCOMING BILATERAL DISCUSSIONS IN APRIL AS WELL AS ITS
ANNUAL AND EXECUTIVE BOARD MEETINGS IN MAY 2002.

--------------
FINANCIAL ISSUES
UNCLASSIFIED

PAGE 03 ROME 01587 01 OF 02 281725Z
--------------


3. USAID/DCHA/FFP REPRESENTATIVES JEFF DRUMMOND (CHIEF OF
PROGRAM OPERATIONS DIVISION) AND LAWRENCE WILLIAMS AND FM
REPRESENTATIVE BELLA MAIPID-SMITH, ACCOMPANIED BY JANE
STANLEY AND JOHN BROOKS FROM THE U.S. MISSION, MET WITH WFP
FINANCIAL MANAGEMENT STAFF AT WFP ON MARCH 14-15, 2002.
THE PURPOSE OF THESE MEETINGS WAS TO CLOSE OUT OLD LOC
GRANTS AND ACCOUNTS FOR COMPLETED USAID-FUNDED ACTIVITIES,
THEREBY FREEING UP ADDITIONAL FUNDS FOR THE SHIPMENT OF
USAID FOOD ASSISTANCE. THESE DISCUSSIONS ARE SUMMARIZED

BELOW ALONG WITH NEXT STEPS.


4. LETTER OF CREDIT FOR ITSH: USAID'S LOC GRANTS FOR WFP
ITSH (INLAND TRANSPORT, STORAGE AND HANDLING) COSTS CONTAIN
SEPARATE OBLIGATION NUMBERS FOR EMERGENCY ACTIVITIES (IEFR)
AND PROTRACTED RELIEF AND RECOVERY OPERATIONS (PRRO) FOR
EACH FISCAL YEAR. USAID AND WFP COMPARED THEIR INFORMATION
REGARDING EXPENDED AMOUNTS AND BALANCES UNDER EACH
OBLIGATION NUMBER FOR 1997 AND 1998, WITH THE AIM OF
REACHING AGREEMENT ON THE AMOUNT OF FUNDS TO BE DEOBLIGATED.
IT WAS DETERMINED THAT USAID HAD NOT RECEIVED, OR HAD NOT
YET RECORDED, EXPENDITURES RECORDED ON THE FINAL FORM 269
(WHICH PROVIDES QUARTERLY INFORMATION ON EXPENDITURES UNDER
A PARTICULAR OBLIGATION) FOR ALL OBLIGATIONS FOR ITSH IN
1997 AND 1998. WFP PROVIDED USAID REPS WITH FOUR FINAL SF
269S FOR ITSH GRANTS DURING THE MEETING.

ACTION REQUIRED: THE FM REPRESENTATIVE AGREED TO HAND-
DELIVER THE FINAL 269 FORMS TO WASHINGTON AND ENTER THE
INFORMATION INTO USAID'S FINANCIAL MANAGEMENT SYSTEM WITH
UNCLASSIFIED

PAGE 04 ROME 01587 01 OF 02 281725Z
THE AIM OF DEOBLIGATING AND CLOSING THE 1997 AND 1998 ITSH
ACCOUNTS DURING THE WEEK OF THE USG/WFP FINANCIAL AND
BILATERAL CONSULTATIONS.


5. OCEAN FREIGHT: USAID HAS ESTABLISHED ACCOUNTS TO PAY
FOR WFP OCEAN FREIGHT COSTS RELATED TO THE SHIPPING OF U.S.
FOOD AID. THERE ARE SEPARATE ACCOUNTS FOR OCEAN FREIGHT
COSTS UNDER USAID-SUPPORTED DEVELOPMENT, EMERGENCY (IEFR)
AND PRRO ACTIVITIES FOR EACH FISCAL YEAR. WFP AND USAID
REPS COMPARED FINANCIAL INFORMATION FOR EACH ACCOUNT AND
DETERMINED THAT ADDITIONAL ANALYSIS WOULD BE NEEDED BEFORE
ANY DE-OBLIGATION OF FUNDS COULD TAKE PLACE.

ACTION REQUIRED: USAID/FFP/POD WILL CAREFULLY ANALYZE THEIR
RECORDS AND INFORMATION PROVIDED BY USAID'S FINACIAL
MANAGEMENT (FM) OFFICE AND, IN COORDINATION WITH WFP,
RECONCILE THE BALANCES IN THE 1997 AND 1998 FREIGHT ACCOUNTS
WITH THE OBJECTIVE OF DEOBLIGATING THESE FUNDS BY APRIL 2,

2002.


6. INLAND TRANSPORT: USAID HAS SET UP ACCOUNTS FOR COSTS
INCURRED BY WFP FOR OVERLAND TRANSPORT OF USAID FOOD
ASSISTANCE TO LANDLOCKED COUNTRIES. THERE ARE SEPARATE
ACCOUNTS FOR INLAND TRANSPORT COSTS UNDER USAID-SUPPORTED

UNCLASSIFIED

UNCLASSIFIED PTQ1775

PAGE 01 ROME 01587 02 OF 02 281726Z
ACTION ECA-00

INFO LOG-00 NP-00 AGRE-00 AID-00 AMAD-00 COME-00 CTME-00
SRPP-00 EB-00 EUR-00 E-00 UTED-00 VC-00 TEDE-00
IO-00 VCE-00 DCP-01 NSCE-00 OIC-02 OMB-01 IRM-00
STR-00 TEST-00 TRSE-00 USIE-00 PRM-00 SAS-00 /004W
-------------- 7C01AC 281743Z /38
P 281553Z MAR 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC PRIORITY 2999

UNCLAS SECTION 02 OF 02 ROME 001587

SIPDIS

FROM U.S. MISSION IN ROME

STATE FOR IO AND PRM
USAID FOR DCHA/FFP FOR LLANDIS, JDRUMMOND AND LWILLIAMS
USAID FOR FM FOR BMAIPID-SMITH
USDA/FAS FOR ESELLERS

E.O. 12958: N/A

TAGS: EAID WFP UN EAID WFP UN
SUBJECT: MEETINGS WITH WORLD FOOD PROGRAM ON FINANCIAL
ISSUES

DEVELOPMENT, EMERGENCY (IEFR) AND PRRO ACTIVITIES FOR EACH
FISCAL YEAR. USAID AND WFP REPS REVIEWED EACH ACCOUNT FOR
1997 AND 1998, INCLUDING WFP CORRESPONDENCE ON PREVIOUSLY
UNCLASSIFIED

PAGE 02 ROME 01587 02 OF 02 281726Z
DISALLOWED CLAIMS FOR REIMBURSEMENT UNDER THESE ACCOUNTS,
AND IDENTIFIED SEVERAL ISSUES THAT REQUIRE FURTHER RESEARCH
AND FINAL RESOLUTION.

A MORE DETAILED DISCUSSION OF NEXT STEPS FOR EACH ISSUE IS
PROVIDED BELOW:

SUPERINTENDENCE (USD 1,320,335): WFP AGREED TO PROVIDE MORE
INFORMATION ON COSTS PER TON AND ON THE DETAILS OF CREDIT
ITEMS LISTED IN THEIR CLAIM FOR SUPERINTENDENCE COSTS THAT
WAS PREVIOUSLY SUBMITTED TO USDA/CCC. UPON RECEIPT OF THIS
INFORMATION, USAID/FFP/POD REPS AGREED TO DISCUSS THIS ISSUE
WITH USDA/FAS TO DETERMINE WHAT COSTS ARE REIMBURSABLE. IF
THE ISSUE CANNOT BE RESOLVED BY THE FIRST WEEK OF APRIL, IT
WILL BE PUT ON THE AGENDA FOR THE USG/WFP BILATERAL
CONSULTATIONS IN WASHINGTON, DC. FURTHERMORE, BOTH
USAID/FFP/POD AND WFP WILL PRODUCE ESTIMATES ON SURVEY
COSTS.

BAGGING (USD 25,098): USDA/CCC CAN REIMBURSE WFP FOR THE
COST OF RE-BAGGING COMMODITIES THAT ARE DAMAGED IN SHIPMENT.
WFP AGREED TO RESEARCH AND SUBMIT DETAILED INVOICES FOR THE
BAGGING COSTS TO USDA/CCC, AND USAID/FFP AGREED TO ASSIST
WFP IN GAINING REIMBURSEMENT FOR ANY COSTS DETERMINED
ALLOWABLE.

MISCELLANEOUS (USD 34,200): USAID/FFP REPS STATED THAT IT
WAS THEIR UNDERSTANDING THAT WFP WAS ALREADY REIMBURSED FOR
THESE COSTS. WFP AND USAID/FFP/POD WILL RESEARCH THIS ISSUE
IN ANTICIPATION OF THE FINANCIAL SUB-CONSULTATIONS TO
CONFIRM THAT THIS ISSUE IS RESOLVED.
UNCLASSIFIED

PAGE 03 ROME 01587 02 OF 02 281726Z

OVERLAND (USD 1,775,309): USAID REPS SELECTED THREE
SHIPPING INSTRUCTIONS (SIS) 9610189, 9610466 AND 9610047,
AND ASKED WFP TO PROVIDE A DETAILED BREAKDOWN FOR USAID
REVIEW BY THE FIRST WEEK OF APRIL. IF REVIEW OF THESE THREE
SIS PROVES THAT ALL COSTS ARE ALLOWABLE, USAID/FFP WILL
REIMBURSE WFP FOR THIS OVERLAND EXPENSE. WFP STATED THAT IF
THE DOCUMENTATION IS FILED IN ITS COUNTRY OFFICES IT MAY NOT
BE POSSIBLE TO HAVE THE DOCUMENTATION AVAILABLE BY THE APRIL
FINANCIAL SUB-CONSULTATIONS.

STORAGE (USD 100,524): A BRIEF REVIEW OF THIS CLAIM
REVEALED THAT A LARGE PERCENTAGE OF THESE STORAGE COST WERE
FOR SEA GIRTH, WHICH ARE NOT NORMALLY REIMBURSED FROM THE
INLAND ACCOUNT. USAID/FFP REQUESTED WFP TO REVIEW THESE
COSTS AND, IF APPROPRIATE, RESUBMIT THEM FOR REIMBURSEMENT
UNDER THE APPROPRIATE MECHANISM.

TRANSSHIPMENT (USD 374,462): ALMOST ALL THE TRANSSHIPMENT
COSTS IN WFP'S CLAIM ARE FOR SOMALIA. WFP AND USAID REPS
AGREED TO RESEARCH THEIR RECORDS TO DETERMINE IF THERE HAD
BEEN AGREEMENT TO PAY FOR TRANSSHIPMENT COSTS FOR SOMALIA
UNDER THE INLAND ACCOUNT, WITH THE AIM OF RESOLVING THIS
ISSUE BY APRIL 2


7. USAID REPS REVIEWED USAID REPORTING REQUIREMENTS WFP
FINANCIAL DIVISION STAFF. USAID AGREED TO RESPOND TO WFP'S
LETTER REQUESTING AN EXTENSION FOR SUBMISSION OF THE FINAL
OBLIGATION STATUS REPORT FOR FY 1999 (AS REQUIRED IN THE 19
TH PLEDGE AGREEMENT). WFP AGREED TO SUBMIT THE FINAL
OBLIGATION STATUS REPORT FOR FY 1999 AND THE INITIAL
UNCLASSIFIED

PAGE 04 ROME 01587 02 OF 02 281726Z
OBLIGATION STATUS REPORT FOR FY 2000 BY 31 MARCH 2002.


8. WFP CASH BALANCES: USAID/DCHA/FFP, USAID/FM, AND US
MISSION/ROME REPRESENTATIVES ALSO MET WITH THE DIRECTOR OF
WFP'S FINANCE DIVISION, SURESH R. SHARMA. THE PURPOSE OF
THE MEETING WAS TO GAIN INSIGHT INTO WHY THE WFP MAINTAINED
A CASH BALANCE OF SOME USD 800 MILLION. MR. SHARMA OFFERED
A BRIEF EXPLANATION OF THIS CASH BALANCE, WHICH DETAILED
APPROXIMATELY USD 539 MILLION DOLLARS OF THIS TOTAL.
ACCORDING TO MR. SHARMA, A NUMBER OF LONG-TERM AND NECESSARY
FUNDS, AS WELL AS A LONG-TERM LOAN, CONTRIBUTE TO THE USD
800 MILLION TOTAL, INCLUDING AFTER-SERVICE HEALTH RESERVE,
AN EMPLOYEE SEPARATION RESERVE, AN OPERATIONAL RESERVE AND
AN IMMEDIATE RESPONSE ACCOUNT. THE IMPLICATION BEING THAT
THE BALANCE (SOME USD 261 MILLION) WAS THE BALANCE OF
PROGRAM FUNDS YET TO BE UTILIZED. MR. SHARMA CONFIRMED HIS
PREVIOUS COMMITMENT TO PROVIDE A MORE DETAILED EXPLANATION
OF THIS CASH BALANCE TO THE DIRECTOR OF USAID/FFP, LAUREN
LANDIS.

UNCLASSIFIED

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2002ROME01587 - Classification: UNCLASSIFIED